State Corporate Governance in Russia

Figures & data

FIGURE 1. Holding Structures of the Rostec Aviation Cluster

Sources: Rostec (2015a, 2016a, 2017).

Notes: M: management; T: turnover; W: workforce; E: entities (designers, manufacturers, joint ventures).

TABLE 1 UAC Corporate Indebtedness and State Capitalisation

	2007–2011	2012	2013	2014	2015	2016	2017	2018**	2019	2020
Turnover in
Billion Rubles		171	220	294	352	417	451	411	351.3	431.9
Billion US$		5.5	6.9	6.8	5.3	6.8	7.4	6.2	5.4	5.9
Net loss in
Billion Rubles		5.5	8.7	13.6	109	4.8	5.8 (2.6***)	18.5	60.5	165
Million US$		227	422	351	1,677	71	97 (43)	280	943	2,282
∑ in million US$										6,342 (6,288)
State target programmes* in
Billion Rubles		98	58	50.6	71.3	86.9	105.9	88.6
Billion US$		3.16	1.81	1.29	1.09	1.30	1.76	1.34
∑ in billion US$								11.75
Capitalisation by the state, (shares, bonds) billion rubles	92.2	14.4	4.2 + 46.3	12.3	126	33	74	56.5	10.2
Billion US$	3.6	0.466	0.131 + 1.1	0.318	1.761	0.494	1.121	0.897	0.158
∑ in billion US$									10
Indebtedness
Long-term and short-term in billion rubles		367	441	640.0	723	829	805	945	1,024	1,128
Billion US$		12	14	16.4	11	6.4	13.4	15.0	15.8	15.6

Sources: Own figure based on annual reports of UAC from 2007 to 2017, available at: http://www.uacrussia.ru/ru/investors/open-information/godovye-otchety, accessed 12 September 2021; ‘OAK v 2019 godu uvodila chityy ubytok po MSFO’, Interfax, 8 May 2020, available at: https://www.interfax.ru/business/707908, accessed 12 July 2021; ‘Ubytok OAK po MSFO v 2020 gody vyros v 2,7 raza’, Finmarket, 1 May 2021, available at: http://www.finmarket.ru/news/5462795, accessed 12 July 2021.

FIGURE 2. Share of Export and Government Contracts

Sources: Own figure based on OAK Annual Report 2017, available at: https://www.uacrussia.ru/upload/iblock/af2/af2d72c8b7ed1bb8d76cae232dd1f87c.pdf, accessed 12 July 2021; Russianplanes.net, available at: https://russianplanes.net/planelist/Tupolev/Tu-204/214; https://russianplanes.net/planelist/Antonov/An-124; https://russianplanes.net/planelist/Sukhoi/SuperJet-100; https://russianplanes.net/planelist/Ilushin/Il-96, accessed 12 July 2021.

FIGURE 3. UAC Organisation Chart 2017

Source: Own figure based on OAK (2017a).

Notes: S: stakeholder; M: management; W: workforce; Mod: model of aircraft; Ch: chairholder; P: president.

TABLE 2 Forms of State Corporate Governance in the Aviation Industry (dominant characteristics)

	UAC (PJSC) gubernatorial SOE model		Rostec (NPO) presidential NPO model
	Formal	Informal	Formal	Informal
Ability to act	low		high
– Autarchy	moderate	subversive	high	supportive
	subordination to governmental control (via boards); low market control but higher transparency and disclosure requirements; high innovation potential and dependence on state support →  moderate juridical autarchy and low economic autarchy	special influence of individual DBs, but dominance of top-down influence from government body as well as Rostec → high external influence	no subordination to government bodies and market forces, low external control; high political support and presidential protection; access to state resources, monopoly markets → high legal and economic autarchy	personal relation to president; diversified network with strong bottom-up influence on state agencies and power over other economic actors → securing the access to state resources and privileges
– Fragmentation	low–moderate	subversive	low	supportive
	high industrial integration (via holding); reorganisation of the division of labour; dependence on Rostec (supply chain and export) → coordination of different interests	high level of inter- and intra-corporative fragmentation → uncoordinated state governance	via majority shareholdings and supervisory boards internal control over subsidiaries → high level of integration	strong monocentric personal network system; targeted and coordinated external networking → effective access to state resources and regulations
Target congruency	moderate		low
– Incentives	moderate	subversive	high	subversive
	political support; high technical but low industrial and economic feasibility → difficulties in implementing modernisation targets	high product and low process orientation → selective target congruency (incentives for private expropriation plays minor role)	political and financial support; high economic freedom; bespoke political target projects → high incentives for target implementation	very high incentives for private expropriation and externalisation of costs → incentives for self-serving-businesses are higher than for formal target implementation
– Sanctions	medium		low
	slow (short-term) sanctioning; strengthening of corporate-power-vertical (long-term) → stagnation	mutual blocking measurements → stagnation	low state and market control, compensation and expansion schemes (M&A), monopoly rights → quantitative growth	suspended punishment → protection of misuse of competences and resources (further distortion of targets)
Modernisation potential and economic efficiency	low qualitative growth, despite high innovation potential, and high agency costs (because of mutual blockages, slow decision making, slow/no restructuring, growing production costs, quality and service problems, low sales); survival strategy: state financed indebtedness (and state orders)		low qualitative growth and high agency costs (self-serving business schemes), growing production costs and quality problems; high informalisation and de-economisation; survival strategy: expansion strategies

TABLE 3 UAC Board of Directors 2019–2020

	UAC	From	Formal relations	From	Informal relations
Yuri Slyusar	President; chairman of most UAC subsidiaries	2015	Former Deputy Minister of Industry under Manturov	2012–2015	Sergey Chemezov, strong relations via his father Boris Slyusar
Alexander Serdyukov	Chairman	2017	Rostec, head of aviation cluster, chairman of most Rostec aviation companies	2015	Sergey Chemezov, via Yuri Borisov former Minister of Defence, Deputy Prime Minister
Oleg Bocharov	BOD	2017	Ministry of Industry and Trade, Department for Aircraft and Radio Electronic	2017	Denis Manturov
Artem Dovlatov	BOD	2019	State corporation VEB/VEB Leasing	2018
Pavel Kadochnikov	BOD	2020	Ministry of Finance, Import Substitution	2020	A. Kudrin
Yuri Koptev	BOD	2019	Rostec, Chairman of the Scientific and Technical Council	2010	Sergey Chemezov
Alexander Mikheev	BOD	2019	Rostec, President of Rosoboroneksport; former president Russian Helicopter	2019	Sergey Chemezov
Pavel Osin	BOD	2019	Rostec, Director of Legal Support; oversees the integration process	2017	Sergey Chemezov
Evgeny Yurchenko	BOD	2016	Popov Investment Promotion Fund; CEO Svaz’invest Holding; Rostelecom	2016 (2005; 2010)	Sergey Chemezov; V. Yevtushenko (AFK Sistema)
Alexandr Yurchik	BOD	2019	Ministry of Transport, Aviation Transport	2017
Igor Zavyalov	BOD		Rostec, Deputy General Director of Finance; BOD, various Rostec companies; BOD VTB, VEB	2009	Sergey Chemezov

Rostec (2015a) ‘Annual Report 2015’, available at: https://rostec.ru/upload/iblock/716/7165429a8fb2f26581d105aa978957b5.pdf, accessed 30 August 2019.

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Rostec (2016a) ‘Annual Report 2016’, available at: https://rostec.ru/upload/iblock/941/941854b0310874ea177ea2c1506db626.pdf, accessed 12 July 2021.

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Rostec (2017) ‘Annual Report 2017’, available at: https://rostec.ru/upload/iblock/e51/e51272bbcf59ce3ce8320cdabf668a1d.pdf, accessed 12 July 2021.

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OAK (2017a) ‘Annual Report 2017’, available at: https://www.uacrussia.ru/upload/iblock/674/674b55ed1ad96f1c69118c5a046e3739.pdf, accessed 12 July 2021.

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