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Dark past haunts "Transneft"
During the mid-1990s, Transneft remunerated its employees by paying them in preferred shares of the Company’s stock, which, in turn, led to an opaque paper trail for the owners. However, an attempt to “clean up” the scheme has led to some problems for the Company, as shareholders are demanding payment for unpaid monies. Consequently, this has led to the parties to go to court in order to sort out the matter, and the minority shareholders are losing thus far.
Transneft issued shares to the employees of its subsidiaries during privatisation in 1995. Two years later, a decision was made to “consolidate”, so the Company began collecting the shares. Several of the owners sold their shares, while the remaining owners signed fixed-rent agreements.
“In 1997, salaries were not very high at Northern Long-distance Oil Pipeline (NLOP is a subsidiary of Transneft), and employees were often paid in Transneft shares. I received 84 preferred shares,” Vasily Pozdeev, who worked for the company for 33 years, has told RBC daily. These employees were then asked to give power of attorney to the officials of NLO, and then later learned that fixed-rent agreements and a suretyship (Transneft was the guarantor) were signed on their behalf. The Transneft shares were the subject of the agreement (rent was set at RUB 255 per share), and an increase in rent payments depends on the profitability of the paying party (NLOP).
Igor Demin, an advisor to the head of Transneft, Nikolai Tokarev, recalls that obvious fraud was committed against employees through heavy-handed administrative action in the mi-1990s, when the employees were forced to sign cleverly drafted documents or face being dismissed.
In 2011, federal law No. 363-FZ “On Amending Separate Legislative Acts of the Russian Federation” was adopted, under which the amount of rent paid per month must not be less than the minimum cost of living in the relevant constituent entity or in Russia in general; and the law is applied retroactively. A tenant is required to pay rent by taking into account the minimum cost of living at the time of signing an agreement, notes Anastasia Vasilenko, a lawyer at ART DE LEX.
However, the Company is not keen on recalculating retroactively from 1997, so it has sent all rent recipients a supplemental agreement to sign (RBC daily has obtained a copy), under which federal law No. 363-FZ is applicable as of 1 December 2011, when the law came into force. Currently, NLOP pays the cost of living minimum under the contracts, and paid out RUB 119,000 in 2012 and has paid out RUB 59,000 for the first half of 2013 as per each agreement, the head of PR for NLOP, Svetlana Bondareva, has told RBC daily. Ms. Bondareva has also said that the Company will not recalculate for the period up to December 2011, as “the Company has sent rent recipients an offer to amend the agreement, and sufficient and sensible measures have been taken to bring the rent agreement in line with legislative requirements”.
Supplemental agreements have been signed out of court with NLOP for 139 of the current 196 fixed-rent agreements, a Company official has told RBC daily. Mr. Pozdeev, who is retired, is among those who have not signed the supplemental agreement. “If NLOP were to recalculate all of the money as of 1997, then I would receive around six hundred to seven hundred thousand roubles, which would allow me to move from a studio to a one-bedroom apartment; however, now they want to deprive me of this money”, says Mr. Pozdeev. The parties have not been able to reach a compromise, and, in June, NLOP filed a lawsuit with the Ukhta City Court against the Transneft minority shareholders “on being compelled to amend the fixed-rent agreement”. However, this is not the only lawsuit, as RBC daily has information that there are three similar NLOP cases. The NLOP PR official has explained that the Company has filed 55 lawsuits, with the court ruling in favour of NLOP in 43 of them; another lawsuit has been dismissed; and the rest are currently still under review.
According to Ms. Vasilenko, the correction in the amount of payment (from RUB 14 to the cost of living minimum, which is RUB 8,408 in the Komi Republic) is a substantial change in the conditions; therefore, the Company has the right to request a review or cancellation of the contract via the courts.
During the first hearing on 16 July, Mr. Pozdeev filed a counter suit, claiming that he is not obliged to sign the supplemental agreement whose conditions are practically being imposed by the Company. “The only reason for NLOP to file a lawsuit to compel me to sign the supplemental agreement is the illegal attempt to deprive me of the right to receive rent payment at the cost of living minimum as from the moment of having signed the rental agreement, and also to relieve the respondent of the responsibility of adhering to the suretyship agreement”, Mr. Pozdeev has indicated in the counter suit. If the suretyship agreement is removed, then there is the risk that the rental agreement itself could be cancelled, believes Mr. Pozdeev.
In the counter suit, Mr. Pozdeev has also indicated the unfair amount of payment under the contract; for example, in 2009, he received RUB 14.01, while a dividend of RUB 250.40 was paid for each preferred share. “Under the fixed-rent agreement, I would receive RUB 21,000 for the sale of 84 shares, although I should be able to receive more than 6 million roubles. Is it different for someone who is retired?” says Mr. Pozdeev. (Transneft preferred shares are currently trading at RUB 83,000 per share on the Moscow bourse.)
If a shareholder believes that rental payment is undervalued, he may file a corresponding suit with the courts by presenting a calculation of the rental payment that he reckons should be paid to him, agrees Zinaida Zakharova, a lawyer with the law firm Yukov & Partners
“The actions of the directors may only be judged from a moral standpoint. Today, it is complicated to take a legal decision that would suit all parties; therefore, the courts must find a solution to this matter”, says Igor Demin. At the same time, Mr. Demin believes that NLOP’s directors are formally obliged to protect the interests of the Company. “We do not believe that those who have filed the lawsuits are trying to break something up. If the Company’s directors do not take the right decision in the interests of the Company, then they could be held correspondingly responsible”, explains Mr. Demin.
Transneft issued shares to the employees of its subsidiaries during privatisation in 1995. Two years later, a decision was made to “consolidate”, so the Company began collecting the shares. Several of the owners sold their shares, while the remaining owners signed fixed-rent agreements.
“In 1997, salaries were not very high at Northern Long-distance Oil Pipeline (NLOP is a subsidiary of Transneft), and employees were often paid in Transneft shares. I received 84 preferred shares,” Vasily Pozdeev, who worked for the company for 33 years, has told RBC daily. These employees were then asked to give power of attorney to the officials of NLO, and then later learned that fixed-rent agreements and a suretyship (Transneft was the guarantor) were signed on their behalf. The Transneft shares were the subject of the agreement (rent was set at RUB 255 per share), and an increase in rent payments depends on the profitability of the paying party (NLOP).
Igor Demin, an advisor to the head of Transneft, Nikolai Tokarev, recalls that obvious fraud was committed against employees through heavy-handed administrative action in the mi-1990s, when the employees were forced to sign cleverly drafted documents or face being dismissed.
In 2011, federal law No. 363-FZ “On Amending Separate Legislative Acts of the Russian Federation” was adopted, under which the amount of rent paid per month must not be less than the minimum cost of living in the relevant constituent entity or in Russia in general; and the law is applied retroactively. A tenant is required to pay rent by taking into account the minimum cost of living at the time of signing an agreement, notes Anastasia Vasilenko, a lawyer at ART DE LEX.
However, the Company is not keen on recalculating retroactively from 1997, so it has sent all rent recipients a supplemental agreement to sign (RBC daily has obtained a copy), under which federal law No. 363-FZ is applicable as of 1 December 2011, when the law came into force. Currently, NLOP pays the cost of living minimum under the contracts, and paid out RUB 119,000 in 2012 and has paid out RUB 59,000 for the first half of 2013 as per each agreement, the head of PR for NLOP, Svetlana Bondareva, has told RBC daily. Ms. Bondareva has also said that the Company will not recalculate for the period up to December 2011, as “the Company has sent rent recipients an offer to amend the agreement, and sufficient and sensible measures have been taken to bring the rent agreement in line with legislative requirements”.
Supplemental agreements have been signed out of court with NLOP for 139 of the current 196 fixed-rent agreements, a Company official has told RBC daily. Mr. Pozdeev, who is retired, is among those who have not signed the supplemental agreement. “If NLOP were to recalculate all of the money as of 1997, then I would receive around six hundred to seven hundred thousand roubles, which would allow me to move from a studio to a one-bedroom apartment; however, now they want to deprive me of this money”, says Mr. Pozdeev. The parties have not been able to reach a compromise, and, in June, NLOP filed a lawsuit with the Ukhta City Court against the Transneft minority shareholders “on being compelled to amend the fixed-rent agreement”. However, this is not the only lawsuit, as RBC daily has information that there are three similar NLOP cases. The NLOP PR official has explained that the Company has filed 55 lawsuits, with the court ruling in favour of NLOP in 43 of them; another lawsuit has been dismissed; and the rest are currently still under review.
According to Ms. Vasilenko, the correction in the amount of payment (from RUB 14 to the cost of living minimum, which is RUB 8,408 in the Komi Republic) is a substantial change in the conditions; therefore, the Company has the right to request a review or cancellation of the contract via the courts.
During the first hearing on 16 July, Mr. Pozdeev filed a counter suit, claiming that he is not obliged to sign the supplemental agreement whose conditions are practically being imposed by the Company. “The only reason for NLOP to file a lawsuit to compel me to sign the supplemental agreement is the illegal attempt to deprive me of the right to receive rent payment at the cost of living minimum as from the moment of having signed the rental agreement, and also to relieve the respondent of the responsibility of adhering to the suretyship agreement”, Mr. Pozdeev has indicated in the counter suit. If the suretyship agreement is removed, then there is the risk that the rental agreement itself could be cancelled, believes Mr. Pozdeev.
In the counter suit, Mr. Pozdeev has also indicated the unfair amount of payment under the contract; for example, in 2009, he received RUB 14.01, while a dividend of RUB 250.40 was paid for each preferred share. “Under the fixed-rent agreement, I would receive RUB 21,000 for the sale of 84 shares, although I should be able to receive more than 6 million roubles. Is it different for someone who is retired?” says Mr. Pozdeev. (Transneft preferred shares are currently trading at RUB 83,000 per share on the Moscow bourse.)
If a shareholder believes that rental payment is undervalued, he may file a corresponding suit with the courts by presenting a calculation of the rental payment that he reckons should be paid to him, agrees Zinaida Zakharova, a lawyer with the law firm Yukov & Partners
“The actions of the directors may only be judged from a moral standpoint. Today, it is complicated to take a legal decision that would suit all parties; therefore, the courts must find a solution to this matter”, says Igor Demin. At the same time, Mr. Demin believes that NLOP’s directors are formally obliged to protect the interests of the Company. “We do not believe that those who have filed the lawsuits are trying to break something up. If the Company’s directors do not take the right decision in the interests of the Company, then they could be held correspondingly responsible”, explains Mr. Demin.