#18
Gap between good and bad Russian firms widens

MOSCOW, Jan 15 (Reuters) - The gap between Russian companies who treat shareholders well and those who treat them badly is widening, a corporate governance expert said on Tuesday.

Investor perceptions of a big improvement in corporate practice among top Russian firms, once renowned for almost universally riding roughshod over shareholders, was seen as one of the key factors in spurring a rise in local shares last year.

Dmitry Vasilyev, head of corporate governance ratings agency the Institute of Corporate Law and Corporate Governance and former head of Russia's stockmarket watchdog, said a new survey of 30 companies showed changes among firms and within sectors.

"In the first three quarters of 2001 the gap between the quality of corporate governance seen in the best and worst companies grew," he told journalists.

"The difference is also growing within individual branches of industry, for example, telecoms," he added.

Positive developments in the period included a sharp improvement in the quality of financial reports presented by the best companies and the fact that a lot more information was available on their websites, said Vasiliev.

He also said there had been positive changes in the structures of boards, with more independent directors appearing.

However, he said there had been an increase in the number of companies with unequal shareholder rights written into charters and the number of managers with too much power.

Russia's second largest telecommunications company, Vimplelcom, topped the list, while the country's largest mobile phone company Mobile TeleSystems made the list for the first time, pushing in at number two.

Moscow Department store GUM was at number three while utilities UES, Lenenergo and Mosenergo took the next three places.

Oil firms came in much further down, although their reputation has generally improved since the days in the mid and late 1990s when they were seen as the most grievous corporate governance sinners.

Number six producer Sibneft was the first oil company to appear, coming in at number 11, while number one producer LUKOIL only managed to tie at number 23.