Lawmakers Challenge Yeltsin’s Selloff of State Firms : Russia: Free-market reform plan is imperiled. Supreme Soviet acts while the president vacations.

The Russian legislature dealt its most direct challenge to President Boris N. Yeltsin’s free-market reforms Wednesday by voting to strip his privatization agency of power to continue selling off state-owned enterprises.

The move by the Supreme Soviet is not expected to halt the mass auctions of shares in these companies, but reformers said it could give ex-Communist apparatchiks still entrenched in the government bureaucracy enough legal leverage to bog the process down.

Acting while Yeltsin is away on vacation, the Supreme Soviet authorized government industries and ministries to take over the powers of his State Property Committee, the most dynamic reform agency of the post-Soviet era, and to carry out privatization as they see fit.

The property committee promptly issued a statement that it has no intention of giving up power. But its chairman, Deputy Prime Minister Anatoly B. Chubais, warned that conservatives could “sabotage” privatization and “deal a blow to millions of people” who want to become capitalists.

Created by Yeltsin and approved by the legislature as the Soviet Union was collapsing in December, 1991, the property committee first distributed a free voucher to each Russian citizen, then began accepting those vouchers in exchange for shares in state companies.

Chubais said Tuesday that 57% of the country’s smaller state-owned enterprises and about one-third of the larger ones--more than 60,000 companies in all--have been sold to private shareholders in an auction unprecedented in scale.

Such former Soviet showcases as the Volgograd tractor plant and the ZIL factory that made limousines for the Communist elite are now joint-stock companies. Public interest in the auctions is growing: The vouchers, after dipping below half their original face value of 10,000 rubles apiece, now trade for 10,500--about $10 at the current exchange rate.

The Supreme Soviet and its parent body, the Congress of People’s Deputies, never approved the selloff and continually snipe at it. They claim the process is corrupt and chaotic and tends to concentrate wealth among a small class of nouveaux riches .

On Tuesday the Supreme Soviet voted to annul a May 8 decree, issued by Yeltsin after he won a popular vote of confidence in his reforms, to speed up the auctions and force reluctant factory managers to take part.

Then came Wednesday’s action, throwing the entire program into uncertainty.

Sergei A. Polozkhov, a centrist lawmaker, said the Supreme Soviet acted to decentralize the power to determine the scope and pace of privatization. This leaves Chubais’ agency with only the authority to carry out the decisions.

“No one wants to curb the privatization process,” Polozkhov said. “We are just improving it. It has become evident that the property committee was overwhelmed with the work to be done. . . . It was too monopolistic.”

Soviet-era bureaucrats in the military-industrial lobby and their supporters in the legislature still control thousands of companies. They stand to lose if Yeltsin-style privatization succeeds. Reformers noted that the Supreme Soviet acted just as the property committee was moving to sell off lucrative oil companies and defense industries.

This week’s resolutions were prepared in secret by the legislature’s Presidium and brought swiftly to a debate to which government representatives were not invited.

“When you give away property you lose power; it’s as simple as that,” said Igor N. Plotnikov, an aide to Chubais.

If the old bureaucracy gets control of the property committee, he warned, it could “privatize” many companies by simply transferring titles to long-entrenched managers and loyal workers. By keeping the majority of shares from reaching the public market, reformers say, such managers could resist efforts to seek private investment and continue to agitate for state subsidies.

How much support this anti-reform lobby has in the government is unclear. Yeltsin’s critics have been on the defensive since his spring referendum victory, in which more than half the voters endorsed his free-market reforms. And the privatization program appears to be genuinely popular.

“Some ministries will try to bury privatization in a sea of consultations and deliberations,” Plotnikov said, predicting a bitter struggle inside the government. “This blow is very serious but not lethal.”