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28 Nov, 2008 06:23

Independent Directors rise in prominence on Russian company boards

Oleg Deripaska's RusAl has nominated two independent directors for the Norilsk Nickel board this week, as part of the resolution of a long running shareholder dispute. Settling such disputes in corporate Russia can be tricky business.

Billionaires Vladimir Potanin and Oleg Deripaska this week have finally buried the hatchet in their long-running battle over Norilsk Nickel. A key part of the peace deal is bringing 3 independent directors on to the board. A state representative will also act as an arbiter on the board, looking after the interests of VEB. The state bank has guaranteed the stake held by Deripaska's RusAl, and Vladimir Potanin is expecting independence.

“The representative of the state can be independent. We do not exclude this.”

Earlier President Medvedev strongly backed the trend but Aleksandr Filatov, Head of Russia's Association of Independent Directors, says state officials did not prove as effective.

“Even state companies now have independent directors. This year will show whether it was a good experiment. State officials were not sufficient. The best corporate governance is not in the corridors of power.”

Another of the country's most high-profile shareholder battles – at oil firm TNK-BP – is also being settled with the help of independents. On Monday, the company will name an independent CEO to balance the interests of BP and the Russian shareholders.

But independents aren't always the complete answer to corporate governance concerns. After all, American bank Lehman Brothers had 10 independents on its 13-member board. But it still crashed to bankruptcy under the weight of billions of dollars in toxic debts.

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