Summit News

Tycoon proposes newborn son as Aeroflot director

MOSCOW (Reuters) - Tycoon Alexander Lebedev has proposed his newborn son to replace him on the board at Aeroflot AFLT.MM in a tongue-in-cheek attempt to highlight what he says is continued weak corporate governance at Russia's state-run corporations.

Lebedev, an outspoken former KGB spy who made his fortune in banking, told the Reuters Russia Investment Summit this week he believes corrupt officials and state executives have pocketed $500 billion in bribes over the last few years.

The situation is not improving, he said, as the state has failed to implement a mechanism to control its bureaucrats and executives.

“Can I put my three-month-old son, Nikita, on Aeroflot’s board in place of myself?” said Lebedev, who owns 30 percent of state-run Aeroflot, Russia’s national flag carrier.

“Guys, you don’t need me. Let my son work there. It wouldn’t be a problem -- he’s a clever guy,” Lebedev said, quoting from a letter he sent to Aeroflot’s new president, Vitaly Savelyev.

Lebedev, rare among Russian businessmen in daring to criticize the Kremlin, said he was angered by Aeroflot’s decision to shun dividend payments while splashing millions of dollars on non-core projects.

The airline has rented an expensive new office in central Moscow and sponsored leading Russian soccer club CSKA Moscow and the 2014 Winter Olympics in Sochi.

Savelyev, who joined Aeroflot only four months ago from private conglomerate Sistema SSAq.L, told Reuters he viewed cost-cutting and improving efficiency as the main tasks of his new job.

“It’s a great idea,” Savelyev said at the summit, referring to Lebedev’s proposal. “I think his son will be less capricious than his father.”

Savelyev said it was a state decision not to pay a dividend at Aeroflot, where net profit fell almost tenfold to $37 million in 2008. He said the sports sponsorship would bring long-term profits, while the new office was needed to improve logistics.

Under Russian legislation, company board directors must be aged 18 or over.

Editing by Simon Jessop