S&P Refuses to Release Rankings

The financial crisis has claimed another victim.

Blaming the turmoil, Standard and Poor's took the unprecedented step Thursday of disclosing only the top 10 names on its annual transparency and disclosure list of Russia's 90 largest publicly traded companies.

Most Transparent

Company2008 Rank2007 Rank
CTC Media13
Novolipetsk Steel320
Mobile TeleSystems41
WBD Foods89
Evraz Group98
Source: S&P
Investors and company representatives waiting for the information at a news conference called by the international ratings agency were stunned by the decision.

"It is complete absurdity that transparency ratings are being kept secret. What are transparency ratings when they aren't transparent?" said Alexei Navalny, an individual Russian stockholder currently involved in several transparency-related lawsuits against Rosneft, which was ranked as the second most transparent company on the list after CTC Media.

Rosneft vice president Peter O'Brien also expressed a desire to see the full list of scores. Not knowing the rankings of the state oil company's rivals makes it difficult to compete, and "competition is good," O'Brien said.

O'Brien, nevertheless, was proud of Rosneft's jump in the rankings, up from 10th place last year. "The criteria are good, and the market is paying attention," he said. "Transparency is important: It allows us to get feedback, it increases the possibility for analysts to accurately evaluate the company's actions."

Responding to investor and company complaints, Svetlana Borodina, director of S&P's governance services, explained that the global financial crisis was not an opportune time for full transparency.

"When the market is going up, companies are not so sensitive about their rank, but when the market is going down, when were are in turbulent times, we need to take precautions," she said. "We don't want our ratings to be the last straw to bring a company's stock price down."

S&P said it would notify all 90 companies of their respective rankings later Thursday. It intends to publish the full list again next year.

CTC Media, the owner of several television networks and production companies, attributed its first-place ranking to the trading of its shares in New York. "Because our stocks compete on New York's NASDAQ exchange, we must stick to high American standards of transparency and information disclosure," Vasily Bogatyrev, CTC's deputy general director, said in a statement. CTC placed third last year.

S&P said in a report that all companies that trade in New York got significantly higher rankings than those that trade only in Russia.

Climbing significantly in the rankings from last year were Novolipetsk Steel, from 18th to third place, and pipe producer TMK, from 20th to sixth place. Mechel, whose New York-traded shares halved in three days this summer after Prime Minister Vladimir Putin attacked its pricing policy, placed fifth.

Navalny described the top-10 list as "strange."

"There are lots of questions about this list that S&P can't answer," he said. "Rosneft doesn't even disclose at what price it exports oil, and its profits from these exports affect shareholders' dividends. They don't even show this kind of information, but somehow they end up in second place on the list."

S&P's failure to reveal the full list may lead to less competition this year among companies that did not make it to the top 10, said a representative of X5, the retail giant.

"We don't even know what our ranking is, " said the representative, who declined to give her name because she is not an official media spokeswoman.

"It will be hard for us to compete against Rosneft because it is in a totally different sector. We have to be able to see the other companies in our sector," she said.

None of X5's direct competitors were listed in the top 10.

Igor Andruyshchenko, deputy executive director for the National Council on Corporate Governance, also voiced concern over S&P's decision to withhold the information on transparency.

"It is even more important today in times of crisis because investors are being more scrupulous, and transparency makes decision-making easier," he said.