Brewers accused of 'questionable' tactics in Russian row

Scottish & Newcastle (S&N) has strongly denied any suggestions of wrongdoing following allegations that it acted "questionably" over a business transaction in Russia.

The allegations come from minority shareholders in brewers which are effectively owned by Baltic Beverage Holdings (BBH), a joint venture owned by S&N and Danish brewer Carlsberg.

These minority shareholders are believed to be objecting to the process by which S&N and Carlsberg are trying to consolidate their interests throughout the former Soviet Union.

BBH owns five Russian breweries and part of the consolidation process would see the joint venture bring together its holdings in these companies through the largest, Baltika.

A minority shareholder group in Baltika is claiming S&N and Carlsberg are using the process of consolidation to benefit themselves at the expense of other shareholders. It asserts that the two companies are overvaluing the minority shareholdings with a view to transferring funds back onto their own books.

It also claims that Hartwell Capital, an investor in S&N, should not have been allowed to vote in the proposed acquisition of a Siberian brewer Pikra, a vote which BBH lost.

Both S&N and Carlsberg have contested the shareholder's claims. Carlsberg told Danish newspaper Boersen that it was following the rules and regulations governing the country's business affairs and added that it couldn't understand why such claims, which it stated were false, were being made.

A spokesman for S&N stressed the company and its partner had taken the appropriate steps to ensure the consolidation process was compliant with local laws.

"These shareholders are not objecting to the fact that we want to consolidate our operations in Russia and bring into play operational efficiencies in areas such as IT, marketing and distribution platforms," he said.

The complaints were not a criticism of the plans but were objections regarding the procedure, the spokesman added. "This is a small setback, an impediment, rather than a roadblock," he noted.

S&N and Carlsberg will be re-proposing their restructuring plan in the next six weeks, according to reports.