Publication: Monitor Volume: 7 Issue: 100

An unprecedented campaign of “kompromat” against Rem Vyakhirev, CEO of Gazprom, suggests that a change of the guard is imminent at the 38-percent state-controlled natural gas monopoly. An article published this week by the German newspaper Frankfurter Rundschau–based on a five-week investigation and 500 pages of documents–found that Gazprom executives have passed assets potentially worth billions of dollars to their relatives. The documents, which were also made available to the Moscow Times, showed that the owners of Interprocom–a company registered in Hungary in 1989 by former gas executive Mikhail Rakhimkulov–received a host of assets, ranging from a 10-percent stake in Panrusgas–an enterprise Gazprom and Hungarian gas monopolist MOL created to supply an estimated US$23 billion worth of gas to Hungary–to valuable stakes in a Gazprom-owned fiber-optic network, a computer company and a gas distribution equipment importer. In 1997, Interprocom passed into the possession of a company called Horhat, ownership of which was then divided between the offspring of top past and present Gazprom officials, including Vyakhirev and former Prime Minister Viktor Chernomyrdin.

The publication of the results of Frankfurter Rundschau’s investigation followed a spate of other revelations concerning Gazprom. Last week, for example, Boris Federov, the former finance minister who now heads the United Financial Group and sits on Gazprom’s board, charged that US$2-3 billion disappears each year from Gazprom through “corruption, nepotism and simple theft” (Moscow Times, May 21). Fedorov and others have charged that Gazprom’s managers have siphoned off assets into Itera, Russia’s second largest natural gas company, to which they are allegedly linked (see the Monitor, April 2). There have been other reports this week of waste, fraud, abuse and excess by Gazprom’s leadership. According to one of them, Vyakhirev even has a particular type of grass specially flown in to Moscow from Russia’s Far North to feed to his pet reindeer (Gazeta.ru, May 22).

Frankfurter Rundschau should be congratulated for its scoop. However, when kompromat of such a high level finds its way into the press, it is generally the result of strategic leaks by one side or another in a high-level power struggle. In the case of Vyakhirev, the leaks have come just ahead of Gazprom’s annual board meeting, set for May 30. That meeting could be decisive for him, given that his contract as Gazprom’s CEO runs out the following day. In the past, Vyakhirev’s contract has been renewed almost automatically, but there are signs that this may not happen this time, particularly the Russian Federal Securities Commission’s recent decision to postpone renewing an agreement with Vyakhirev giving him the right to hold the state’s 38-percent share in Gazprom in trust. That controversial agreement has been renewed as a matter of routine for some years now (Novaya Gazeta, May 21). All of this suggests that Vyakhirev will be ousted at the end of this month. This impression was made stronger by a report earlier this week that the Kremlin has “recommended” to members of Gazprom’s board–including board chairman Dmitry Medvedev, who happens to be a deputy chief of the presidential administration as well–that they vote against retaining Vyakhirev as CEO. Vyakhirev may be replaced by either Kremlin administration chief Aleksandr Voloshin or a less political candidate–Valentin Nikishin, head of the Mezhregiongaz company (Kommersant, April 21).

Like Vyakhirev, Voloshin has also been the subject of a spate of rumors in the press that he will soon be removed as Kremlin administration chief and replaced by either Emergency Situations Minister Sergei Shoigu or one of President Vladimir Putin’s seven envoys to the country’s federal districts (Vechernaya Moskva, May 16). Such rumors were given further credence by the appearance of a transcript of conversations reportedly taped from Voloshin’s office telephone, published earlier this month by the English-language weekly the eXile and its sister media, the Russian-language Stringer.ru website. The transcripts contained nothing particularly damaging to Voloshin, but some observers took their publication as a sign that his political position has become precarious.