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. Last Updated: 07/27/2016

Envoy Convenes Takeover Council


The Kremlin's envoy to the Central Federal District Georgy Poltavchenko

Trying to catch up with a worrisome trend, the Kremlin's envoy to the Central Federal District, Georgy Poltavchenko, created a new body Wednesday to solicit ideas on how to combat predatory corporate takeovers on the regional and grass-roots level.

So-called abusive takeovers and other murky business practices will be the focus of the new Coordination Council on the Defense of Investors' Rights, which will be headed by Poltavchenko's deputy, Vasily Kichedzhi, and include representatives of several government bodies and investor groups.

"Now that property division is over, property owners have an urgent need to defend against businessmen like themselves," said Kirill Lipa, managing director of investment bank Aton and deputy head of the council.

Despite the influence of its members, however, the council does not intend to publicly go after any of the "predatory" companies that grabbed headlines in recent months.

"We are not going to attempt to replace court decisions," Kichedzhi said. "It is important, however, to have a public discussion on a number of issues, including law enforcement practices."

Yury Sizov, head of the Moscow branch of the Federal Securities Commission, said mergers and acquisitions is a market worth $5 billion per year. "Poor business practices prevail," he said.

The birth of the new body comes on the heels of several cases that have attracted attention in Moscow, inspiring City Hall to open a hotline where takeover targets can seek help.

The city brought criminal charges earlier this year against Rosbuilding, a company it characterized as a predator for taking advantage of legal loopholes to gain control over local businesses sitting on prime real estate.

Other "predators" singled out by City Hall include Vash Finansovy Popechitel, Guta and Aton, the very same company now in a leadership position on the Coordination Council on the Defense of Investors' Rights.

"The only blank space in Russia is publicity," Lipa said. "Nobody knows how the decision-making process works."

The council intends to work out a procedure to bring to the table for talks between stakeholders currently in conflict so as to avoid the public outcry that accompanied recent takeover attempts.

Whether this new body will sink into oblivion like many of its predecessors or becomes a force to be reckoned with remains to be seen, but its founding fathers vow to put their plans into action.

"Discussion always ends up in decisions being made," Kichedzhi said. In setting up the council, Kichedzhi and his lieutenants are following a trend that has dominated the marketplace for a year.

The nation's influential big business lobby , the Russian Union of Industrialists and Entrepreneurs, or RSPP, adopted a corporate code of ethics this year and last year set up a commission to settle corporate disputes outside the courts. That commission is currently reviewing two cases -- Tver Poliefir vs. ZMA Holding, and Stilteks vs. Alfa Eko. Yukos chief Mikhail Khodorkovsky is presiding over the latter case.