How Do You Say "Help Me Eliot Spitzer" In Russian?
I never thought I would ever say or write the words in the title of this post. (Well, I only mean them in a jesting way, I don't need Eliot Spitzer to save me from myself because I might take a securities analyst's view as completely untainted and independent.) But how soon we forget. I guess seven years is long enough to forget names like Jack Grubman and Henry Blodgett. This Bloomberg article chronicles how Lloyd Blankfein, CEO of Goldman Sachs, prostrated himself before a Russian bank CEO and apologized because a Goldman analyst put a 'sell' rating on the bank. Just imagine these words being spoken just after dot-com bubble burst: ``If Goldman is not prepared to support stocks post-IPO, there are plenty of other underwriters that will.'' Wow. What a stunning admission. We have completely forgotten the spanking that Wall Street's reputation took when the world figured out the dirty secret of stock analysts's true purpose. Or maybe we learned that lesson for us here, but are happy to bring the old, corrupt model to Russia, where that kind of thing is more at home.
posted by Donny Baseball at 10:12 AM
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RUSSIAN IPO INVESTOR ALERT
French holders of Russian government bonds remind investors that the Russian Federation is still in default today (July 2007) on their estimate of some US$ 90 billion owed to them since the Bolshevik, then the Soviet, and now the Russian Federation governments have all unilaterally repudiated Tsarist debt and refused any form of contact or dialogue with their legitimate bona fide creditors.
They also remind investors that in its Sep. 15th 2006 report entitled "Governance matters: a decade of measuring the quality of governance", the WORLD BANK has rated Russia's governance comparable to that of Swaziland, Zambia and Kazakhstan. Russia came 151st out of 208 countries in terms of (...) accountability, quality of regulatory bodies, and rule of law, (...). In particular, rule of law (i.e. the courts and the quality of contract enforcement) was judged as effective in Russia as it is in Ecuador, Indonesia, and Bangladesh. Nicaragua, East Timor, and China's ability to control corruption was judged similar to Russia's.
On February 26th 2007 the St. Petersburg Times, quoting a report from Vedomosti, wrote that "Surgutneftegaz managers covertly hold 72 % of the secretive oil firm" and that Deutsche UFG analysts had had to "raise its estimate number of outstanding shares from less than 26 billion to (...) 43 billion" which "implies a 40% dilution in the value of the stock".
In Paris on April 3rd 2007 to launch the merged NYSE-EURONEXT entity Mr. John Thain, the New York Stock Exchange CEO, warned that he was "very concerned about the quality of corporate governance, the transparency of company financials and the protection of minority shareholders. A number of Russian companies raise serious questions around these issues."
Despite these findings, and the main rating agencies' knowledge that Russia is in default on US$ 90 billion of Tsarist debt, Russia is rated "INVESTMENT GRADE" whereas it should clearly be in "SELECTIVE DEFAULT".
French bondholders intend to pursue their claim until full settlement at present value, by any legal means and in any jurisdiction they deem appropriate.
EVERY POTENTIAL INVESTOR IN RUSSIA MUST BE MADE AWARE OF THESE RISKS.
FRENCH CREDITORS OF THE RUSSIAN FEDERATION STRONGLY ADVISE AGAINST ANY FORM OF INVESTMENT IN A COUNTRY WHOSE SOLVENT GOVERNMENT HAS IN THEIR VIEW SYTEMATICALLY REFUSED TO FULFIL ITS NATIONAL AND INTERNATIONAL CONTRACTUAL OBLIGATIONS, REFUSES ALL CONTACT AND DIALOGUE WITH ITS LEGITIMATE BONA FIDE CREDITORS, AND REFUSES TO DISCLOSE LIABILITIES WORTH US$ 90 BILLION.
July 2007
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