Business in Russia

Mechel bashing

Vladimir Putin’s attack on a mining company shows that nothing has changed

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Readers' comments



Russia is a large country, but the population is very small per square kil, and there are a numerous of poverty family, althoug the Russian economy is developing, but the wage is still very low, we can see the another scene, the Russia has been the bigest luxury market, we can see the Russian throw billions to buy a football club, why does it become the great difference? maybe the gap between rich man and poverty is largest in Russia, we must look into the reason, tracing history, it shapes those oligarch, but the history has pasted, Mr. Putin is taking measures to deal these problems, the attack service to general people. I support the attack.


Allegations about Yukos' executives' crimes including murder might or might not be true. Don't forget that one is innocent until proven guilty. In the case of Yukos the courts have clearly been subjective and their decisions null. Furthermore, those, supposedly many, Russian who want their "old" (Yeltsin era) oligarchs brought to "justice" should perhaps also become concerned about Mr. Putin's alleged multi-billion furtune (along with the fortunes of his entourage).


May be Mechel is evading taxes and doing other naughty things. But it did so quite probably long before the attack and it is quite probably in good company. The question then is why Putin attacks only Mechel only now.
Mechel might somehow have displeased Putin and/or he just wants to seize the assets and/or demontrate his power. Really important is his demonstration that he stands way above the law (and pretty anything else in Russia).
As this attitude is shared by a lot of lower functionairies and bureaucrats companies much smaller than Mechel might also pay the price.


"Business risk models for most companies do not include executives being sent to special prisons for several years" Well they should. Think Enron for example. And in the case of Yukos, most definitely. Just think! 8% of the world's oil reserves bought for less than half the amount spent by a "Russian oligarch" on an overseas house. Or put it another way, paying one USD for every USD 400 worth of oil. Not to mention that the Yukos owner "funded democracy" as some Western broadsheets put it, by giving lotsa money to politicians just before a bill was being discussed which about to raise tax rates on oil when the price of oil reached a certain level. Again in the case of Yukos perhaps the business risk model involved would have been more realistic if it had provided for its happening consideration that one of Yukos's top people has been charged with murder of the mayor who tried to raise local rates on his region's oil output. The wanted man like other Yukos oligarhs "took refuge" in Israel.

Indiana Johns

Putin's statements were not entirely uncalled far. The Economist article does not tell the whole story since Putin's claim was that selling the product abroad at bargain prices was a part of a tax evasion scheme. Mechel allegedly sold its product to its own offshore subsidiary in order to avoid taxes, which in my opinion is entirely plausible. So, just like Yukos, Mechel is likely running tax a major tax evasion scheme. Of course, Putin's intention might not be entirely benign here, but if the Russian companies want to avoid such confrontations they had better start paying their taxes!


Well the whole point is this? Is it true that this company is charging Russian people more than its customers overseas? If so to Russians it shows the ugly face of capitalism and they see such enough ugly faces anyway. This to me is the key question. The overwhelming majority of the Russians want to see the people who are called Russian oligarchs, and who Russians think are neither, punished. When one hears that the Yukos owner "bought" 8% of the world's oil reserves for less than half the amount for what another "Russian oligarch" paid for a property in London, and knowing that many honest, heroic people tried to defend the living standards of fellow countrymen with their lives, including the honest and extremely popular mayor of the area which gave the new owner much of his wealth, you are bound to agree with the ordinary Russian in the street.Russians are disappointed that Britain instead of jailing people whom they judge as arch-criminals, or at least pass them over to Russian courts or to other countries who are also "interested" in their activities, allow them to appear as experts on democracy in popular TV peogrammes.My conclusion about Putin's remarks. It's true!


Are you sure that in "civilized" US and EU the government are not used as a weapon? How about the Iraq's war foi oil, when these civilized governments are about to settle a deal rewarding their national oil companies after the bloodshed? Where are the Mass Destruction Weapons which motivated Iraq's invasion? Only idiots believe that rule or law has any value in "civilized" Europe and US.


Here we go again. Putin and his KGB elite are going to acquire a large and valuable capital asset by using the government to attack the company and then funnel the assets to Putin and his friends. The rule of law means little to these kinds of people. They take what they want and use the government as a weapon.

In a civilised country, companies are not destroyed or stolen by government officials. One expects it in Zimbabwe or in Russia but not in the US or EU. That is one reason these economies, over time, lead the world.

I don't invest in Russia as it is too uncertain and lawless.

Best regards

Alter Native

Is this about the treatment of Mechel or the treatment of BP? Mechel is accused: a prerogative of the Russian government. The market responds by marking down the shares of Mechel: a prerogative of the market. Everyone's is justified in their actions so far apart from the Economist. The newspaper has raised the spectre of a witch hunt and a breach of the rule of law. Which Russian law has Putin broken so far in this matter? Is this really about Mechel or an attempt to turn up the heat on Russia on behalf of BP?


And no one mention of simple book called "Tax Code of RF". Of course what significance this book can have for Mechel subject.


Russia x UK: a serpent trying to swallow a snake. The rule of law is the less important thing when these countries are disputing its positions. The emergent Russia trying to teach capitalist tricks to submergent UK. Who will be the winner? Not known, but for sure the global civilization is the loser.

Measure twice and cut once

This is puzzling, as Russian companies are acquiring international companies with their USD from oil and other resources. They rely on rule of law to make and hold thrse investments.

The positive part of this situation is that the Russian government may realize that rule of law is more effective, cheaper and less disruptive than denunciations of large companies by senior officials.

Also, to get high-tech joint ventures into Russia following these Yukos and BP and Mechel may require even more carrots as international companies may decide to invest in other nations. Business risk models for most companies do not include executives being sent to special prisons for several years; the risk of such outcomes can mean that lucrative potential profits are ignored.


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