ANALYSIS: Izvestia prints murky revelations about RosUkrEnergo company (05/14/06)

ANALYSIS

Izvestia prints murky revelations about RosUkrEnergo company

by Roman Kupchinsky
RFE/RL Belarus, Ukraine and Moldova Report

On April 26 the Russian newspaper Izvestia, owned by Gazprom Media, published an article naming two hidden beneficiaries of RosUkrEnergo.

The Swiss-registered company, which is half-owned by the Russian gas monopoly Gazprom, has been at the center of a storm of controversy in Ukraine over gas deliveries from Russia and Turkmenistan.

After Yulia Tymoshenko became Ukraine's prime minister in January 2005, the Security Service of Ukraine (SBU) launched an investigation into RosUkrEnergo that failed to uncover the undisclosed beneficiaries of the remaining 50 percent stake in the company.

The investigation was dropped, reportedly on the orders of President Viktor Yushchenko, after Ms. Tymoshenko was dismissed as prime minister in September 2005. Just months later, following a bitter dispute between Ukraine and Russia over gas supplies, RosUkrEnergo was named as the middleman in a new deal for the supply of Russian and Turkmen gas to Ukraine. The development led to claims by the Ukrainian government that the Kremlin had imposed RosUkrEnergo's role on Ukraine.

While clearing up the issue of RosUkrEnergo's beneficiaries, Izvestia failed to shed light on many other outstanding questions regarding the company - and raised a few new ones.

The article was signed by what appears to be a non-existent Russian journalist named "Vladimir Berezhnoi." According to a report in the April 27 edition of The Moscow Times, the article was written by an Izvestia staff member under a pseudonym "after a Gazprom representative showed him the PwC [PricewaterhouseCoopers] audit" that named the previously undisclosed beneficiaries of RosUkrEnergo. "Vladimir Berezhnoi" does not exist, The Moscow Times reported.

The hidden beneficiaries were named as Dmytro Firtash and Ivan Fursin, two Ukrainian nationals. Mr. Firtash, according to Izvestia, holds 90 percent of the shares of the Austrian-based Centragas, which is part of RosUkrEnergo, while Mr. Fursin holds 10 percent.

According to figures provided by Raiffeisen Bank, RosUkrEnergo earned a profit of $500 million in 2005, half of which went to the hidden beneficiaries of Centragas and the other half to Gazprom Bank.

One of the points of contention in the RosUkrEnergo case is whether Gazprom was aware of the beneficiaries of a company it helped create. Gazprom spokesmen have consistently claimed that they did not know who the owners of Centragas were. The Ukrainian side has claimed that it would be inconceivable for Gazprom to enter into a multi-billion-dollar deal without first knowing who they were dealing with. A former SBU investigator close to the case told RFE/RL: "They could have been Chechen terrorists who were using the company to launder money for their own needs. The Gazprom story does not hold water."

Messrs. Firtash's and Fursin's names were revealed after a Swiss-based branch of PricewaterhouseCoopers audited RosUkrEnergo's activities from July 2004 to December 2005. The results of the audit were made available to Gazprom on March 31.

Three weeks later the names appeared in the Izvestia article, which came on the heels of a Wall Street Journal article that reported that the organized-crime unit of the U.S. Department of Justice was conducting an investigation into the ownership structure of RosUkrEnergo. According to the Austrian media, U.S. officials reportedly traveled to Vienna to discuss the case with Austrian banking and government officials, while RosUkrEnergo officials were summoned to Washington for talks.

The article in Izvestia was disdainful of the U.S. investigation and suggested that U.S. law-enforcement officials not interfere. One explanation offered by the Ukrayinska Pravda website as to why the names of the beneficiaries were leaked was that Gazprom was worried that the U.S. investigation of RosUkrEnergo would follow a money trail that could lead to high-level Gazprom officials along with prominent Russian and Ukrainian officials - both past and present.

Messrs. Firtash and Fursin, according to comments printed in The Moscow Times on May 3 by Oleksander Chalyi, a former Ukrainian deputy minister of foreign affairs who was in charge of the latest gas negotiations with Russia, are not the ultimate beneficiaries of RosUkrEnergo. "Firtash is not the end of the chain. He is just the beginning and the beginning of a big scandal for the top leadership of Ukraine," Mr. Chalyi said.

The Ukrayinska Pravda website commented that the release of the information by Izvestia was meant to preempt the U.S. Justice Department's investigation and hopefully end the case before it got too close to the real beneficiaries.

Roman Kupchinsky is the organized crime and terrorism analyst for RFE/RL.

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