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. Last Updated: 07/27/2016

Battle Heating Up for Seat on UES's Board

Head of national power grid Unified Energy Systems Anatoly Chubais is likely to have the upper hand at the next company shareholders meeting, slated for April 28.

First, Chubais staved off the personal attacks of his foes, who decided at last week's board meeting not to put his position of chief executive officer up to a vote at the shareholders meeting.

"Chubais always had the support of the government and he obtained it once again," first deputy board director Leonid Melamed said after Wednesday's meeting.

Second, Chubais orchestrated a split among minority shareholders by introducing new candidates on behalf of companies deemed to be close to UES managers.

"The fight is brewing for one place on the board of directors," says Kakha Kiknavelidze, analyst with Troika Dialog.

The list of candidates to the 15-member board was shortened to 29 people from 35 after six people withdrew their names. Just days before the UES board was to approve the agenda for the shareholders meeting, a list of 13 candidates was submitted by Alexander Novikov, who said he was acting on behalf of outside shareholders, mostly banks. Market watchers, however, say that UES managers are connected to companies on whose behalf Novikov drafted the list.

Since most of these 13 candidates had not been notified, six people, including managing director of Hermitage Capital Management Bill Browder, J.P. Morgan equity analyst John Paul Smith, former head of the Federal Securities Commission Dmitry Vasiliyev and NAUFOR board member Oleg Fyodorov, asked to withdraw their names.

"We think it is unethical to put people on the list without their approval," said Grigory Raksha, spokesman for State Duma member Viktor Pleskachevsky from Unity, who also asked that his name be dropped.

UES board member Ivan Lazarko from NAUFOR, who is on Novikov's list, said he may consider withdrawing his candidacy if he feels he is being manipulated. "Otherwise, I do not see why I should bail out," Lazarko said. "I would like to talk to companies on whose behalf my name was introduced."

If indeed UES managers stand behind the scheme, they have succeeded in splitting up minority shareholders, who even in the best case scenario can get no more than three places in the new board. Ten of the seats are expected to go to the government.

"Attempts to split minority shareholders cause serious concerns," says Alexander Ikonnikov, executive director of the Investor Protection Association.

IPA considered putting four candidates on the voting list, but later decided to name just three people, including head of research with Hermitage Vadim Kleiner, chief investment officer with Brunswick Capital Management David Herne and director of Prosperity Capital Management Matthias Westman. "We wanted to lower risks," Ikonnikov said.

However, the fourth IPA candidate whose name was to be dropped — Florian Fenner from Unifund — still features on the list. He was proposed by outside shareholders acting independently from IPA.

"It is unlikely that IPA now will put more than two of their representatives on the board," said Natalya Baranova, head of research with CentreInvest Securities.