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The BBC's Moscow correspondent Robert Parsons
"No-one doubts that the Kremlin... played a critical role"
 real 28k

Wednesday, 30 May, 2001, 15:49 GMT 16:49 UK
Gazprom boss fired
Gazprom gas workers
Gazprom workers: Tapping a quarter of the world's known gas reserves
A close ally of Russian President Vladimir Putin has been appointed to take charge of the country's most powerful company, Gazprom, hours after its board members fired chief executive Rem Vyakhirev.

The 39-year-old deputy energy minister Alexei Miller will replace Mr Vyakhirev, 66.

"He has bureaucratic experience, but bureaucratic experience and business experience are two different things," said Troika Dialog oil and gas analyst Valery Nesterov, questioning whether Mr Miller has the skills to manage Gazprom.

The change in management at the gas company came after persistent corruption allegations against Mr Vyakhirev.

The board's vote on whether to dispose of Mr Vyakhirev's services had been seen as a key test of whether the Kremlin was serious about cleaning up the image of Russian business.

According to Russia's Interfax news agency, Mr Miller used to work in the foreign relations department of the St Petersburg mayor's office in the early 1990s - about the time the department was headed by Mr Putin.

He became deputy energy minister last year after Mr Putin's rise to the presidency, having earlier headed the Baltic Pipeline System - a project aimed at carrying Russian crude oil to Europe.

Under pressure

The position of Gazprom chief executive is a prominent one - Gazprom controls a quarter of the world's known gas reserves, and accounts for a fifth of Russia's export revenues and taxes.

But the company has been plagued by scandal, including allegations of mismanagement, corruption and nepotism.

And the Russian government has come under growing pressure to control the company's management more tightly.

Analysts said Wednesday's board meeting was the corporate equivalent of a presidential election and a true test of whether Russian business was prepared to clean up its act.

Billions missing

Mr Vyakhirev had been chief executive of Gazprom since 1992. During that time, critics say that between two and three billion dollars has gone missing from Gazprom every year.

Rem Vyakhirev, chief executive, Gazprom
Rem Vyakhirev: Fired
An investigation by German and Russian newspapers suggested that bosses at Gazprom used a web of shadow companies to siphon off the company's money and assets to a network of family and friends, including the sons and daughters of Gazprom's current management.

Florian Hassel of the German newspaper the Frankfurter Rundschau has compiled hundreds of pages of official documents charting those manoeuvres.

The BBC asked Gazprom to respond to these allegations, but the company declined to comment.

State role

The Russian state still owns 38% of the company, so ultimately it is the government that decides who is boss.

However, ahead of Wednesday's appointment, there had been a view within the Kremlin that Gazprom had become a state within a state, operating independently from the government.

Financially they'd like to get rid of him because they want someone affiliated with the government so it's easier to understand where money is made

James Henderson
Renaissance Capital
President Putin's decision to get rid of Mr Vyakirev could be a move to change that, James Henderson, head of research at Renaissance Capital had said.

"[Mr Vyakirev is] someone who's associated with the history of Gazprom over the last 40 years and as a result of that, slightly less forward-thinking and less innovative in his ideas."

"Financially they'd like to get rid of him because they really want to have someone in place who's more affiliated with the government so it's much easier for the government to understand where money's being made within the company, what taxes should be being paid and what the real state of the company is," said Mr Henderson.

It seems unlikely that anyone will ever be able to unravel the complex web of companies which now own many of Gazprom's valuable assets - much to the irritation of its smaller shareholders, including Western companies.

However, Mr Henderson says appointing a new chief executive would at least give the Kremlin greater control over the company's lucrative future.

"Our view is that Mr Putin does want to take control of the country's major natural monopoly. And the coincidence of that desire with the ending of Mr Vyakirev's contract gives him a perfect opportunity on Wednesday to oust the incumbent management and to start to introduce new blood that's needed in the company," he said.

Urgently needed

Before the decision to sack Mr Vyakhirev came, the Frankfurter Rundschau's Mr Hassel had said he thought the board might try to find a subtler way of getting rid of Mr Vyakhirev, perhaps by renewing his contract for a transitional period.

"From what we hear, members of the government are willing to clean up Gazprom - and they would sure like to get more money from Gazprom.

"What they are not willing to do it seems is to wash the dirty linen in public. So they don't want to answer questions, they don't want to do an independent audit of Gazprom.

"So it's still the old Soviet habit - that you sometimes clean up, but you do it behind closed doors," said Mr Hassel.

For Gazprom's critics, the worst-case scenario was having Mr Vyakirev stay put - sending a signal to the West that it's business as usual for Russia's wealthy elite.

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See also:

29 May 01 | Business
Gazprom boss awaits fate
25 May 01 | Business
Gazprom management under pressure
04 May 01 | Europe
Russian NTV handed to Gazprom
19 Apr 01 | Europe
Analysis: Russian media troubles
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