What are Russia's Losses Because of Yukos Scandal?

Are there any motives to cover up abuses of companies?
Director General of the United Machinery Group OMZ Kaha Bendukidze has made a decision to stand up for Yukos President Mikhail Khodorkovsky. He says that because of the action against Yukos the capitalization of the Russian stock market reduced by about $10 billion. The businessman says that Russia's total losses within the several days when the Yukos scandal developed were higher than the $283 million paid for 20 per cent of Apatit shares (the shares about the illegal purchase of which the scandal broke out).

So, the logic of the businessman is as follows: if the Russian economy suffers such great losses does it make sense at all to take up problems of the past, especially if they concern just some hundreds of millions of dollars?

The human position of people defending Mikhail Khodorkovsky is quite understandable. Anyone who has invested money into Russian assets has not a kindly attitude toward the General Prosecutor's Office as the investigation of the Yukos case may influence the value of the assets within the nearest half-year.

What losses of the Russian economy are actually meant?

Let's admit that if a small group of shareholders of Yukos and other Russian issuers (who are mostly foreigners) sell shares and others buy them at a lower price, then it has no effect upon the Russian economy. The billions that are said to be lost thus are just a value calculated on the basis of the price of shares circulating on the market and held by strategic shareholders.

This is perfectly clear that the higher the capitalization of a company is the easier it attracts loans and so on. This is what gives economy an additional stimulus. But the influence of the stock market upon the economic realities is mediated and indirect. This is obvious profanation when we hear someone saying that as a result of decline on the stock market Russia is losing some billions of dollars. What is more, this is deliberate manipulation of the public opinion.

This is interesting that the logic of Kaha Bendukidze contains not only arithmetical but also ethical defects. It seems that for him the loss of some virtual billions is quite a reason to cover up any abuses in the economic sphere. Then, if we follow the logic of the OMZ director general, the bigger is a company the bigger sins it can be forgiven. If an investigation is started concerning this company, then the stock market and the whole of Russia's economy will suffer losses, Kaha Bendukidze says.

If we follow the logic of the Russian businessman, then the USA should shelve the cases of Enron and other companies involved in economic crimes. The losses of Enron activity are incommensurable with the huge losses of the US market that it suffered as a result of several corporate scandals. Meanwhile, Americans have made a decision to investigate the case. Why?

May be they need such an experienced economic adviser and talented businessmen as Russia's Kaha Bendukidze to suggest the idea?

Arkady Izotov