Publication: Monitor Volume: 8 Issue: 51

Viktor Vasiliev, the director of the Moscow division of the Tax Police, said yesterday that the Tax Police were investigating whether Gazprom had evaded paying 30 billion rubles (some US$1 billion) in taxes. A decision would be made, he said, by the end of March on whether to press charges against the 38-percent state-owned natural gas monopoly. Vasiliev made this revelation almost in passing, during a press conference devoted to his division’s tenth anniversary. Pressed by journalists, he said that the alleged violations included underreporting proceeds from the sale of gas and sales of natural gas at below-market prices. This had an almost immediate effect on Russia’s stock market, with Gazprom shares losing 7.6 percent of their value and the company’s market capitalization shrinking by US$1.1 billion. Gazprom, for its part, denied that it had dodged taxes, with deputy CEO Vitaly Savelev saying in a press release that the “disclosure of the results of an incomplete inspection” by the Tax Police was both “unethical” and could “seriously hurt Gazprom’s business reputation in the domestic and foreign capital markets.”

Vasiliev’s comments and Gazprom’s shrinking share value were accompanied by various rumors. According to one, the Tax Police announcement concerning its probe into alleged Gazprom tax evasion was part of a larger effort aimed at ousting the gas giant’s CEO, Aleksei Miller. If Gazprom is formally charged with tax evasion, wrote, the move will be one aimed “not against Gazprom as a whole, but against Miller as head of the concern.” The website quoted unnamed sources in Gazprom as saying that the Kremlin has known for a long time that Miller would not last in the post, but that because President Vladimir Putin had personally been involved in picking Miller to head the gas monopoly, a “very weighty basis” was needed for his ouster (, March 12). Kommersant, meanwhile, reported that Vasiliev is a member of the “Petersburg team”–known elsewhere in the Russian press as the “Chekists”–and, like many other members of that group, a former KGB officer from Russia’s second city. This, according to the paper, “may serve as confirmation of a fight between various forces within Vladimir Putin’s inner circle for control over Gazprom” (Kommersant, March 13).

If the charges concerning alleged Gazprom tax evasion are indeed aimed against Miller, it would be ironic, given that he was putatively brought in last year to head the gas monopoly in order to clean up the company and make its activities more transparent. Since Miller’s accession, several Gazprom affiliates whose managers allegedly have close ties to Gazprom’s old management team have been targeted for criminal investigation. In January, Yakov Goldovsky, president of Sibur, a petrochemical company 51-percent owned by Gazprom, along with Yevgeny Koshchits, Sibur’s vice president, and Vyacheslav Sheremet, Sibur’s board chairman and a top Gazprom official, were jailed on suspicion of having abused their positions. Last month, Goldovsky and Koshchits were formally charged with colluding to siphon off more than US$80 million worth of Sibur’s assets. Earlier this week, a Siberian judge found in favor of Gazprom and appointed an external manager to oversee Sibur’s operations (Moscow Times, March 6, 12; see also the Monitor, January 10). In January, Yury Vyakhirev, son of former Gazprom CEO Rem Vyakhirev, resigned as the head of Gazexport, which is fully owned by Gazprom, after the Prosecutor General’s Office launched an investigation into charges that Gazexport used middleman companies to purchase gas from Gazprom and sell it at a much higher price abroad (Moscow Times, January 30).

At the same time, there were hints prior to yesterday’s press conference by the Tax Police that Miller’s accession had not brought an end to financial malfeasance at Gazprom. In December, Russian media reported that the state’s Vneshtorgbank had loaned the gas giant 15 billion rubles (US$500 million) to help it pay its taxes by the end of last year. The money for the loan, which was reportedly made for a year at an interest rate lower than the rates asked by Western banks, originated with Russia’s Central Bank, which deposited US$700 million in Vneshtorgbank in early December (see the Monitor, January 10).

In any case, the current investigation of alleged Gazprom tax evasion may have aims other than ousting Aleksei Miller. The market for Gazprom shares may soon be liberalized (there is currently a two-tier system for selling Gazprom shares that limits foreign investors to buying American Depositary Shares). “The appearance of super-negative information about the company,” as one observer put it, would provide companies with insider information about the timetable for liberalizing the Gazprom shares market–an excellent opportunity to buy up shares cheaply (Kommersant, March 13). Meanwhile, Vedomosti put forward another theory. It quoted an anonymous source “close to one of the state’s representatives on Gazprom’s board of directors” as saying that the announcement of an investigation into alleged Gazprom tax-dodging made it much more difficult for the company to insist, as it has been doing, on raising gas prices and receiving tax breaks (, March 13).