Moskovsky Komsomolets
Government powerless against pyramid schemes
Pyramid schemes continue to strip people on average incomes of their savings despite the government’s efforts. The problem was once again raised at the August 2 government presidium meeting, where Vladimir Putin said deceived investors will be paid back up to 700,000 rubles (abut $25,200) of their funds. But experts say this will not help defeat fraudsters.
“Sometimes pyramid schemes masquerade as consumer lending cooperatives, taking people’s money and promising high rates of return,” Putin said. Moskovsky Komsomolets has already reported that people often get back as little as 10% of the funds they invested in these fraudulent schemes. “We propose introducing amendments to the law that will help identify these fake cooperatives at an early stage and protect people from fraud,” he said. The Economic Development Ministry has submitted that law for consideration.
The prime minister believes the law will help identify pyramid schemes early on. Putin said that self-regulating organizations, including consumer lending cooperatives, will be able to file for bankruptcy much earlier, at the first indication that something is seriously amiss. Previously, legal action could only be launched against suspected pyramid schemes after the victims had lodged a complaint. Technically, these crooks can be charged with fraud when they stop making payments to their customers, but this is exactly when they disappear with the money.
Defrauded investors now stand a better chance. “In the event of bankruptcy, the claims of members will be paid first in the amount not exceeding 700,000 rubles, while directors of the cooperative that files for bankruptcy will receive their money after all others. I believe this is fair,” Putin said.
However, the main problem is that consumer lending cooperatives are essentially unaccountable, said Konstantin Selyanin, a bank official in charge of financial market operations. “They are not obliged to disclose information about their members or the structure of their assets,” he said. “Therefore they have carte blanche to do whatever they want. Oversight is carried out by the members’ general meeting, and is almost never effective,” the expert said.
This government-proposed measure will only protect people if a consumer lending cooperative goes bankrupt for market reasons. It does nothing to guarantee repayments to people who have fallen victim to pyramid schemes.
Selyanin said that it would be much simpler to prohibit archaic organizations like consumer lending cooperatives from operating.
Kommersant
Aviation fuel prices up, again
Jet fuel prices have begun climbing again in Russia as suppliers announced a 5% to 10% increase in the current rates on Tuesday. The growth is due to changes in global refined product quotes and a severe shortage in aviation fuel. Demand for jet fuel is five to six times greater than the supply at Russian commodity exchanges. Investors are expecting the traditional airfare increases.
On Tuesday, Russia’s airports announced new fuel prices. Sheremetyevo increased the cost of one metric ton of aviation fuel by 1,000 rubles. The same increase is expected at Domodedovo, on August 6. In Vnukovo, one ton of fuel will be 1,190 rubles more expensive. On average, jet fuel prices will go up 4.9% in Moscow. The oil news and research company, Kortes Centre, forecasts a 2% to 10% August increase in jet fuel prices for Russia in general.
A Kommersant source at TNK-BP puts the increases down to a “number of factors.” One is changes in the Platts Jet Fuel Price Index, which “was jittery in July.” The price first fell from $120 to $102 per barrel, then jumped back up and is now hovering around the $115-$120 level. Also, the source said, fuel at European airports is 10% higher, so overseas carriers want to top the tank in Russia, creating additional demand.
Vladimir Spiridonov, head of Aerofuels Group, added that many refineries are now producing winter diesel fuel for a state program. The Defense Ministry has also purchased large volumes of fuel.
Alexander Bylkin, from Petrokommerts, said Russian based airlines continue to attract new passengers which alone could account for 7% of the fuel shortage.
The government tried to hold the line on jet fuel prices as early as last winter, along with diesel prices. Prime Minister Vladimir Putin put pressure on the oil producers, and some even reduced prices. But later the increases resumed. Since the beginning of the year, Aerofuels Group reveals, fuel prices have increased 25% to 27%. The last bump was on June 1 – about 5% - when many airlines announced fuel surcharge increases.
Major carriers are now trying to hedge against price fluctuations. Transaero recently concluded a formula-based pricing agreement with Gazpromneft-Aero and TNK-BP to minimize risks.
Dmitry Gorin, head of the transport committee at the Association of Russia’s Tour Operators, believes most major airlines will be able to hold their prices, but mid-size carriers may be forced to increase fares over the next two weeks.
“Given the announced rise in aviation fuel prices, air fares for mid-size carriers are likely to go up by about ten euros,” believes Alexander Morozov, general director of Aviacharter. A Kommersant source at Sky Express explained that only large companies with high sales are able to hedge against the risks a few months ahead, while “smaller carriers are forced to pay current rates.”
Gazeta.ru
South Ossetia seeks entry to Russia-Belarus Union
South Ossetia no longer seeks to become a region of the Russian Federation; instead it wants to join the Russia-Belarus Union State as an independent member. There is one problem: it is not recognized by Belarus.
The issue of South Ossetia’s potential union with Russia was raised hours after the United States declared Russia’s actions as being the occupation of a self-proclaimed republic not recognized by the West.
The question cropped up again on Sunday, when Prime Minister Vladimir Putin visited a pro-Kremlin youth camp by Lake Seliger. Milana Rivazova from North Ossetia asked Putin: “Is South Ossetia’s union with Russia possible? It is our common problem, I mean for North Ossetia and South Ossetia. We are one ethnic group divided by a border now.”
Putin agreed “it’s a real problem,” but added that the solution will “depend on the Ossetian people themselves.”
This discussion came 24 hours after the U.S. Senate adopted a resolution recognizing Abkhazia and South Ossetia as regions occupied by Russia and asking Russia to withdraw its troops. Timed to coincide with the third anniversary of the Russia-Georgia war, it reminded Moscow of its failure to meet certain ceasefire agreement requirements, such as allowing the return of Georgian refugees. The resolution sparked outrage in Russia. Russia’s NATO envoy Dmitry Rogozin said “Russia cannot be said to occupy a country which it has recognized and which has invited Russia to station its forces on its territory. Had Russia stationed its troops in another country against its will, then that of course could be called an occupation.”
Officials in South Ossetia were prompt to comment, backing a different option: accession to the Russia-Belarus Union. “The South Ossetian people are historically oriented toward Russia and will never forget Moscow's historic decision to recognize South Ossetia in August 2008,” President Eduard Kokoity said.
Kokoity’s spokesman Vyacheslav Sedov said this decision must be made through a national referendum, which will take time, even if Belarus recognizes South Ossetia.
Teimuraz Mansurov, head of North Ossetia, sounded enthusiastic about a potential reunion. “I have no doubt as to the referendum’s outcome, if one is held,” he said.
However, Russia and South Ossetia will obviously be slowed down by Belarusian reluctance. “I don’t know why they had to raise this issue again. It is all so far-fetched,” Sergei Musienko, an advisor to the Belarusian president, said. “Minsk won’t change its policy, so South Ossetia might as well save its breath.”
Putin’s Seliger comments were clearly aimed at provoking Alexander Lukashenko into a harsh riposte, believes Kirill Koktysh, political theory professor at Moscow’s Foreign Relations Institute. Lukashenko’s reluctance to recognize the two independent republics has sparked conflicts between Russia and Belarus before. Another refusal could weaken his influence, argues Koktysh.
Vladimir Zharikhin, deputy director of the CIS Institute, believes joining the union state will offer South Ossetia all the benefits of integration without the corresponding responsibilities to Russia, such as military conscription.
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