The norms and rules concerning state corporations were, in fact, “dormant”, and no alterations or additions were introduced into them thereafter. Thus, before the year 2007, state corporations were created only on exceptional occasions, at the junction of jurisdictions of the RF Government and the RF Central Bank. In the corresponding laws, the creation of such corporations was intertwined into a broader context of regulation in the corresponding spheres, and the creation itself of corporations was strictly positioned as an instrument, Lavrov, K. Reiting voennoi sluzhby. [The rating of military service] // Voenno – promyshlennyi kur’er [The Military – Industrial Herald], 5 – 11 March 2008.
and not as an ultimate objective in its own right. At the same time, the laws were rather pedantically and in much detail determining the operational principles and the procedure designed to regulate the activity of the corporations in question, as well as were establishing in what ways regulation was to be carried out in the corresponding spheres. To a certain extent, this elaborateness compensated for the excessively general character of the basic norms stipulated the Law “On Not-for-Profit Organizations” (1996), which had established state corporation as an organizational – legal form in its own right.
This situation was radically changed in 2007 with the adoption of the federal laws on the creation of 6 big state corporations, which were to deal with very important issues of economic, social, and political nature:
Table State corporation created under Date of adop- Objective of corporation’s activity law tion of law 1. State corporation “The Bank for Devel- May 2007 To assist in increasing the competitiveness and opment and Economic Activity” (“Vneshe- diversification of the RF economy and to stimulate konombank”) innovational activities by way of carrying out the investment, foreign-trade, insurance, consulting, and other activities aimed at implementing the projects - both in Russia and abroad – designed to develop infrastructure, innovations, special economic zones, and environmental protection, to stimulate export of Russian goods, work, and services, and also to support small and medium – sized businesses.
2. State corporation “The Russian July 2007 To assist in implementing the state policy in the Nanotechnologies Corporation” (GK “Ros- sphere of nanotechnologies, in developing innovananotekh”) tive infrastructure, and in implementing the projects of creating progressive nanotechnologies and an efficient nano-industry.
3. Fund for Promoting Reform in the July 2007 To create safe and adequate living conditions Housing and Utilities Ssector for citizens, to stimulate the reforming of the housing and utilities sector, to form efficient mechanisms for managing the housing fund, and to introduce resource-preserving technologies by way of granting financial support at the expense of the Fund.
4. State corporation for constructing the October 2007 The fulfillment of the managerial and other soOlympics’ facilities and the development of cial functions dealing with engineering surveys in the city of Sochi as a mountain and climatic the course of construction activity, with the designhealth resort (GK “Olimpstroi”) ing, building, reconstructing, and operating the facilities to be used in the XXII Winter Olympic Games and in the XI Para Olympic Games of the year 2014 in the city of Sochi,, as well as with the development of the city of Sochi as a mountain and climatic health resort.
5. State corporation for promoting the de- November 2007 To assist in designing, manufacturing, and exsigning, manufacture, and export of hi-tech porting hi-tech industrial products by way of proindustrial products “Rostekhnologii” (Gosu- viding support at the home and external market to darstvennaia korporatsiia “Rostekhnologii”) the Russian organizations engaged in designing and manufacturing hi-tech products, and by way of attracting investments into organizations operating in various branches of industry, including the defense – industrial complex.
6. State Nuclear Power Corporation December 2007 To implement state policy, carry out normative “Rosatom” (Goskorporatsiia “Rosatom”) – legal regulation, provide state services and conduct state property management in the sphere of use of nuclear power and with regard to the development and accident – free functioning of the organizations of the RF nuclear – power and nuclear – weapons complexes, to the safeguarding of nuclear and radiological safety, to the nonproliferation of nuclear materials and technologies, to the development of science, technology and professional education in the sphere of nuclear energy, and to the promotion of international cooperation in this domain.
The state corporations created in 2007 considerably differ from each other both with regard to the history of their creation and to their objectives and functions. While the creation of the Bank for Development and the Fund for Promoting Reform of the Housing and Utilities Sector can be considered as certain elements of the evolution of the use of the organizational – legal form “state corporation”, the creation of the other state corporations substantially deviates from this tendency in its stronger association with the implementation of branch (or sector) priorities, and also with the adjustment of the administrative system. These corporations, while being endowed with a wide range of functions, received large volumes of state property (in 2007, the volume of financial means allocated to them from the federal budget and the Stabilization Fund amounted to approximately 760 billion rubles; they also received various productive and financial assets) sufficient to keep them functioning for the years to come.
The process of creation of state enterprises has immediately became subject of much controversy as to the rationality of such an activity on the part of the State. In general, the response to the creation of state corporations26 in the year 2007 can be characterized as predominantly skeptical and cool. In our opinion, to a large extent this response can be explained by the following peculiarities27 of the formation of these structures:
- the non – transparency of the processes of preparing and preliminarily discussing the projects of creation of state enterprises;
- the rapidity of the processes of discussing the draft laws on the creation of state corporations;
- the novelty of the organizational-legal form being used (state corporation); the vagueness (or the framework character) of the basic norms;
- the use of the supreme political resource during the process of creation of state corporations ;
- large volumes of state property allocated to maintain the activity of state corporations;
- the wide and diverse range of functions commissioned to the corporations;
- the rather tepid character of the activity aimed at the propagation of arguments in favor of the creation of state corporations;
- the vagueness of strategic plans and the principles of activity of state corporations;
- a long trail of proposals voiced by various parties with regard to the creation of new state corporations.
Much attention was paid to the risks of such negative consequences of the process of creating state corporations as an increased degree of the unjustified presence of the State in the economy, inefficient use of state property, and the non-transparency of functioning and the low accountability (or controllability) of state corporations. However, analysts felt greatest concerns in regard of the risk of further expansion of the processes of creation of state corporations; in addition to other reasons, also because of the recent proposals that the possibilities for creating state corporations should be legislatively determined at the level of subjects of the Russian Federation.
When assessing the state policy aimed at creating state corporations, it is necessary to distinguish and treat separately the following two aspects: aspect one – to determine how well-grounded are the objectives of the activity of these subjects; and aspect two – to determine how justified and well- grounded was the decision to achieve the said objectives by such method as the creation of state corporations (bearing in mind the existence of other sufficiently well-substantiated alternatives, like the formation and implementation of federal target programs, or the creation of joint-stock holding companies on the basis of use of state property). In our opinion, the major risks with regard to the creation of state corporations were related, primarily, to the choice of the form of achieving the set objectives.
State corporation is one of the types of not-for-profit organizations. The organizational – legal form “state corporation” was legislatively established as early as July 1999 through the introduction of a corresponding amendment (Article 7.1, State Corporation) to Federal Law # 7 – FZ “On Not-for-Profit Organizations” adopted in January 1996.
It has been repeatedly noted with regard to state corporation that this organizational – legal form has considerable flaws, including:
The use of the term “corporation” in the names of a number of big holding companies created by the State (the OJSC “The United Aircraft Building Corporation”, the OJSC “The United Shipbuilding Corporation”) sometimes leads to a broad interpretation of the term “state corporation”. In our study, when the organizational – legal form “state corporation” is being used, we apply this term in the narrow sense of the word.
These peculiarities are characteristic of the process of creating state corporations in general; it does not mean that the full range of them should necessarily typify the creation of each of the established state corporations (for example, the creation of the Bank for Development was relatively long and included a number of open discussions and consultations).
- the vagueness of the notion “socially useful functions”, which offers opportunities for broad interpretations being applied when justifying the necessity of implementing this form;
- when a state corporation is being created, state property is transferred to it practically free of charge;
- no principles for managing the property of a state corporation have been established, which is fraught with additional risks;
- the issues of reorganization and liquidation of a state corporation have not been formulated (even in the most general form).
In general, the basic law on not-for-profit organizations contains a very limited and highly formalized list of issues that should be established in the laws on the creation of state corporations. Special risks are associated with the possibility to abstain from applying the norms stipulated in the Law “On Not-for-Profit Organizations” with regard to a state corporation, if this possibility is envisaged in the law regulating its creation (Article 7.1, part 2 of the Law “On Not-for-Profit Organizations”). Theoretically, this makes it possible to create a highly individualized organizational – legal form for any new corporation, and to absolutely freely transgress, in so doing, the norms of the basic Law “On Not-for-Profit Organizations”.
In the final account, the dynamic process of adopting laws on the creation of state corporations, which was going on in 2007, predetermined the emergence of a wide range of significant problems concerning their current functioning and the “quality” of the legislative definition of this organizational – legal form.
Firstly, one should point out the general character of the adopted laws on the creation of state corporations. Practically each of the adopted laws is characterized by lack of a sufficiently detailed elaboration28 of the terms and principles of activity of a given corporation (the only exception being the Law “On the Creation of the Fund for Promoting Reform of the Housing and Utilities Sector”), and requires a number of subordinate acts to be adopted so as to enable an enterprise to adequately function, and some very important procedures to be determined at the level of the corporation itself. So far as the majority of the created corporations are concerned, the adopted laws do not establish the procedure for their reorganization or liquidation, and contain only reference norms indicating that this could be done on the basis of a corresponding federal law (the liquidation procedure is determined only with regard to the Fund for Promoting Reform of the Housing and Utilities, whose period of activity has an established time limit29).
Secondly, it should be pointed out that the level of “unification” of the norms stipulated in the adopted laws on the creation of state corporations is low. Certainly, the goals, tasks, and the spheres of activity of each corporation are very different, but even in the case when the norms are quite close in essence, their exposition considerably differs, including with respect to details and stylistics30.
Thirdly, one should point out the weak effect on the development of the basic Law on Not-for-profit Organizations. In principle, one could have expected that a more intensive use of the norms regarding state corporations and the adoption of corresponding laws would result in a generalization of the practice and in clarification and amendment of the norms established by the Law “On Not-for-Profit Organizations”, but this did not happened. The only exception dates back to 2007: in parallel with the adoption of the law on the Bank for Development, and for the purpose of enabling it to borrow funds, the norms of Article 7.1 of the Law “On Not-for-Profit Organizations” were amended with regard to the possibility to form the authorized capital of a corporation. The amendment makes it possible to determine the minimum size of the authorized capital of a corporation that would guarantee the interests of its creditors31.
In our view, the over-generalized and structurally fragmented nature of the adopted laws on the creation of state corporations and a very low level of legislative regulation of corporations’ activity have given rise to the following problems as well:
1) a delay in corporations’ actually beginning to function properly.
In the case of some corporations (for example, GK “Rosnanotekh” and GK “Olimpstroi”), the insufficient detailing of the laws on their creation is compensated for by the strategies and programs of development of the corresponding spheres.