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. Last Updated: 07/27/2016

Voucher Dives After Attack By Parliament

Nervous traders pushed down the price of the Russian privatization voucher Wednesday as parliament continued its attack on the government's massive state sell-off.


"The deputies do not seem to understand that millions of people have supported privatization by investing their vouchers", said Yevgeny Shidyayev, director of marketing for Alfa-Capital, a voucher investment fund. "The decision has already led to a fall in the voucher rate".


The voucher tumbled by 1, 000 rubles ($1) in trading Wednesday on the Moscow Commodities Exchange, with traders buying the privatization checks, which have a 10, 000-ruble face value, for 8, 000 rubles. The voucher purchase price had been 9, 000 rubles on Tuesday.


On the larger Russian Raw Materials and Commodities Exchange, the average price fell to the 8, 000 level by the early afternoon, from a close Tuesday of 10, 050. But it rebounded to end the day at about 9, 800.


The voucher had strengthened considerably in recent weeks, exceeding its 10, 000-ruble face value on most exchanges as the government increased the number of privatization auctions. It continued to go up even as parliament debated the laws.


But on Wednesday, for the second day in a row, the parliament jabbed at the government's privatization program, passing a resolution that takes away control of state-owned property from the State Property Committee and gives it directly to the government.


Although the government could still cede control back to the property committee, the move was seen as leading to more chaos in the privatization campaign.


It was a clear slap at Deputy Prime Minister Anatoly Chubais, who is in charge of privatization. The parliament has sought his ouster for several months.


In an interview Wednesday on the evening news broadcast, Novosti, Chubais warned that the move could bring "a halt" to privatization in Russia.


"It is obvious that political games to bring down the president are taking precedence over the good of the people", Chubais said.


A last-minute amendment gave worker collectives the right to prevent the owner of their government-owned factory to sign contracts or found subsidiary companies.


Maria Ettyryntyna, a deputy from the Chukotsky autonomous region, said that she had voted for the resolutions because privatization had gone too fast and that parliament wanted to ensure that strong defense and aerospace enterprises would not be privatized.


"We simply want to know what you can privatize in 1993, and what you cannot", she said, noting that Chubais had not submitted his privatization plan by May 31, as requested by parliament.


The vote, which passed 173 to 4, with 10 abstentions, came one day after lawmakers had suspended a May decree by President Boris Yeltsin aimed at speeding up privatization.


The president's decree ordered firms to sell at least 29 percent of their shares at auction and ordered 2, 000 additional firms to be privatized.


"The greatest benefactors from a suspension of privatization will be the Mafia", said Georgy Zadonsky, a liberal deputy.


He said that rich criminal gangs would be able to buy up large numbers of vouchers if the price of the voucher plunged as a result of the vote.


A spokesman from the State Property Committee said that the parliamentary decision would "deprive people of the opportunity to use their vouchers".


He added that it would now give the various ministries the right to decide which enterprises could be privatized and the speed at which they would be sold off.


Sergei Krasavchenko, a pro-reform legislator who tried in vain to delay the vote, said that privatization should be controlled by a separate organization because putting the ministries in charge of privatization of their own enterprises would "widen opportunities for corruption".


Executives at voucher investment funds, which manage and invest the privatization checks, were alarmed by the decision taken by parliament.


"It's a nightmare", said Dmitry Slabky, deputy manager of the Zhiltovarishch Check Investment Fund. "I don't know how we'll work in the future".


The fund planned to open several offices around the country to use vouchers in the privatization of property.


But Andrei Fetissov, director of the First Check Fund, said he did not think parliament could stop privatization.


"We shall see what we shall see", Fetissov said. "I think there are resolutions which can be fulfilled and there are resolutions which cannot be fulfilled. This one belongs to the last category".