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The Standard & Poor's international rating agency recently published the results of a survey on the information transparency of Russian state corporations
Their average level of information provision is very moderate, 47%. This means that they fail to disclose information as readily as Russia's private companies of the same level do (52%) and considerably worse than their overseas counterparts (63%). However, this is not a bad result for a country where norms of corporate governance were only introduced recently and the Code of Corporate Conduct appeared only a couple of years ago. It is not surprising that the transparency of state companies is lower than that of private firms; this is a common trend not only in Russia. The average level of transparency of state companies overseas is, it is worth repeating, 63%. Yulia Kochetygova, director of S&P's corporate governance rating division, said the average transparency level of major private companies in Britain is 71%, or higher than for state firms. Besides, companies usually start worrying about transparency when they decide to float on the stock market to raise additional funds. The higher the standards of corporate governance, the better a company's reputation and the more money it can hope to get by placing shares on the exchange. State companies' dependence on exchange loans is lower, and hence transparency is not crucial to them. This is why the S&P figures for Russia are logical. But the conclusions that can be drawn from them represent a completely different matter. According to S&P, the results of its survey confirm that information transparency of state companies in Russia is kept back by the government's and individual state officials' use of their influence on such companies for political or private reasons, which are seldom motivated commercially and do not correspond to the interests of investors. It has become fashionable, especially after the Yukos saga, to accuse Russia of intransparency and its authorities of interfering in business affairs and preventing effective business operation. Kochetygova said that many state firms are joint stock companies, which have private minority shareholders whose interests do not always coincide with the interests of the state. Moreover, corruption remains a problem. In addition, the state and business have different views of what effectiveness means. State companies sometimes have to act as the agents of the state and not as effective market entities, taking on the fulfillment of crucial state tasks to the detriment of their commercial interests. Viktor Shpringel of the Open Economy Institute said state companies shoulder the bulk of social responsibilities of business in Russia. The provision of gas and electricity to the rural areas or the social responsibilities of economic mainstay enterprises are not always profitable to state companies. But they have to take on some of the state's functions because the local budgets do not always fulfil these tasks. If a state company goes too far in increasing its transparency to attract potential investors, this does not always have a positive effect on its business. Shpringel believes that United Energy Systems (RAO UES), which S&P ranked second after Gazprom, worked too hard on the stock market, trying to increase its capitalization, which was one of the reasons for a major blackout in Moscow in late May. Pavel Teplukhin, the president of the Troika Dialog investment company, said the development of corporate governance in Russia was hindered by the dual function of the state, which both formulates the rules of the game and is a market player. The state demands bigger dividend payments from JSCs where it is a major shareholder. At the same time it demands higher profits and hence higher tax deductions to the budget from the companies where it does not possess a large share. Corporate governance and company transparency in Russia can be improved if the state adopts a clear dividend policy and imposes a harsh tax discipline. Yelena Krasnitskaya of Troika Dialog said the state as a dividend and tax recipient would play a more active part in strengthening financial discipline in 2005
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