Mortgage Auctions property - this is one of the ways to obtain a government loan secured by state securities of the Central Bank. They were held in 1995 by decree of the president. As a result of privatization, a number of commercial banks received stakes in large companies.
Background
In 1995, the state budget deficit was 8% of GDP. To finance it, it was necessary to sell state property in the amount of $ 1 billion. But the State Duma banned the privatization of companies before the election. Therefore, a scheme was developed to sell state assets through loans. Collateral auctions were organized by the RF State Committee for Property Management. The winner was the company that offered the maximum loan amount.
Conditions
Initially, it was planned to put up for sale blocks of shares of 42 companies. According to the results of auctions, out of 16 presented 4 were unclaimed. The total amount of loans amounted to $ 800 million.
Under the terms of the transaction, the borrower was supposed to pay off the debt in full by September 1996. This did not happen, so the shares were transferred to lenders. Since collateral auctions were held between banks and the state, it turns out that credit institutions provided the government with a loan from its own funds.
Mortgage Auctions: a technology for generating income from scratch
So, as a result of transactions, banks became the owners of the Central Bank of the largest companies in the country. From a legal point of view, there were no violations. But only until the first part of the Civil Code of the Russian Federation came into force, fixing a new model of legal relations. The creditor could receive part of the value of the pledged property at the expense of his funds, and not the object itself. To do this, repeated mortgage auctions were to be held, but already in public.
But the scheme was artificially complicated. In addition to the loan and pledge agreement, a commission agreement was concluded. The state instructed the winner to sell the Central Bank. That is, the pledge holder simultaneously became a commission agent. Most likely, such a scheme was invented in order to avoid judicial penalties. The right to conclude a commission agreement could be transferred to another person. Then the implementation of the Central Bank engaged in affiliated digging. those. in this case, the sale of shares would not be carried out by the bank itself, but by another person. In fact, credit institutions themselves sold the Central Bank.
Reasons for failure
After B. Yeltsin won the election, the government had a theoretical chance to return funds to creditors. But that did not happen. Russia was in a fiscal crisis. Funds in the budget were sorely lacking. This led to the default and devaluation of the ruble. There was no opportunity to pay collateral auctions. Attracting financing from Western banks under the same conditions was more difficult. There was no guarantee that the acquired corporate rights could be sold profitably. But there is also a third reason. Redemption of the Central Bank - violation of the conditions of the game. Lenders invested in the enterprise, organized a new management there and began to pay taxes to the budget.
results
The report of the Audit Chamber of the Russian Federation “Analysis of privatization of state property”, published in 2004, said that collateral auctions in Russia led to the alienation of federal property. The reason was called initially low prices and the "feigned nature" of the competition. In addition, a number of violations were identified.
Firstly, there were no competitions as such. Out of 12 lots, only 4 out of the loan amount exceeded the initial price.
Secondly, bank mortgage auctions were funded by the state. Moreover, the funds were not directed to the Central Bank, but remained on specialized accounts of credit institutions.
As a result, collateral auctions were officially declared ineffective. The reviews, which were then published in the media, once again confirm that the whole procedure was invented with the aim of buying out the companies for their original price.
According to the Civil Code of the Russian Federation, collateral auctions have all the signs of a pre-planned transaction between a group of interested parties. The purpose of the operations is the alienation from the state of ownership of the best oil refineries in the country in the form of CB packages. The approximate value of the assets is $ 40 billion. From the point of view of the Criminal Code, theft of property takes place on a very large scale. The cost of some facilities in 1995 was specially underestimated by 20 times.
Consider several examples of the implementation of the described scheme.
Yukos
At a 1995 auction, the Central Bank put up the second-largest oil company in Russia. Yukos was part of the Samaraneftegaz company. In terms of oil reserves, the holding was considered the richest in the market. Therefore, the demand for stocks was high. 45 percent of the shares were put up for sale.
A month later, Inkombank, Alfa-Bank and Russian Credit offered $ 350 million for the concern. Menatep Bank was responsible for registering applications. He did not miss the application of the consortium, since part of the funds for the repurchase was offered in the form of government bonds, and not in money. According to the results of the bidding, Yukos went to Menatep for 9 million rubles.
"Norilsk Nickel"
Shares of the largest exporter and shareholder of Onexim Bank were also put up for auction. The biggest offer came from Comte. She represented the interests of Russian Credit Bank. They were ready to pay $ 355 million for Onexim-Bank. But the registration of the application was refused due to the lack of financial guarantees. As a result, the Onexim-Bank branch won the auction, having paid $ 170.1 million for the Central Bank. This amount was $ 100,000 more than the starting one.
A few weeks later, 51% of the oil giant Sidanko was put up for sale. Russian Credit tried to file an application, but Onexim-Bank did not accept it again. This time, the official reason for the refusal was the lack of a deposit. Needless to say, the auction was won by the IFC associated with Onexim Bank. For "Sidanko" paid only $ 5 million.
Effects
One of the reasons for the strong decline in living standards was mortgaged auctions of banks. According to demographer N. Eberstadt, in Russia the “excess mortality” for the next six years amounted to 2 million. In the First World War, Russia lost 1.7 million people. Children suffered the most. The percentage of "refuseniks" in 1997 was a record 1.3 million newborns (9%).
Conclusion
The participants in these processes were well aware that the state would not be able to repay loans on time. Why then did the banks agree to such a scheme? Credit institutions received most of the profit from servicing the accounts of the largest exporters — those very enterprises that were put up for auction. Banks needed guarantees that funds from accounts would not go anywhere. Perhaps this was the reason why collateral auctions were held.
