Beware of Russians bearing gifts - especially in the form of
gigantic "win-win" deals. In this case, we are talking of Rem
Vyakhirev, who recently made the rounds in Washington. He is an old
friend and protege of Russian Prime Minister Viktor Chernomyrdin
who, by extension, has become a great pal of Vice President Al Gore.
Vyakhirev is chairman of Gazprom, Russia's "privatized"
natural-gas monopoly, which enjoys an unusually unsavory reputation
in a land of Wild West capitalism that would make our 19th-century
robber barons, by comparison, look like Protestant pastors.
Gazprom's boss is in search of loans for his company - and
without question, Gazprom could stand an infusion of capital. For
years the company has skimped on investment, allowing its plants
and pipelines to deteriorate. There is virtually no training or
skills-development - at times its 367,000 employees have gone
without pay. Moreover, management has taken inefficiency to new
heights: Exxon generated $100 billion in revenues last year and
Gazprom about $13 billion. But Exxon ran its worldwide empire with
just 95,000 workers - making its work force some 30 times more
efficient than Gazprom's.
Yet the firm, a Stalinist-era industrial behemoth, inspires big
ideas. It has exclusive control of Russia's natural gas, one-third
of the world's reserves. How much all this is worth is not known,
but estimates range up to $700 billion. How much profit it could
generate is also questionable - because while Gazprom is among the
world's biggest corporations, it is also one of the most opaque. No
one outside its own corporate suite has seen the books.
Price-Waterhouse, its own auditor, is uncertain about the company's
Balance sheets aside, however, Gazprom has structural problems
that are nearly without equal. By law, the company cannot cut off
supplies to Russian electric utilities - its principal domestic
customer - even though they frequently owe money. Worse, individual
Russian consumers rarely pay their electric bills, and foreign
purchasers in Eastern Europe are not much better.
But what one hand takes away, the other gives back. Gazprom has
benefited from unilateral presidential decrees - not legislation -
that provide it unique tax benefits not available to the rest of
Russia's industrial enterprises. Though it was supposedly
privatized two years ago, Gazprom enjoys a very special status. It
is still quasi-state-owned - the Russian government is the largest
shareholder, with some 40 percent of the corporation's common stock.
Until now, the shares have been held at artificially low prices. …