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Russia: Three Officials Of Gazprom Subsidiary Sibur Detained Amid Asset-Stripping Probe

  • Michael Lelyveld

Russian prosecutors have detained managers from the Gazprom subsidiary Sibur as the government takes a stand against alleged asset-stripping at the world's largest gas company. But questions remain about whether President Vladimir Putin will push for a complete cleanup at Gazprom if it risks breaking political ties.

Boston, 11 January 2002 (RFE/RL) -- Russia's detention of three petrochemical executives may be a dramatic step to recapture lost assets at the gas monopoly Gazprom, but it is unclear how far President Putin is willing to go.

On 9 January, prosecutors detained top officials of the Siberian-Ural Petrochemical and Gas Company, known as Sibur, following a long struggle with Gazprom, its parent company. The move came one day after investigators swooped down on Sibur's Moscow office in a search for incriminating evidence.

Although charges have yet to be filed, Prosecutor-General Vladimir Ustinov made clear on 10 January in an interview with the Interfax news agency that he plans to pursue a case of asset-stripping against the top management of Sibur, which has been on the verge of bankruptcy.

Ustinov said, "I do not want to disclose the mechanism of the assets' withdrawal." He added, "There are many ways to drain the assets of this or that company. I think that after the investigation we will show how it is possible to make the hitherto richest company bankrupt."

In a statement, the prosecutor's office said it is investigating the illegal sale of Gazprom assets valued at 2.6 billion rubles ($85.2 million), "The Moscow Times" English-language daily reported.

The Sibur officials in custody have been identified as its chief executive, Yakov Goldovskii; the chairman, Vyacheslav Sheremet; and a vice president, Yevgenii Koshchits. Sheremet is also first vice president and a board member of Gazprom, which is 38 percent state-owned.

The complex case involves a company whose business may be equally obscure to Russian consumers, who face a 35 percent increase in gas tariffs this year.

According to the "Petroleum Argus" industry newsletter, Sibur's main business is operating gas processing plants in Siberia, where liquids called condensates are separated from gas produced by Russian oil companies. Sibur sells the dry gas to Gazprom and uses the liquids in its own petrochemical plants.

An article in "Petroleum Argus" said, "It is widely believed that majority control of Sibur's gas processing plants has been transferred to an offshore company controlled by members of the firm's management, including Goldovskii." Ustinov said formal charges must be filed within three days after the individuals were taken into custody.

Gazprom has been locked in a battle for months with Sibur managers, who planned to issue $1.7-billion worth of new shares. The offering would have diluted Gazprom's 51 percent stake in Sibur, unless Gazprom came up with over $800 million. Sibur already owes Gazprom $827 million. In December, Sibur reportedly had only $6 million on hand.

Reports on Gazprom's involvement in the prosecution are contradictory. On 10 January, a spokeswoman for Gazprom Chief Executive Aleksei Miller told RBC Consulting that no request was made for a criminal case against Sibur officials. But Interfax quoted Ustinov as saying that criminal proceedings followed "an examination done at the request of Gazprom heads," who asked for a probe of Sibur asset transfers.

A Gazprom press release, quoted by "The Moscow Times," said, "Gazprom has continually kept law-enforcement officials up to date on how Sibur is damaging the interests of its shareholders and creditors by selling the assets of subsidiaries."

There seems to be little doubt about the origin of the request. President Putin has warned Gazprom since April that it must take steps against the loss of its assets. In May, Putin named Miller to replace longtime Chief Executive Rem Vyakhirev, who has reportedly been questioned in the Sibur affair. In November, Putin specifically named Sibur as a Gazprom asset at risk of "slipping away."

But Vyakhirev remains in what is now a largely ceremonial post as Gazprom chairman, a job once held by former Prime Minister Viktor Chernomyrdin. In 2001, Putin appointed Chernomyrdin as ambassador to Ukraine.

It is still unclear whether Putin intends a full-scale cleanup at Gazprom that would include investigations of past actions and the long-suspected holdings of Vyakhirev, Chernomyrdin, and their families.

So far, Gazprom has only acted in cases where deadlines have forced its hand, such as the recent decision to buy back shares in a subsidiary called Purgaz, where an option was set to expire at the end of 2001. Gazprom had sold its controlling stake Purgaz for a nominal sum of $1,300 to Itera, a private gas-trading firm.

The amount of Sibur's alleged diversions is small, compared with Gazprom's enormous size. But the company, which holds an estimated 25 percent of the world's gas reserves, has a stock market value of only $8 billion, in part because of the lawlessness and lack of accountability in the control of its assets.

Tariff increases on gas, which will hit Russian consumers this year, are needed in part because Gazprom's low valuation makes it impossible for it to raise cash or fund investment otherwise.

So far, Miller has shown little taste for tackling corruption at the highest political levels of Gazprom, despite Putin's public support. After nearly two years in office, Putin has also appeared cautious about how far to go.

Although they are reining in some Gazprom subsidiaries, Miller and Putin have yet to take on the question of Itera. Over the years, Gazprom has allowed Itera to take over huge chunks of its business without apparent compensation, making it Russia's second-largest gas company. In the past month, Itera has continued to take on new business despite ceding control in Purgaz back to Gazprom.

Now, Sibur officials may be called to answer for their actions. But a full accounting at Gazprom still seems a long way off.