Putin Questions Dealings of Russian Oligarchs

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Putin Questions Dealings of Russian Oligarchs

By ANDREW E. KRAMER
Published: February 24, 2010
MOSCOW — Four of Russia's wealthiest businessmen were criticized by Prime Minister Vladimir V. Putin on Wednesday, accused of failing to properly invest in the country's energy sector.

Presiding over a meeting on the electricity industry, Mr. Putin said in a televised speech that the executives, known as oligarchs, had undertaken to invest in power plants some years back but were now trying to renege on the obligations, citing diminished demand for electricity.

Mr. Putin said the investments were still needed, as demand would grow eventually, and that the men had committed to making them and should follow through.

"We were counting on the owners being responsible," Mr. Putin said. "Unfortunately, far from all of them showed responsibility."

While the comments were hardly searing, anytime Mr. Putin publicly criticizes a businessman it is closely watched and parsed by the markets. In Russia, the consequences of falling from favor are great in an economy with weak property rights and a recent history of effective nationalizations.

The criticism was mitigated with some assurances of continued favor for the men — Mikhail D. Prokhorov, Vladimir O. Potanin, Viktor Vekselberg and Leonid Lebedev.

Mr. Putin had sharp words for Mr. Prokhorov, whose business interests extend outside of the country as well.

A basketball enthusiast, Mr. Prokhorov agreed last fall to buy a controlling stake in the New Jersey Nets from the developer Bruce C. Ratner, and move the team to a proposed stadium at Mr. Ratner's Atlantic Yards site in Brooklyn.

"He's feeling good on the economic level," Mr. Putin said of Mr. Prokhorov at the meeting held at a hydroelectric plant in Siberia, according to a transcript posted on the Web site of the Russian government.

"He has money," Mr. Putin went on. "And he's visiting different offices, and he came by mine not long ago. I have warm relations with him. He's looking for uses for his resources. But the obligations he took earlier, those have to be fulfilled."

At issue are investments by the oligarchs in electrical generating companies. Under the terms of the privatization, they were to invest in building power plants or refurbishing existing sites with more fuel-efficient turbines, Mr. Putin said. The men could be fined if they fail to invest.

Then, in a comment ominous for its echoes of the arrest and imprisonment of Mikhail Khodorkovsky, once Russia's richest man as owner of the now bankrupt Yukos oil company, Mr. Putin said reasons might arise to involve the prosecutors general in this dispute.

"There is a possibility," Mr. Putin said, "especially if we are talking about technical safety" at the power plant sites. The Sayano-Shushenskaya hydroelectric plant where he spoke was the site of 75 deaths last summer when a water conduit burst.

Mr. Putin's comments can have sharp effects on markets. In 2008, his criticism of the owner of the steel company Mechel touched off a 38 percent plunge in the company's stock, reducing the market value by $6 billion.

Mr. Putin wrapped up his comments saying that he would prefer an agreement with the oligarchs on the generating company investment plans and adding, "Let's not argue about this."

http://www.nytimes.com/2010/02/25/busin ... ruble.html