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. Last Updated: 07/27/2016

Power Battle Breaks Out At Generator Monopoly




ST. PETERSBURG -- A full-blown struggle has broken out for control of Elektrosila, Russia's monopoly manufacturer of power station generators, with current leadership sparring against new management appointed by the plant's holding company.


In addition to deciding the fate of the 5,300-employee factory, analysts and plant officials said the battle looks once again to be an example of how minority shareholders' rights are trampled in Russia.


German giant Siemens AG, which holds a 20 percent stake in the plant, has accused massive holding company EMK of violating Elektrosila's charter by trying to fire the factory director and replace him with its own man.


The case has gone to court, and on Nov. 5 a Moscow city court ruled in the current management's favor. But Moscow-based EMK, which stands for Energomash Korporatsiya, is ignoring the decision and the two directors are today occupying offices across from each other.


The issue will be addressed when the company's board of directors meets Nov. 12, and a source familiar with the dispute said EMK will probably emerge victorious.


The feud became public Oct. 29 when EMK, which owns majority stakes in 26 large machine-building enterprises in Russia that sold about $1 billion worth of goods in 1997, accused the plant director Ravil Urusov of poorly managing the factory and tried to replace him with Valery Chernoshyev, who currently leads another EMK subsidiary, the Leningrad Metal Factory.


Urusov refused, pointing out EMK couldn't force his resignation under the company charter. Alexander Kuleshov, an adviser to Urusov, added that during the director's one-year tenure the factory had come out of the red for the first time in years, earning a profit of 65 million rubles for the first nine months of 1998.


Kuleshov suggested that the dispute centers around a fight for control of a one-third stake in Elektrosila.


He said EMK was forced to hand over part of its 37.7 percent stake to the now-defunct Inkombank when it defaulted on a loan in August.


Kuleshov claimed EMK decided to replace Urusov with a director who would be more active in helping the corporation take back the stake before Inkombank could sell it.


EMK officials were not available for comment.


Siemens, which owns a 20 percent stake in the plant, is outraged over EMK's "seizure of power," according to Sergei Semiletov, who represents the firm on Elektrosila's board.


"My colleagues from Germany are furious with the behavior of EMK ... because it has violated the charter of Elektrosila," Semiletov told a meeting of plant workers, according to the factory's official newspaper. "Siemens finds no fault with the current general director, Mr. Urusov, as the company is performing well."


In the end, it seems that victory for EMK is inevitable. Even Kuleshov, who sides with Urusov, believes the general director will be ousted when the board of directors meets this week.


"It is not possible that Urusov will win this fight because EMK is the largest shareholder in Elektrosila," said Alexei Musakin, head of strategic planning at Energomashbank, a St. Petersburg bank owned by EMK.


"His victory would accomplish nothing and mean that Elektrosila would be paralyzed by a state of constant conflict," he said.