Seeks to Stop Reform of Russian Energy Giant

Journalist Moses Gelman has recently bought ten stocks of the Russian energy company RAO UES of Russia for 24 rubles.  A couple of weeks ago, Gelman went to the Supreme Court of Russia to sue the government. Gelman wants to declare one of government's decrees illegal. The decree in question was passed by the government last year.  The document was called “The Reform of the  Power Industry.”

According to Gelman, he purchased RAO UES stocks at the end of the past year from a friend of his. He said that he bought the stocks in order to stand up for the interests of the state. When  he studied the governmental decree concerning the reform of the power industry, the journalist came to conclusion that the document infringed upon the property rights of the state.

Gelman filed the suit on September 12. With his suit, he wants to prove that the governmental decree contradicted Article 71 of the Constitution. The above-mentioned article states that federal energy systems are under the complete authority of the Russian Federation.  Gelman believes that if the reform is conducted according to the document, then the state will be deprived of the right to affect the use and development of the country’s energy supply resources. In Gelman’s opinion, such reform will eventually cause a lot of damage to Russia and to him, since he is a shareholder. Gelman is certain that the profitability of his ten stocks will definitely be decreased if RAO UES of Russia is divided up into numerous smaller companies. This is a serious infringement upon shareholders’ rights.

Moses Gelman does not have any financial claims for the government yet. He just wants the Supreme Court to correct the mistake by canceling the decree. The claimant said that he hopes that the judge does not have a grounds for refusal, because an opinion of the Constitutional Court is required for the suit. In the long run, Gelman does not really believe that he will win the case.

Regions.Ru informs that Moses Gelman has extensive experience fighting with RAO UES of Russia  managers. In 1997, Gelman was employed for the newspaper Pravda-5. Back in those days, he was fighting with RAO’s administrator Boris Brevnov. The Russian State Duma ordered investigations into RAO UES of Russia twice because of the fight between Brevnov and Gelman.

A member of RAO’s governing board, Andrey Trapeznikov said: “I have known Gelman for quite a while.  He stands against any reforms. His newspaper the Industrial News published numerous “denunciations,” and he gave copies of it away to deputies. We do not treat people like him seriously.  There is nothing surprising about the fact that these people become more active prior to parliamentary hearings.”

On October 9th, the parliament will consider a package of documents concerning the power industry. RAO UES of Russia refuses to evaluate the perspectives of Gelman’s suit. They claim that it was Gelman’s right to raise doubts, whereas the court will decide the rest.

Some people think that Gelman's suit will be inevitably be dismissed. Alexander Branis, a top manager of the energy company Mosenergo, said, “There is no point in filing such lawsuits without some sort of political constituent, without any approval from the government.” According to Branis, Gelman’s arguments about the violation of the Constitution are far-fetched. “On the other hand, the claimant is right.  There is a possibility for smaller companies to become less profitable if  RAO UES of Russia is divided up into many smaller companies. However, the suit does not pay much attention to this issue,” Branis believes.

However, Gelman has a theoretical chance to win. The well-known Russian lawyer Henry Reznik recalled an occasion when the court ruled to cancel a governmental decree. “In 1998, there was a decree issued, which set increased rates for assignments to the pension fund. Soon, the pension fund cancelled the decree, having proved that it had infringed upon the Constitution.  It was ruled that the government passed a decree that should have been approved upon the base of a separate law.”