Ukraine Gas Deal Draws Attention to Secretive Importer

Ukraine Gas Deal Draws Attention to Secretive Importer - New York Times

ANDREW E. KRAMER: " RosUkrEnergo's secretive nature has driven the Parliaments of both Ukraine and Russia to open investigations; meanwhile, Russian journalists have tried to untangle the skein of shell companies and subsidiaries in the ownership structure.

On Tuesday, Ukrainian authorities approved one element of the Jan. 4 agreement. The antimonopoly committee cleared RosUkrEnergo to distribute natural gas inside Ukraine through a joint venture with Naftogaz, the Ukrainian national gas company. But the overarching agreement to import gas from Russia into Ukraine seems to be adrift, amid a growing din of criticism.

RosUkrEnergo, which owns no physical assets, has a dozen or so employees at an office in Zug, Switzerland. The company made $500 million in before-tax profits last year, according to Mr. Putschek.

RosUkrEnergo's role has been to import natural gas from Central Asia to Ukraine through pipelines owned by Gazprom, a service Gazprom is able to deliver without an intermediary making huge profits, analysts say. Ceding this business to an outside company is estimated to cost Russia's majority state-owned natural gas monopoly — and Russian taxpayers as well as Ukrainian natural gas customers — hundreds of millions of dollars.

It is unclear how profitable the latest deal will be to RosUkrEnergo in its role of exclusive supplier of both Russian and Central Asian natural gas to Ukraine.

The investigations in Russia and Ukraine are opening a window on the widespread use of shell companies and offshore dealing, a business practice that proliferated in the 1990's in Russia and remains mostly in the shadows, with the curtain rising briefly only in times of crisis.

One glaring example emerged during an unstable period in the 1990's, when Russian investigators tracking suspected money-laundering traced $70 billion to the address of a shack on Nauru, a tiny island nation in the Pacific. The money was tied to the Russian mafia and, as the schemes unraveled, Western nations imposed sanctions on the island.

In December 2004, a unit of the oil company, Yukos, was sold at a questionable auction to the Baikal Finans Group, an unknown company with a registered address at a dingy cellphone store 170 miles outside Moscow. Baikal paid $9.37 billion, well below the estimated $14 billion to $22 billion value of the unit, and then swiftly sold it to Rosneft, the Russian government-controlled energy company. The sale was interpreted as the beginning of a partial nationalization of Russian oil assets.

RosUkrEnergo evolved from a previous entity registered in a Hungarian village, which grew out of a trading firm called Itera. The newspaper Novaya Gazeta in Russia reported last week that Itera fueled the high-roller lifestyle of a generation of politically connected business tycoons in both Moscow and Kiev, the capital of Ukraine.

Yulia V. Tymoshenko, the former prime minister of Ukraine, has said the current deputy director and the former chief executive at Naftogaz were among the beneficiaries. Neither man responded to phone requests for comment.

In addition, Ms. Tymoshenko's campaign director, Oleksandr Turchinov, who is a former director of Ukraine's secret police, has hinted that an accused Russian organized crime kingpin, Semyon Mogilevich, plays a prominent role in the company. Mr. Mogilevich has been linked to crimes including the 1990's money-laundering scheme in Nauru. Mr. Turchinov was quoted in the newspaper Ukrayinskaya Pravda as saying Mr. Mogilevich had had a hand in the company's operations since 2004.

Mr. Mogilevich is wanted by the F.B.I. on suspicion of racketeering, securities fraud and money-laundering, according to the agency's Web site. The site says Mr. Mogilevich, who also goes by the alias Seva, is believed to be living in Moscow.

Mr. Putschek, however, flatly denied any beneficiary of RosUkrEnergo had criminal ties. Under the contract that settled the gas dispute between Russia and Ukraine, RosUkrEnergo will buy Russian natural gas for $230 per thousand cubic meters and sell it to Ukraine for $95 for the same volume. It will make up the difference by either selling gas in Europe, where the price is around $230 per thousand cubic meters, or by blending the Russian gas with cheaper fuel from Central Asia. Analysts say the potential for profit depends on the fuel mix and the volumes re-exported to Western Europe.

RosUkrEnergo's unnamed investors are represented by Raiffeisen Investments, a branch of the Raiffeisen Zentralbank, based in Vienna. Mr. Putschek, who represents the Raiffeisen investors, says that RosUkrEnergo operates in strict compliance with European banking law. He said he knew the investors, and that the law stated that their names never needed to appear on any stock register; that the shares were owned as bearer instruments, which operate like currency, meaning that whoever possesses the stock certificates owns the company. The certificates are typically kept in bank safe deposit boxes, Mr. Putschek said.

Mr. Putschek said that his shareholders' representatives gathered for board meetings in Zug, but generally exercised no control over operational questions of gas supply or shipment."