Standard & Poor’s, the international rating agency, demoted the corporate governance rating of TGK-9, a large power supplier, from 4+ to 4 and called it off at the same time. The Russian scale rating was also reduced from 4.8 to 4.4 and called off upon the company’s request.

‘TGK-9 corporate governance rating was limited by a pronounced decrease in the efficiency of the checks and balances system within the company’s BOD after the organization went through a restructuring process in 2007 and 2008. The influence of the new majority shareholder (KES) is now not counterbalanced properly. In addition, there appears to be a conflict of interests, as this controlling shareholder owns the stocks of some other power industry enterprises,’ the agency explains.

‘The company’s BOD is limited, so the minority shareholders have no way of efficiently balancing the majority shareholder’s influence. What is more, the financial flow among TGK-9 and the other power suppliers are far from being transparent to investors, as the company’s financial reports do not comply with the IAS,’ says Standard & Poor’s analyst Ekaterina Marushkevitch.