#6159
[Second Issue of the Day]
#12
New York Times
March 27, 2002
U.S. Grant to Gazprom Partner Is Questioned
By SABRINA TAVERNISE
MOSCOW, March 26 — Why was the United States government subsidizing Itera Holding, a mysterious company in Jacksonville, Fla., at the center of accusations of corruption swirling around Gazprom, the Russian gas giant?
That is what minority shareholders in Gazprom demanded to know about an $868,000 grant announced by the United States Trade and Development Agency in late February. The agency provides grants to American companies to help them gain contracts overseas.
The grant was intended to pay for an American engineering company to conduct a feasibility study of a gas field in northern Russia that Itera owns with Gazprom. But Gazprom shareholders complained that the grant gave a stamp of approval from the American government to a company they say has benefited improperly from asset-stripping at Gazprom, a charge that Itera denies.
The Trade and Development Agency suspended the grant last week, apparently because of the complaints. Leocadia Zak, the agency's general counsel, said that additional information was needed before the money could be disbursed.
Itera Holding started in the mid-1990's as a small gas trading company and rapidly grew into the No. 2 gas producer in Russia, behind Gazprom. But the transactions with Gazprom that brought about that growth are shrouded in mystery. Gazprom extended more than $600 million in loan guarantees to Itera, and some analysts and shareholders have said that they think Gazprom managers secretly enriched themselves or their relatives by transferring Gazprom assets to Itera.
The managers who ran Gazprom through the 1990's were removed last year by the Russian president, Vladimir V. Putin, who said that enormous sums of money had leaked out of the company. The Russian government is Gazprom's largest shareholder with 38 percent.
Since then, Gazprom's new management has been struggling to regain control of lost assets, generally by exercising buyback options or forcing bankruptcy proceedings for affiliated companies like Sibur and Purgaz.
Itera and former managers of Gazprom said that there were no improper links between the two companies or their executives.
At the heart of the controversy is the question of who owns the Achimovskoye gas field, with estimated reserves of 354 billion cubic meters of gas. An Itera spokesman, Nikolai Semanenko, said that Itera and Gazprom, after creating a joint venture in 2000, applied to the Russian government for the development rights, and that Itera had invested in the field since then.
But a study last year by the accounting firm PricewaterhouseCoopers found that Gazprom had sole ownership rights to the field that dated from before the joint venture, raising questions about how Itera gained its 49 percent interest.
An American official involved in the process said the grant to Itera "made sense because of U.S. exports — we want to give U.S. firms a leg up in the development of this field — and because Itera has become a major player in Eurasian gas."
The American engineering company that was to conduct the study on the gas field, BSI Industries of Columbus, Ohio, is owned and run principally by Vladimir Gokun, 56, a Russian-born American citizen, who had worked in the Soviet gas industry designing transport systems. Mr. Gokun said he met Itera's chief executive, Igor Makarov, at a conference in Houston in 1994.
Mr. Gokun said the grant would give American companies, which sold gas turbines to the Soviet Union before the 1979 invasion of Afghanistan and subsequent embargo, an opportunity to return to the market.
But Ian Hague, a partner at Firebird Management, an equity fund in New York that holds Gazprom shares, called the grant "an endorsement of what we minority shareholders regard as something that could turn out to be a criminal organization," referring to Itera.
Mr. Semanenko dismissed the criticism. "Itera and Gazprom are two independent companies with no relation to each other," he said. Referring to critics, he said, "They've talked about a connection a million times, but not once has anything been proven."
James Fenker, strategist at Troika Dialog, an investment bank in Moscow, said: "It was a closed deal between former Gazprom management and Itera. It just doesn't seem like something the U.S. government should be involved in."
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