Accessibility links

Breaking News

Russia: Chernomyrdin Says Gazprom Leadership Should Not Be Changed

Moscow, 26 June 1998 (RFE/RL) -- On the eve of today's much discussed shareholders' meeting of Russian gas giant Gazprom, former prime minister Viktor Chernomyrdin, the man who most observers in Moscow say is "genetically linked" to the company, said current CEO (Chief Executive Officer) Rem Vyakhirev should not be replaced.

Since last year, some cabinet members have attempted to gain control over Gazprom, and many recent reports in the Russian media had indicated that, for this purpose, cabinet officials wanted to replace, at today's meeting, Vyakhirev with a manager loyal to their position.

The state owns a 40-percent stake in the company, but, until late last year, Vyakhirev had full control of 35 percent of the state stake, thanks to a trust agreement between the government and the company's leadership. The agreement had never been publicized, until Boris Nemtsov, appointed in March 1997 First Deputy Prime Minister, attempted to shake Vyakhirev's dominance, and extract thousands-of-million of rubles in back taxes for the Russian budget from the biggest and wealthiest Russian company.

The struggle continued for most of last year, until, with the support of President Boris Yeltsin, government leaders managed to cancel the old document and replace it with a new trust agreement. The new agreement allowed Vyakhirev to hold the shares, but only as directed by a Collegium of State Representatives, a body overseen by Nemtsov. Another five-percent state stake in Gazprom is entrusted to other government representatives.

Today's shareholders meeting is expected to elect a new board of directors, that will, in turn, appoint a new board chairman as well as a new CEO. Vyakhirev, the current CEO, said in February that Aleksandr Kazakov, who became chairman of the board while holding a cabinet post that he later lost, would be replaced at today's meeting.

However, according to media reports, the new government of Prime Minister Sergei Kirienko also wants to replace Vyakhirev. Two newspapers controlled by Gazprom, "Trud" and "Rabochaya Tribuna," noting what they called the new government's "hostile" attitude toward Gazprom, said the government was preparing to sack Vyakhirev.

The government has recently been putting pressure on Gazprom and its subsidiaries, to make them pay more than 4,000-million rubles in taxes, owed to the federal and some regional budgets. The new head of Russia's tax service, Boris Fedorov, has said he warned Gazprom that regional tax authorities had received instructions to extract taxes forcibly. Two Gazprom subsidiaries in the Ural region, Orenburgazprom and Uraltransgaz, last week had their accounts frozen and property seized by tax authorities.

Vyakhirev and other top gas officials have threatened to stop gas distribution in the regions and warned of nationwide strikes, if the government continued with the policy and failed to address nonpayments and wage arrears in the gas sector.

The standoff came as the International Monetary Fund (IMF) was reported to have linked talks on additional loans to Russia to overcome its economic crisis to a breakup of so-called "natural monopolies," particularly Gazprom and energy giant Unified Energy Systems (UES). UES Chief Executive Anatoly Chubais, who is also Yeltsin's special representative in talks with the IMF, said this week that speculation about a requested break up of the monopolies is exaggerated. According to Chubais, "what we are talking about is the well-known and old idea that within 'natural monopolies' the utilities extracting gas or generating power should work separately from enterprises dealing with transport."

Chernomyrdin, speaking at a wide-ranging news conference in Moscow yesterday, said the government, under no circumstances, would break up energy companies such as UES and Gazprom. Chernomyrdin, who until 1992 headed Gazprom, said that "this is the best system in the world. Why should it be destroyed?"

Chernomyrdin this week met Kirienko and separately with presidential chief of staff Valentin Yumashev. According to some media reports, he could be the candidate the government could propose, in a bid to replace Vyakhirev. However, at the press conference, the former prime minister and leader of the "Our Home is Russia" party brushed off the reports, saying, "there is no such need now, either for Gazprom, or for Chernomyrdin."

Chernomyrdin has already announced that he will run in the 2000 presidential election, and is currently a candidate for a seat in the State Duma, in an election to be held in September.