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Russia: New Suspicions Emerge Over Gazprom Dealings

The latest reports of asset-stripping at Russia's Gazprom focus on the families of top executives. But they also seem to reflect rising concerns in Europe about ties to the gas monopoly. RFE/RL correspondent Michael Lelyveld reports.

Washington, 24 May 2001 (RFE/RL) -- A new scandal over the assets of Russian gas giant Gazprom is a sign of the suspicion that continues to haunt its dealings at home and abroad.

German and Russian newspapers charged 21 May that the relatives of top officials at Gazprom were part of a scheme to sell valuable holdings through shell companies at minimal cost. The stories are reportedly based on notarized bills of sale.

Controlling interest in companies that handled Gazprom's business in Hungary were sold for as little as 40.5 rubles, then worth about $2.50, said Germany's "Frankfurter Rundschau," Russia's "Vedomosti," and "The Moscow Times."

The transfers are said to have benefited the children of Gazprom chief executive Rem Vyakhirev, his deputy Vyacheslav Sheremet, and Viktor Chernomyrdin. The former prime minister and founder of Gazprom is now Russia's ambassador to Ukraine.

On 22 May, Chernomyrdin denied the accusations, telling the Interfax news agency, "Only people who are ill-disposed toward Russia and Ukraine are capable of such provocations."

The stories have apparently forced a delay of a Gazprom board meeting this week to consider Vyakhirev's contract, which expires at the end of the month. The one-week postponement may be a signal that the government, which owns 38 percent of Gazprom, was prepared to keep Vyakhirev on.

While the press has played up the complex story of asset transfers, it has tried and failed many times to find the key to unlock changes at the world's biggest gas firm. A full accounting at Gazprom is seen as a major test for Russian reform.

In April, "The Moscow Times" reported that Gazprom sold a majority stake in a Siberian gas company to its trading partner Itera for $300 after investing $135 million. In March, the "Financial Times" also thought it found a smoking gun when it discovered a memo detailing a partnership between Gazprom and Itera's operating arm. Itera has denied that such a link exists.

The latest story may boost the reform campaign of Gazprom's dissident board member, Boris Fyodorov, the former finance minister who has alleged that "$2 billion to $3 billion disappears from Gazprom each year through corruption, nepotism, and simple theft."

But perhaps the most significant aspect is that Gazprom is being investigated by newspapers outside Russia at a time when the European Union is planning to raise its reliance on Moscow.

Germany's ties to Gazprom are crucial as the EU considers a proposal to double its energy imports from Russia over the next two decades. Germany's Ruhrgas is a major shareholder in Gazprom, which supplied 26 percent of the gas consumed in Europe last year.

Gas companies in Germany, France, Italy, and Finland are all working with Gazprom on pipeline plans to bypass Ukraine for future shipments to ensure the security of the gas trade. Gazprom has also tried to gain control of Ukraine's pipelines, after accusing it of diverting transit gas.

The huge interests in the European gas business may be the cause for Chernomyrdin's charge that corruption stories come from enemies of Russia and Ukraine. But the motive may instead be to clean up corruption before Europe adds more cash to the trade.

Gazprom is also under fire in Poland, where prosecutors said last week that they will bring charges in the case of a fiber-optic phone cable that was secretly laid across the country with a Gazprom pipeline.

The cable would have allowed the company to profit from phone traffic to Germany without informing the Polish government. The incident has made Warsaw wary of allowing a second pipeline to Europe that would detour around Ukraine.

In Hungary, Gazprom has sparked fears following a long takeover battle to control BorsodChem, the country's second-largest petrochemical plant. Last September, Russian tactics came under scrutiny when it was found that an Irish company acted as a Gazprom front in buying 25 percent of BorsodChem shares.

Panrusgaz, which was Gazprom's agent in Hungary during that battle, is now a focus of the reports on assets and the families of Gazprom officials. In February, Hungarian Prime Minister Viktor Orban called for an investigation of the BorsodChem affair.

Orban said, "Given the secrecy surrounding the purchases, the thought may arise whether or not there is perhaps money laundering taking place, and thus there may be a link to organized crime."

The statement is another measure of the suspicion that surrounds Gazprom, both in Russia and the West.