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. Last Updated: 07/27/2016

Mosenergo Boss: Thief Or Traitor?

On Friday, an extraordinary shareholders meeting has been planned at Moscow's power monopoly, Mosenergo. The reason is that its parent company, Unified Energy Systems, wants to sack Mosenergo's general director Alexander Remezov. Since UES holds a controlling stake in Mosenergo, it is well within its rights to do so.

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What's really interesting here is the reason for removing someone who up until two years ago was considered a loyal lieutenant of Anatoly Chubais. At UES, Remezov's guilt is explained succinctly: He was caught "with his hands in the till."

Of course, instances of wrongdoing there probably were. For example, Remezov's pocket Transinvestbank took a commission of 1 percent for servicing deals involving promissory notes. The promissory notes of an unknown company, Transinvestfinans, were used instead of cash. Just to remind you, non-monetary schemes were used in only 1.8 percent of all payments, which is substantially less than the volume of offsets conducted by UES subsidiaries such as InterRAO.

Overall, things at Mosenergo look rather respectable. In the first quarter of 2001, electricity production was 305 million kilowatt hours above target; the cost of producing one kilowatt hour was 5 percent cheaper than planned; and net profit was 1.2 billion rubles above projections. In short, it's a classic example of a UES subsidiary where pre-Chubais stealing was ubiquitous and under Chubais everything has started running like clockwork.

To answer the question of whether stealing went on at Mosenergo, I would contend that no promissory note scheme in Russia takes place without some form of kickback. And as to whether a lot of stealing went on, foreign investors have provided the most eloquent answer: The Mosenergo bonds that they purchased increased from 70 percent to 97 percent of face value in one year.

It is no secret that promissory note operations provide a source of income for managers. Illegal it may be, but entirely commonplace.

Moreover, it is no secret that in a number of state-controlled holding companies there is a tacit agreement between the central management and management of the subsidiaries that managers are free to pocket the above-mentioned income, so long as a certain share of it is delivered in suitcases to the big bosses' offices. The bosses can use the cash to buy a house in Cyprus, to finance a democratic party, or whatever else they want.

That's not to say that such a system operates in UES, but if this is how things are done, then Remezov would have had little option but to dabble in dubious promissory note schemes. And disagreements over how much was stolen and how much was handed over could serve as grounds for a general director's removal.

In fact, Remezov's guilt is probably much greater. It is said that several months ago, at the height of the battle over UES' restructuring, the Mosenergo general director's personal file landed — without Chubais' sanction — on the desk of then Security Council Secretary Sergei Ivanov as a potential candidate for fuel and energy minister. Chubais may have taken this as blatant evidence of betrayal by his subordinate.

I am neither denying Remezov's guilt, nor the legality of the shareholders meeting. I simply don't understand what sort of labor disputes can arise in a feudal state, and why terms such as shareholders meeting and audit commission are used when much more appropriate would be betrayal, non-payment of tribute, and out-of-favor vassal.

Yulia Latynina is a journalist with ORT.