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Medvedev Bid to Oust Officials From Boards Is 'Small Revolution'

April 3 (Bloomberg) -- Russian President Dmitry Medvedev's order to remove eight deputy prime ministers and ministers from the boards of major state-owned companies is a "small revolution," activist minority shareholder Alexey Navalny said.

Medvedev yesterday told the government to replace eight officials on company boards they also regulate as cabinet members, including Deputy Prime Ministers Igor Sechin and Alexei Kudrin and First Deputy Prime Minister Viktor Zubkov, by July 1. By Oct. 1, steps must be taken to remove all top state employees from the boards of public companies as part of a drive to improve Russia's investment climate, Medvedev said.

"It's very significant, it's a small revolution," Navalny, a corporate lawyer who has waged a campaign to improve corporate governance at Russian state-owned companies, said in a phone interview today. "His idea is really supported by business, by civil society."

Medvedev, 45, a former lawyer from Prime Minister Vladimir Putin's hometown of St. Petersburg, replaced Putin as president in 2008 because of a constitutional limit on more than two consecutive presidential terms. Putin, 58, a former Soviet intelligence officer, has kept the most power and Medvedev's move risks creating a conflict as it targets close allies of the premier, analysts say. Russia holds presidential elections next March and it still isn't clear yet who will run.

Medvedev has tried to widen Russia's investment appeal beyond energy to help accelerate economic growth to 10 percent from last year's 4 percent, and to match the pace in Brazil, China and India. The president said on March 30 that independent directors may replace ministers and other officials by mid-year.

Significant Resistance

The order, posted on the Kremlin website yesterday, requires Sechin to step down from three company positions including chairman of OAO Rosneft, the largest Russian oil company. Kudrin is to relinquish two posts including chairman of ZAO Alrosa, the world's second-biggest diamond company, while Zubkov must resign from three jobs that include his position at Russian Agricultural Bank, known as Rosselkhozbank.

"I'm still skeptical if Medvedev can do it, because the resistance from the companies and these specific individuals is significant," said Navalny, who pointed out that shareholder meetings must be held to carry out the management changes.

The presidential instruction also lists Defense Minister Anatoly Serdyukov, Transport Minister Igor Levitin, Agricultural Minister Elena Skrynnik, Communications Minister Igor Shchegolev, and Russian Energy Minister Sergei Schmatko who must leave the boards of nine companies, including OAO Gazprom.

"A lot of officials push their own interests in these companies," Navalny said. "For them this is real money and real influence."

Article ©2011 BLOOMBERG L.P. ALL RIGHTS RESERVED; article first appeared at www.bloomberg.com/news/2011-04-03/medvedev-bid-to-oust-officials-from-boards-is-small-revolution-.html

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