Nezavisimaya Gazeta
Regional officials scrutinized for using luxury cars
Officials in the Sverdlovsk Region are coming under scrutiny for their taste in cars. Regional prosecutor, Yury Ponomarev, demanded an investigation into the purchase of Yekaterinburg city Mayor Alexander Yakob’s new car. A similar investigation into regional Governor Alexander Misharin’s new car resulted in an arbitration court motion to declare the deal null and void.
Ponomarev’s latest move came in response to media criticism. It was quick and efficient: journalists spotted a silver Mercedes (reportedly a 350) 4MATIC on May 30. The new car was evidently not easy to spot.
The city manager’s new car had the same license plates (A 201 AA) as the old car, a similar model inherited from Yakob’s predecessor, Mayor Arkady Chernetsky. While the new car is the same color, it was identified by its fog lights, grille and the new turn indicator light diodes under the headlights. There was no record of any tender announcement for a new car purchase from Yekaterinburg administration. “The car was purchased by one of the housing maintenance agencies in Yekaterinburg,” an official statement from the prosecutor’s office said. “A special probe will review the legitimacy of the expense in terms of the regulated procedure for buying expensive cars,” it added.
The car, with an estimated cost of 3.9 million rubles, is registered in the name of Yekaterinburgenergo, a municipal agency. The agency’s management has already been summoned to the prosecutor’s office, which suspects it of sidestepping regulations. “It should be noted that the prosecutor’s office has questioned the efficiency of the head of the Yekaterinburg city management department, a position that has suffered excessive turnover recently. This has had a negative impact on their work,” says a press release by the prosecutor’s office concerning the vehicle purchase.
One day before filing the claim against Yakob, the regional prosecutor’s office filed a motion with the Sverdlovsk arbitration court, pressing for a ruling on the illegal purchase of a new Mercedes Benz for Governor Alexander Misharin. Bloggers spotted the governor in this car, which cost the treasury over 7 million rubles. A source from the Misharin Administration reported that the car was purchased to carry high-ranking delegations and was then given to the governor because his former office car had suffered wear and tear. The prosecutor’s office, however, believes the single-bid tender was illegal and will now try to prove the case in court.
A source at the governor’s administration links the latest flurry of prosecutor activity with a federal agenda – Russian Prosecutor General Yury Chaika’s contract expires at the end of June. The source explains: “According to our information, there is strong competition for the post, and the regions have been encouraged to focus on high-profile cases. This is because incumbent prosecutors will stay on as long as Chaika holds his position – if he goes, they will go, too.”
Gazeta.ru
China concedes over oil debt, hopes for gas deal
China has started repaying its debts for Russian crude oil and expects to sign new lucrative contracts with Russia, including a 30-year gas contract.
According to Transneft, China transferred $33 million for oil on Monday and $45 million on Tuesday. But “it still owes us $20 million,” said Igor Dyomin, the oil pipeline monopoly’s spokesman.
There are media reports that China transferred $50 million to Rosneft on Monday and $67 million on Tuesday. The state-controlled crude producer is now waiting for the final $40-million transfer.
China has been underpaying Russia for oil for several months, while insisting that the existing contracts be reviewed. It particularly wants to see the pricing formula that includes the cost of shipping oil through the East Siberia – Pacific Ocean (ESPO) pipeline to the port of Kozmino reconsidered.
Transneft’s fee is the same along the ESPO pipeline whether or not oil is shipped to the port, Dyomin said.
China demanded that a reduction be made, taking account of the fact that crude is delivered to China through an offshoot from Skovorodino, located 2,046 km (1,272 miles) from Kozmino.
Transneft responded that fees are calculated by the Federal Tariff Service and the talks should be held at government level. The Chinese side “has accepted that argument and talks are currently underway in a constructive spirit of mutual understanding,” Dyomin said.
The talks are being held by Deputy Prime Minister Igor Sechin and his Chinese counterpart, Wang Qishan.
Experts think China has started paying for fear of litigation.
In 2009, China signed a contract under which Russia is to deliver 15 million tons (110.25 million bbl) of crude annually, while China pledged to lend Rosneft $15 billion and Transneft $10 billion. The disputes are to be settled in the London Court of International Arbitration.
“The Russian companies’ legal position seems to have been stronger, and so the Chinese have decided to repay their debts,” said Denis Borisov from the Bank of Moscow. “Besides, China hopes to expand energy cooperation with Russia, in particular in the gas sector.”
The sides have been trying to coordinate gas prices for months. On Tuesday, Sechin said a 30-year gas supply contract would be ready for signing by June 10.
Russia can ship 30 billion cubic meters of gas to China annually by the western route and 38 billion by the eastern route.
Konstantin Simonov, head of the National Energy Security Fund, said haste is Russia’s biggest enemy now.
“Russia should exploit the situation, given the dramatic increase in Russian gas consumption in Europe, the Arab revolts, and Japan’s increased gas consumption after the Fukushima accident,” he said.
Gazprom CEO Alexei Miller said gas supplies to Europe increased 30% in May.
The electricity shortfall in China is expected to be 30 GW this year, Simonov said, adding that China’s energy demand will skyrocket. Its best option is to sign long-term contracts on pipeline gas supply, making the supplier dependent on the customer.
Vedomosti
Government to postpone tax cuts until 2013?
Russian government officials have failed to work out a suitable social tax solution and asked the president to postpone the planned cut until 2013. Experts say agreeing would be political suicide.
President Dmitry Medvedev in March ordered his government to explore ways of reducing businesses’ social security contributions (unified social tax) to 26% of a company’s payroll (the rate that was in effect prior to the rise to 34% at the beginning of this year). They were due to report back to him today with the agreed course of action.
That deadline has not been met. One senior government official said “We will not make a final decision before discussing each of the options with the president.” Although a Kremlin spokesman denied there was a tax meeting on Medvedev’s schedule, a representative of the president’s executive office said the meeting would take place in several days time. Officials with the agencies involved suggest it is likely to be next week.
One of the initial proposals was to cut the tax for nonretail small businesses to 16%-18% in 2012. Medvedev rejected that plan.
The Kremlin may be intent on cutting tax rather than granting benefits to “privileged” taxpayers but it has to date failed to produce any workable solutions. One high-ranking official said: “It would be senseless to cut this tax while raising others. That wouldn’t change anything.” Cutting the social tax would appease one group of taxpayers while causing outrage among others, a government official explained. He believes the whole pension system has to be reformed, which cannot be done overnight.
The government proposes delaying any change until 2013. “We are not opposed to cutting the tax,” an official said. The problem is, they do not have any viable ideas about how it should be done; nor have they developed any proposals about pensions, or the retirement age.
Cutting social tax and keeping the budget balanced requires changes to the pension system that will reduce the government’s contribution and increase the funded part of retirement pensions, said Natalia Akindinova from the Higher School of Economics. But this may be dangerous, with the elections around the corner.
The strongest argument in favor of further cuts to these social contributions is the possibility that businesses will simply evade taxes they deem exorbitant. However, the State Pension Fund’s first quarter statistics suggest that its receipts have grown. The fund received 585.3 billion rubles (about $21bn) in mandatory pension insurance premium, up 51.2% year on year.
“The government has painted itself into a corner,” said Igor Nikolayev, a partner at the FBK private auditing firm. First they disregarded the warnings and raised the social tax, now they want to cut it while raising other taxes. The president is unlikely to agree to postpone this decision for a year. “That would be political suicide,” Nikolayev said adding that the officials would probably reach a compromise, cutting the tax – but only slightly.
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