A proposal made by Prime Minister Vladimir Putin to impose a one-off tax on the beneficiaries of "dishonest" 1990s privatization would be near impossible to implement in practice, analysts said.

Speaking to representatives of big business Thursday, one month before he is due to run in presidential elections, Putin suggested that companies privatized in the 1990s should pay a fee to win public acceptance for their deals.

"The solution lies in either a one-time contribution or something else, I believe that society and particularly the entrepreneurial class are interested in finding such a solution," Putin said.

Most observers have taken the proposal with a pinch of salt, partly because Putin has made similar promises before, and partly because he is in full election-mode, brandishing populist proposals on a near daily basis.

But representatives of the business community also note that the proposal is unrealistic, both legally and logistically.

"Ten years ago, maybe even five, it could have been an absolutely appropriate idea," said Kendrick White, head of the Marchmont Capital Partners investment consultancy. "But now many of the assets have changed ownership several times and have overcome their risk premium."

Sergei Budylin, senior lawyer at international law firm Roche Duffay questioned the "legal validity and constitutionality" of Putin's proposal and said it left many questions unanswered.

"It's not clear, for example, who is supposed to pay the fine - the current owner of the assets or the person who privatized them a decade or two ago?" Budylin asked. "Consider the most famous privatization story: Roman Abramovich privatizes Sibneft at some $200 million to sell it a decade later for $13 billion. How much should Abramovich pay and to whom? If he does not, should the Sibneft assets be withdrawn from their current owner [Gazprom]?"

Mark Rubinstein, head of research at the Moscow-based Metropol investment company said the fine is too subjective to serve its purpose in encouraging public acceptance of the privatization deals.

"No consensus can be achieved in our society on this issue as any decision will be of a subjective nature," Rubenstein said.

Former Russian Finance Minister Alexei Kudrin also spoke out against the proposal on Monday, saying on his Twitter blog that it would cause Russia's legal and economic environment "to deteriorate."

"If the privatization deals struck 17 years ago are over-burdened, new privatization deals and ownership rights as a whole will be undercut," Kudrin wrote.

http://www.russica-izvestia.ru/company.html