RUSSIAN ALUMINIUM THE WORLD’S LARGEST REMOVALIST

The acuity of Sherlock Holmes was famously tested by the clue of a dog which didn’t bark. It was the case of Silver Blaze, in which a plot to steal a prize racehorse is solved when  a watchdog’s refusal to bark exposes that he knows the perpetrator, the dog’s owner.

The announcement this week that Russian Aluminium (Rusal), Siberian Ural Aluminium (SUAL), and Glencore have signed an agreement between themselves to form a mergerd company, to be called “United Company Rusal” – purportedly to become the world’s largest aluminium producer — required no feat of detection, because Deripaska’s PR dogs have been barking about this deal for several weeks in the promotional media of London. Much of this noise was angled to apply pressure by Oleg Deripaska, the Rusal owner, to increase the value of his stake at the expense of Victor Vekselberg, SUAL’s owner. On that score, the only loser was Glencore, the private Swiss metals trader, which has been cut from 14% to 12% in the proposed new Rusal shareholding. Deripaska helped himself to 1.5% of that loss, and Vekselberg got 0.5%. They end up with 66% and 22%, respectively.

Brian Gilbertson, the chief executive of SUAL since August 2004, managed to hang on to a precarious position as non-dealmaker and non-executive chairman of the new group, a multi-million pound bonus promised by Vekselberg deferred until the new Rusal manages to sell its shares in the London market. Since Vekselberg had hired Gilbertson to do that for SUAL, and he failed to do it in two years’ of trying, Vekselberg is reportedly as unenthusiastic about rewarding Gilbertson as Deripaska.

The clue to Gilbertson’s bonus, not to mention the fate of the two aluminium companies which Vekselberg and Deripaska control, lies with several dogs who, for days after the the deal announcement, have signally failed to bark. These include those owners of Rusal and SUAL assets, who have evidence that Deripaska and Vekselberg have defrauded them. About $4 billion in asset value may have to be subtracted from the new Rusal, or set aside as contingency for compensation payment. Another dog yet to bark is the European Bank of Reconstruction and Development (EBRD), which in January of this year announced an endorsement of Deripaska’s business practices, but has since covered up evidence it claimed did not exist, and the evidence subsequently produced in High Court proceedings and judicial rulings in London. Deripaska’s lawyers are trying desperately to suppress the court documents at this very minute. They failed this week to stop the British Broadcasting Corporation going to air with a less than sanguine account of Deripaska’s history.

Russian government officials were much swifter to ensorse the last great sale of Russian assets to a foreign company, when in 2003 Mikhail Khodorkovsky disclosed he was selling Yukos to ExxonMobil, followed by a meeting between then Prime Minister Mikhail Kasyanov and US oil executives. They claimed they had Kasyanov’s blessing. So far, Prime Minister Mikhail Fradkov has said nothing at all, and that’s not because he doesn’t know, or does know, or doesn’t dare guess, what Putin thinks of the deal. The fate of Khodorkovsky’s gamble on Putin’s permission is very well-known. And so is the fate of the last great merger attempt of strategic Russian resources – Khodorkovsky’s merger of his Yukos assets with Roman Abramovich’s Sibneft. When that aborted, and Khodorkovsky went to jail, Abramovich remained to profit from a Kremlin-directed takeover of them both. For months, advisors of Vekselberg have acknowledged their apprehension of a state-directed acquisition of SUAL along those lines.

For the time being, ministerial-level officials have made remarks too general to be construed as approval of a foreign takeover of all of Russia’s bauxite, alumina, and aluminium assets. The head of the federal Anti-Monopoly Service,