Russian Investment Firm: DA!

When Russia announced last month that one of its most important defense resources -- MiG -- was going private (ANN: "Russia To Retain Control of MiG" -- August 24, 2003), there was a catch. The Russian government got to keep all 100 percent of the shares. While perhaps a step toward full privatization, it was a baby-step at best.

But the powerful Russian holding company, Sistema, is ready for a public offering now. Right now. "Yes, we will buy [shares in MiG]," the chairman of the powerful holding firm, Vladimir Yevtushenkov, told reporters last week,  "as many as they will give us."

Sistema owns a piece of a lot of companies, including Kamov, the Russian helicopter company. Even though MiG and Sistema are partners in the Kamov operation, they may not be all that close. The Moscow Times reports MiG executives had no idea Sistema was so interested. Flattered, but unaware.

"It means that we are worthy of interest," said Vladimir Barkovsky, MiG's deputy general director, late Thursday.

A spokesman for Industry, Science and Technology Minister Ilya Klebanov said Friday he was not aware of Yevtushenkov's comments. "This is the first time I heard about it," Andrei Mazurov told the Moscow Times.

But maybe it's not a communications problem so much as it is an issue of awareness. MiG was also caught by surprise when the government announced it was on the list for privatization.

That could be because the Russian government has, in the past, indicated 80 percent was as high as it would go in terms of former state assets sold to shareholders. During a visit to MiG's new production facility in Lukhovitsy, outside Moscow, State Duma Speaker Gennady Seleznyov argued that the state should retain control over the remaining one-fifth. "The government simply has to preserve such jewels in its state crown," Seleznyov said, referring to MiG.

Even MiG bosses share that conservative point of view. MiG general director Nikitin told the Times, "If the final decision is taken to turn it into a shareholding company," he said, MiG should remain 100-percent state-owned, and "it should be done openly and publicly under the control of the State Duma and the president."

Boy, you could almost hear the clock ticking backwards on that one, all the way to 1977. The Breshnev Years -- ed.

FMI: www.sistema.ru/_en