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In actual practice, SK Rostekhnologia is, almost entirely, controlled personally by the RF President, who is empowered to appoint (or approve) the top managers of the new company. In accordance with Item of Article 6 of Law No 270-FZ, the President of the Russian Federation:

1) appoints the Chairperson and other members of the Supervisory Board of the State Corporation Rostekhnologia, and terminates their powers in the procedure established by this Federal Law;

2) appoints to his post and dismisses from his post the General Director of the State Corporation Rostekhnologia;

3) exercises other powers envisaged in this Federal Law.

It is expected that SK Rostekhnologia will be receiving substantial budget investments. In accordance with Law No m270 - FZ, its property is formed from the following sources:

the property contribution made by the Russian Federation, incomes received by the State Corporation Rostekhnologia from the use of its property and from its activity, regular and (or) lumpsum receipts (or contributions), the decisions concerning which are to be adopted in accordance with legislation of the Russian Federation, and from the organizations whose shares (or stakes) are federal property, other property transferred by the State Corporation Rostekhnologia in the course of its activity, other lawful receipts, and are property of the State Corporation Rostekhnologia.


It should be noted that the new State Corporation, similarly to the previously created Russian Nanotechnologies Corporation, being a recipient of large budget investments that are not precisely earmarked according to their target, is thus endowed with very broad financial powers to spend such investments, which will entail very active business activity. Thus, SK Rostekhnologia has the right to:

create commercial and not-for-profit organizations in and outside the territory of the Russian Federation;

participate in charter capitals of economic societies, property of other commercial and not-for-profit organizations established in and outside the territory of the Russian Federation, whose goals are to develop, manufacture and export hi-tech industrial products, including those for military and dual use;

make investments in Russian and foreign organizations.

In this connection, the investing of temporarily free resources of the State Corporation Rostekhnologia is based on the principles of recovery and profitability of the financial instruments acquired by the State Corporation Rostekhnologia.

The areas for, procedures and terms of investing, as well as the marginal size of the temporarily free resources of the State Corporation Rostekhnologia to be invested, are determined by the Supervisory Board of the State Corporation Rostekhnologia.

It seems that in a situation when operations involve products and technologies for military and dual use, which are subject to state secret, the activity of SK Rostekhnologia will be quite non-transparent, while the risks of corruption among its officials resulting from this lack of transparency very high.

Although formally SK Rostekhnologia is obliged to submit annual reports of its activity32 and undergo mandatory audits, as well as to form, as a constituent part of its organizational structure, a revision commission, these control mechanisms may fail to achieve the expected results under conditions of the companys non-transparency for public. Thus, in accordance with Article 9 of Law No 270-FZ, the auditing company to conduct the mandatory audits will be selected by SK Rostekhnologias Supervisory Board (on the basis of a tender). Considering this circumstance, audits cannot be judged as being fully external and independent.

Both in the Russian and international practice there were instances when auditing companies followed the instructions of a big corporate client and composed resolutions lacking precision and objectivity (for example, this happened during the bankruptcy proceedings against Enron in the USA, as well as in the Yukos case in Russia).

It appears that, while granting to an organization the powers to pursue commercial activity in the military sphere, the lawmakers should have paid more attention to creating specialized mechanisms of financial control.

Considering the facts described above, the following conclusions can be drawn. It is still too early to speak of any efficient activity of the newly created state corporation. However, as said above, the very fact of defense and dual-use technologies being commercialized, as well as of the export of the products of the defense-industrial complex to foreign countries, is fraught with certain financial risks due to the lack of transparency in this sphere. No specialized mechanisms of financial control over the activity of the new corporation, designed with due regard for its specificity, are envisaged by the new law.

Besides, it is unclear in which way the creation of SK Rostekhnologia may improve the situation existing in the sphere of export of civil machine-building products, which was declared to be one of the main reasons for the new corporations creation while it was being established.

New Changes in Legislation on Local Self-Government Slavgorodskaia M., Mironova N..

In October November 2007, legislators adopted new alterations in legislation on local self government which were aimed at improving the delineation of powers among the various levels of authority in the The Annual Report of the State Corporation Rostekhnologia incorporates the following components:

1) report on the activity of the State Corporation Rostekhnologia in the completed reporting period, including in the sphere of military industrial cooperation of the Russian Federation with foreign states, as well as indices describing the activity of the organization acting as a state intermediary in foreign trade of military products;

2) annual accounting balance sheet of the State Corporation Rostekhnologia ;

3) account of profits and losses of the State Corporation Rostekhnologia;

4) account of the execution of the financial plan of incomes and expenditures of the State Corporation Rostekhnologia;

5) account of the formation and use of the funds of the State Corporation Rostekhnologia;

6) auditors estimation.

Russian Federation. Apart from the sphere of delineation of powers, alterations were introduced into the territorial foundations of local self government, property relations, and a number of other issues pertaining to the organization of municipal administration.

In the final quarter of the year 2007, in line with the well established tradition to introduce, at the end of each year, new changes in legislation which regulates the delineation of powers among the levels of authority, legislators also adopted two federal laws: Federal Law, of 18 October 2007, No 230 FZ, On the introduction of alterations in some legislative acts of the Russian Federation in connection with the improvement of delineation of powers and Federal Law, of 8 November 2007, No 257- FZ, On motor roads and the roads - related activity in the Russian Federation and on the introduction of alterations in some legislative acts of the Russian Federation. The major alterations introduced by these laws in legislation on local self - government can be summarized as follows:

Firstly, these alterations clarify some issues pertaining to the territorial foundations of local self government previously not reflected in federal laws. In particular, they envisage the procedures for changing the boundaries of urban and rural settlements, and also the procedures for the abolition of municipal formations in territories with low population density and in localities which are difficult of access.

In accordance with the new version of the Law on Local Self government, the decision concerning changes in the boundaries of a city okrug must be taken with taking into account the opinion of the population of all the municipal formations involved in this process, namely, the city okrug, the settlement being annexed, and the municipal raion in whose territory the settlement is situated. At the same time, the procedure for taking into account the opinion of the population has become simpler: the opinion of the population should be expressed by the decisions of representative bodies; as regards most of the other types of transformations of settlements and changes of their boundaries, the opinion of the population should be revealed by voting or at citizens meetings. Simultaneously with the merger of a city okrug with an urban settlement, the administrative and territorial division of a corresponding RF subject should also take place, so that the city forming a part of the city okrug and the town (or settlement) functioning as the center of an urban settlement should merge to become a single city.

It should be pointed out that the introduced alterations are rather ambiguous. On the one hand, for promoting their development, cities need additional resources, and first of all, land resources. However, the possibilities for developing empty land plots within the existing boundaries of the majority of big cities have already been exhausted. On the other hand, the adoption of this amendment can lead to the beginning of mass elimination of suburban settlement resulting from their inclusion in the city limits. At the same time, extension of the city okrugs administrative boundaries is by no means the most efficient method for administering the urban agglomerations that have emerged as a result of the cities having spilled over their boundaries, which manifests itself in the erection of housing blocks in suburban territories, the transfer of enterprises beyond the city limits, mass cottage building etc. Meanwhile, there exists another model, the fragmented one, which has already been introduced, on a relatively wide scale, into international practice. In this model, the administering of an urban agglomeration is effected, on the basis of inter - municipality agreements, by all the municipalities included in it. Such model can be materialized also within the framework of Russian legislation by way of organizing, within the framework of Russian legislation, inter municipality cooperation.

The adoption of the norm concerning the possibility of abolishing a relatively small number of municipal formations existing in the territories with small population density and in localities which are difficult of access can be considered absolutely justified. It is permitted to abolish rural settlements populated by less than 100 persons on condition that the decision on the abolition has been adopted at a citizens meeting. In international practice, and in particular in Canada, no local administrative bodies are formed in those settlements situated in northern territories, where there exist neither the personnel nor the economic potential for adequate development, and the provision of necessary services to local population is carried out by regional authorities. Among the drawbacks of this amendment to legislation on local self government, one could point to the absence of clarifications as to what localities should be deemed to be difficult of access, although it is apparent that settlements with the size of population less than 100 are not likely to be found in densely populated regions.

Secondly, the list of the territories entitled to special organization of local self government has been extended. Previously, this status was accorded to the inter city territories of the cities of federal importance, Moscow and St. Petersburg, closed administrative and territorial units, and border territories. Now this list also includes municipal formations situated in the areas of the Far North and to the localities equated thereto, which have seasonal time limitations for the delivery of cargos (or products). It is established for them that the powers with respect to the guaranteeing of the delivery of some goods (fuel and energy resources, foodstuffs, and industrial and technological production) which require centralized supply, should be carried out by the executive authorities of RF subjects.

Thirdly, a number of alterations dealing with the delineation of powers among various levels of authority were introduced in federal legislation. The major alterations in this sphere are aimed, on the one hand, at specifying the powers vested in the bodies of local self government with regard to resolving the issues of local importance previously consolidated to municipal formations, and, on the other hand, at expanding the competence of municipal authorities.

The first area of reforming the powers delineation system includes, in particular, the alterations in branch legislation on protecting the health of citizens and on fire safety. The new versions of the afore noted laws set up the concrete powers of local self government bodies with regard to such issues of local importance as the organization of medical assistance to the population and the implementation of primary measures of fire safety in the populated localities being part of settlements and city okrugs. The adoption of these alterations has introduced clarity in the determination of powers in the corresponding spheres, and eliminated any vagueness concerning the delineation of the competence of local authorities as regards the resolution of the said issues. At the same time, the established list of powers is significantly wider than that previously implemented in actual practice by local self government bodies, especially in the sphere of carrying out the primary measures of fire safety. The adoption of these amendments can result in the growth of local budgets spending liabilities.

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