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Russia: Yeltsin Man Heads Gazprom Image Team

Moscow, 10 November 1997 (RFE/RL) -- Once the most influential man in President Boris Yeltsin's entourage, Victor Ilyushin, has taken on the job of directing public relations for Gazprom. This move comes as Russia's most powerful company defends its Iranian dealings from threatened American sanctions that could halt a $1 billion convertible bond issue. The issue is being prepared for American investors by Goldman Sachs.

Gazprom officials say Ilyushin was appointed in May to a seat on Gazprom's management board. And, sources say he is now responsible for the energy producer's information-and-investor- relations effort.

Company officials would not say whether Gazprom has formally decided to go ahead with the $1 billion bond raising in the U.S. It is believed Goldman Sachs is nervous about the backlash in the U.S. that has followed the announcement of Gazprom's participation with France's Total Oil Group and Petronas of Malaysia, in a contract to develop Iran's South Pars gasfield.

Defending Gazprom's participation from American criticism, President Yeltsin has said "Russia, France and Iran are independent, freedom-loving states, and interference from any other state is not to be tolerated." Russia, he added, "will not budge an inch."

That can't be said for Goldman Sachs, Russian sources say, whose mandate to arrange Gazprom financing was secured amid intense competition from European financial institutions. Clinton Administration backing is believed in Moscow to have been helpful in persuading Gazprom to engage Goldman Sachs. Now, following the Gazprom contract with Iran, Goldman Sachs is reported worried about the public exposure it and Gazprom face, if and when they launch the sales program necessary to persuade American investors to buy Gazprom bonds.

Ilyushin, a reticent, non-ideological bureaucrat, who served for many years as a top Yeltsin aide, will be one of the Gazprom officials to decide whether to take this risk. If not, Goldman Sachs will have suffered a serious reverse in its attempt to establish business in Russia, Moscow financiers believe.

Gazprom officials announced in Paris last week the signing of an eight-year financing deal of $3 billion dollars, with a group of mostly German and French, headed by Credit Lyonnais and Dresdner Kleinwort Benson. Bankers Trust and Citibank are the two American banks in the 14-member consortium. This announcement was followed by another from London, indicating that the major Anglo-Dutch oil company Shell will join Gazprom in bidding for shares of the soon-to-be privatized state oil company, Rosneft.

Ilyushin's past closeness to President Yeltsin is one reason, observers see, for Yeltsin's tough reaction to Washington's threat of sanctions. Ilyushin is unavailable for comment, Gazprom officials said, as industry sources suggest he may prove influential in deciding whether to go ahead with the Goldman Sachs plan, or shelve it for the time being.

After Yeltsin's re-election last year, and during his lengthy bout of illness, Ilyushin was shunted out of the President's office, and then out of a deputy prime minister's portfolio created for him. His political eclipse was arranged by Anatoly Chubais, the pro-American advisor who ran the re-election campaign, and, who - according to supporters and opponents - virtually ran the country during the President's lengthy illness.