BBC News | BUSINESS | Kremlin grabs control at Gazprom

The Kremlin has tightened its control over Gazprom, the world's biggest gas company, after winning a majority of seats on the firm's board at its annual general meeting.

Although the government owns 38% of Gazprom's shares, it is keen to have more of a say in its management, part of a wider ongoing campaign to increase state control over business.

Gazprom, which produces one-quarter of the world's gas, is vital to the Russian economy, accounting for 8% of gross domestic product and one-fifth of its tax revenues.

Investors hope the board changes will lead to more accountability about what company managers do with assets and cash flow.

Gazprom's shares are traded internationally in the form of American Depositary Receipts, but their performance over the last few years has been dampened by investors' concerns over transparency.

Opaque

Gazprom has long resisted outside attempts to clear up questions about its finances and relationships to other companies.

The most troublesome case has arisen from persistent allegations that Gazprom had a clandestine relationship with Itera, a little-known US-based firm which became a major gas supplier to the ex-Soviet markets that Gazprom controls.

Gazprom's control centre in Moscow
Gazprom supplies gas throughout the ex-Soviet world and beyond

Russia's Audit Chamber, a budgetary watchdog, was charged with investigating links between the two firms, in particular rumours that Gazprom management numbered among Itera's shareholders.

Gazprom has repeatedly denied any close relationship with Itera.

And while the Gazprom AGM was under way in Moscow, Itera announced that the Audit Chamber had found nothing suspicious.

The chamber's official report has not yet been released.

New faces

Shareholders elected six government representatives to the 11-member board - one more than previously.

Management now has three seats, Germany's Ruhrgas has one seat and one went to Boris Fyodorov, a former finance minister who has become a vocal campaigner on corporate governance.

The AGM also effectively handed the government the power to sack the chief executive, amending Gazprom's by-laws to require only a simple board majority to force the official's departure.

Gazprom's shares have risen by 50% since May, when President Vladimir Putin appointed Alexei Miller, a former political colleague, to replace Rem Vyahkirev as chief executive.


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