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. Last Updated: 07/27/2016

Lebed Steps Up War Over Krasnoyarsk Coal

Powerful Krasnoyarsk Governor Alexander Lebed has launched an all-out war against the State Property Ministry over its efforts to privatize the large coal mines in his region.

In a series of bold and controversial tactical moves, Lebed stopped a fresh attempt by the State Property Ministry on Friday to oust his men from the board of the Krasugol coal holding company, a step the ministry had hoped to take to block the dilution of the holding's stakes in three vital strip mines.

The government wants to take control of the management at the holding in order to privatize the mines, a condition Russia must fulfill to win millions of dollars in World Bank loans. The state is stuck in the uncomfortable position of owning 75 percent of the holding's shares, but still having no say in the management's decisions.

Just Thursday, Lebed viciously attacked Prime Minister Vladimir Putin in front of hundreds of miners gathered to protest the privatization of the mines. Putin earlier this week indicated that the state will proceed with the privatization of the Krasnoyarsk coal industry regardless of Lebed's objections.

"If somebody wants to privatize the mines without my participation, I would like to encourage them with a few warm words: I hope God helps your calf eat our wolf," Lebed told the rally of workers from the Borodinsky, Nazarovsky and Beryozovsky strip mines. Lebed used a colloquial phrase meaning that the state will needs God's help if it expects to overcome the stronger Krasnoyarsk holding.

Miners on Thursday held short strikes at their mines and warned that if the government does not back down, they will use the more radical and time-tested tactic of blocking the Trans-Siberian Railroad. Last year, miners outraged over wage arrears created a nationwide stir when they blockaded the railroad for weeks.

But the miners and Lebed may have a war on their hands if they return to such tactics; Putin declared on his first day in office that under his rule, anyone who tries to sit on the tracks will end up in jail.

So far, Lebed has a clean track record for getting what he wants at the coal mines. The governor, a former top Kremlin aide and military general, thwarted attempts by the Krasnoyarsk aluminum group and national electric holding Unified Energy Systems to seize control of the mines earlier this year. Then with the backing of Prime Minister Yevgeny Primakov, who was also leery of selling off the coal sector, Lebed took over Krasugol a few months ago.

Despite those victories, the privatization of Krasugol remained imminent and Lebed decided to resort to another plan: to seize control of the mines by diluting Krasugol's stakes in the three strip mines with fresh shares.

The State Property Ministry had hoped to prevent the dilution Friday by reshuffling Krasugol's board of directors, but the meeting could not be held for lack of a quorum, Krasugol officials said.

The ministry says it will now call an extraordinary shareholders meeting at Krasugol to push through its decisions.

However, shareholders meetings must be announced 1 1/2 months in advance, so by the time the meeting takes place, the Krasugol management may have already approved the share dilutions. The directors plan to vote on the share issues in mid-September.

While the ministry has expressed its outrage over the dilution plan, it has been unable to do anything more than warn Krasugol directors that they will be called onto the carpet if they permit the emissions - a threat it cannot legally follow through on.

Krasugol director general and Lebed ally Vladimir Bondarenko appeared unconcerned about the warning in a recent telephone interview, saying that he was not responsible to the State Property Ministry.