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[Third Issue of the Day]
#13
Moscow Times
January 10, 2002
Top Sibur Executives Hauled In By Feds
By Anna Raff
Staff Writer
A day after ransacking Sibur's headquarters, federal prosecutors Wednesday detained the CEO and board chairman of the country's largest petrochemical holding as part of an investigation into theft at Gazprom.
A Prosecutor General's Office spokesman said Sibur chief executive Yakov Goldovsky and board chairman Vyacheslav Sheremet -- who is also a Gazprom first deputy CEO -- were being held on charges of abuse of authority. A third executive, vice president Yevgeny Kozhits, was also being held.
It was not clear late Wednesday whether the three executives were still being questioned.
Prosecutors are investigating the illegal sale of 2.6 billion rubles ($86 million) worth of Gazprom assets, the prosecutor's office said in a statement. The prosecutor's office did not know exactly which assets were sold, nor could it comment on when the alleged crimes took place.
The criminal case against these managers was opened Monday, and a surprise raid on Sibur headquarters followed Tuesday. Vice president Valery Pisaryov assumed the duties of Sibur CEO on Wednesday, Interfax reported.
These latest allegations of asset stripping are the climax of a long-standing struggle between Gazprom, the nation's gas monopoly, and Sibur, which is Russia's leading producer of petrochemicals and is 51 percent owned by Gazprom.
The appearance of prosecutors is a crippling blow to Gazprom's old guard -- led by former Gazprom CEO Rem Vyakhirev -- and a boost to new management, led by current chief Alexei Miller, a friend of President Vladimir Putin who was appointed in May to replace Vyakhirev.
During the former management's reign, Sheremet was considered Vyakhirev's right-hand man. He was loathed by Gazprom's minority shareholders -- including board member and former Finance Minister Boris Fyodorov -- for buying Gazprom assets at rock-bottom prices in his family members' names.
In the past, a sudden flurry of activity on the part of the prosecutors has rarely led to actual prosecutions. But a slew of arrests is usually enough to scare those the Kremlin targets for wrongdoing, said James Henderson, head of research at the Renaissance Capital brokerage.
"Actual prosecution would be the most dramatic sign of change," Henderson said. "But at the end of the day, officials usually come out and say that nothing illegal had happened."
In a press release, Gazprom said it had sent a stack of incriminating evidence to Prosecutor General Vladimir Ustinov, and Prime-Tass reported that top Gazprom managers sent the prosecutor's office a letter expressly asking for an investigation into the theft of assets.
"Gazprom has continually kept law enforcement officials up to date on how Sibur is damaging the interests of its shareholders and creditors by selling the assets of subsidiaries," the press release said.
It also appears that Gazprom is using these strong-arm tactics to force Sibur to pay back its debt of $827 million. In November, the Gazprom board decided to restructure the debt in a long-term agreement, and all of Sibur's assets are to act as collateral for the debt.
In an April speech, Putin ordered Gazprom management to stop the flow of "millions" from the gas monopoly, and ever since Gazprom has been on the offensive with rogue subsidiaries that threatened to break from the gas giant's grasp. The government is Gazprom's largest shareholder, with 38 percent.
Assets potentially worth billions of dollars -- such as stakes in gas-condensate producer Rospan and Russian-Hungarian joint venture Panrusgas -- have landed in the hands of Gazprom managers and their relatives since the former Soviet Gas Ministry was incorporated in the early 1990s.
Late last year, Goldovsky threatened a share emission that would have shrunk Gazprom's stake in Sibur from 51 percent to 4 percent. Had the emission taken place (it was scheduled for Nov. 4 but later canceled), Gazprom would have been required to pay some $800 million to $900 million to retain its stake. But even then, Gazprom would have lost control due to a planned issue of preferred shares to businessmen close to Goldovsky.
An extraordinary meeting of Sibur shareholders was scheduled for Wednesday to resolve questions of control at the subsidiary, but was canceled because a quorum could not be met. Only 13.33 percent of votes were represented as the meeting convened at 11 a.m.
According to the agenda, shareholders were to elect a new board of directors as well as align the company charter with a new federal law.
Fundamental changes to the law on joint stock companies came into effect Jan. 1. Among them is the following provision: A simple majority is the most that can be required to remove the chief executive.
This is the crux of Gazprom's problems with Sibur. Miller and Gazprom's new managers have tried to oust Goldovsky from power for the past six months, but have been unable to do so because Sibur's charter requires the approval of 75 percent of shareholders in order to do so.
"With the 75 percent requirement, it was impossible to get rid of the general director, even if there were important reasons to get rid of him, even if he had his hand in the company's cash," said a lawyer with a Western law firm in Moscow.
In a statement, Gazprom said it boycotted the meeting because "more time is needed to agree upon the new version of the company charter." A source inside the company said that shareholders tied to Sibur management were adamant in their refusal to change that article of the charter.
Even with a majority of Sibur's shares -- acquired in 1998 -- Gazprom has a minority on Sibur's 17-member board. On Wednesday, the Kommersant newspaper reported that the number of seats was to be reduced to nine: Four would go to Gazprom managers, four to Sibur and one director would be independent -- former Dresdner Bank CEO Walter Bernhard.
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