Auditor Warns CEOs Over 1990s Sell-Offs

MTSergei Stepashin
Russian business executives and officials could face court action over their roles in the chaotic privatization drive of the 1990s, but loyal companies are likely to be spared, Russia's top auditor said Friday.

Sergei Stepashin, a former prime minister who heads the Audit Chamber, said the government was likely to take legal action on the basis of his review of a decade of sell-offs, in which he said the law had been routinely ignored.

"According to a presidential decision, quite a tough presentation has been submitted to the government," he told parliament, which reappointed him Friday.

"It was accepted, and today the government is preparing to take steps, which will be announced in due course. Documents have also been sent to the prosecutors' office," he said.

The debate on Stepashin's report will be keenly watched for signs of government action against business empires that are based on the privatization of firms during the period under review, 1993 to 2003.

"Nobody disputes the content of our report," he said. "But the question of its consequences is a political one. ... Seventy percent of the national wealth has yet to be privatized. We cannot repeat these mistakes."

The privatization drive spawned most of Russia's top firms and created a billionaire business elite. Many are now in exile or in jail, including the richest -- Yukos oil tycoon Mikhail Khodorkovsky, who is on trial for fraud and tax evasion.

Khodorkovsky's downfall and Yukos' dismemberment by tax authorities have fueled speculation that President Vladimir Putin's Kremlin has other business empires in its sights.

That makes Stepashin's report key reading for those asking: "Who's next?"

But Stepashin told reporters not to expect more Yukos cases.

"I believe we need to take politics out of the equation, both for domestic and foreign investors. Nobody is about to do any break-ups or confiscations," he said after his appearance in parliament.

"Those big companies that were sold off at low prices, if they are paying their taxes and playing an active part in the social policy of the state, that's already a big achievement."

Stepashin stepped down as head of the Audit Chamber in December to reapply for the job under a new law on public appointments. His temporary absence from the job further postponed the debate on privatization, after the long-awaited report appeared at the end of November. Besides Yukos, the report also criticized the privatization deals for defense, forestry and industrial firms, as well as oil firms LUKoil and Surgutneftegaz, and Sidanco and TNK -- both now part of TNK-BP.