Kernel of truth

21 September 2010 By Jason Bush

The metals group controlled by Oleg Deripaska has lambasted Norilsk’s governance and performance, saying they saddle the miner with a $20 bln discount. Deripaska makes an unlikely shareholder champion, but his governance criticisms are valid. Sadly the rest is less convincing.

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Russian aluminium giant RUSAL, a 25 percent shareholder in miner Norilsk Nickel, is lobbying western investors to support the election of a new board of directors for Norilsk at an Extraordinary General Meeting on Oct. 21. In a presentation to investors, also published on a website called "Save Norilsk Nickel", RUSAL has outlined a programme for change, which it says will boost Norilsk's market capitalisation by $20 billion.

RUSAL and Norilsk Nickel have provided conflicting interpretations of a letter from Russia's Prosecutor General, outlining the results of an official investigation into the conduct of Norilsk's Annual General Meeting in June.

In a press release, RUSAL said that the Prosecutor General's investigation "confirms violations" in the conduct of the meeting. Norilsk Nickel has responded by stating: "MMC Norilsk Nickel did not violate the existing legislation of the Russian Federation and did not receive any points of criticism from the General Prosecutor's Office", calling claims of alleged machination by Norilsk's management "groundless".

RUSAL is engaged in a public dispute with both Interros and Norilsk's management. It has called for management changes and launched legal action to overcome the outcome of Norilsk's Annual General Meeting, held on June 28. It accused Norilsk's management of "manipulation" of voting, and "gross violations of corporate governance procedures", after losing one of its four representatives on Norilsk's 13seat board.

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