Rem Vyakhirev once thought himself one of the country's most powerful people - after the president, of course. Now the former Gazprom chief is wondering just what the Kremlin has in store for him. Vedomosti's Tatyana Lysova, Yulia Bushueva and Yelizaveta Osetinskaya report.
Last week, board members unanimously ousted Rem Vyakhirev from his nine-year position as head of natural gas monopoly Gazprom, the world's largest gas company.
Often described as a state-within-a-state, Gazprom, the country's most important company, it is also considered a hotbed of grand-scale nepotism and corruption. Vyakhirev's fate was seen as a crucial test of President Vladimir Putin's political will to reform the Russian economy.
Now Vyakhirev ?€” who will almost certainly receive the consolation position of Gazprom board chairman ?€” has been replaced with a Putin loyalist, Alexei Miller, and all eyes are turned to whether the gas behemoth will be restructured and to what extent.
How did Vyakhirev land one of the most influential jobs Russia has to offer ?€” and what is he going to do next?
The son of a blacksmith from the village of Bolshaya Chernigovka in the Samara region, Vyakhirev got his start as a graduate of the Kuibyshev Polytechnical Institute. By the age of 31, he was head of an oil stabilizing plant. He spent the next 15 years managing oil extraction companies in the Orenburg region, where he first met future boss Viktor Chernomyrdin, the longtime prime minister who helped form Gazprom from the Soviet gas industry. In 1983, Vyakhirev was called to Moscow and appointed a deputy minister for oil and gas. Six years later, he became Chernomyrdin's deputy at Gazprom, then still state-owned.
Gazprom was privatized in March 1993, the same month then-President Boris Yeltsin made Chernomyrdin his prime minister, and Vyakhirev ascended to the post of Gazprom director. Since then ?€” and until last week ?€” Vyakhirev was absolute ruler at Gazprom, answerable to no one but the president. Prime Minister Chernomyrdin helped his former colleague push forward an arsenal of government decrees and resolutions aimed at limiting the sale and purchase of Gazprom shares ?€” and concentrating control in the hands of management. The result was a joint-stock company with unrivaled restrictions imposed upon the circulation of its shares.
Vyakhirev was then able to control all major transactions involving the shares of his company. In time, he grew confident that the only way he would leave Gazprom would be as a result of his own free will. "I have enough votes, of course," he was quoted as saying in an interview prior to last week's meeting of shareholders. "My comrades and I manage this entire process."
Vyakhirev's position was most stable while Chernomyrdin was prime minister. The former Gazprom boss retained his own stake in the company and was able to protect the company's interests at the highest levels of politics. Many of those dealing with Vyakhirev often spoke of his harsh and sometimes rude manner, his supreme confidence and his total lack of respect for politicians.
"He often spoke of the country's leaders ?€” including prime ministers ?€” in a disparaging and scornful tone," said one state official. "He would often comment on the stupidity of all the governments with which he had had to deal."
Politicians echoed that opinion. "He avoided meeting ministers," said a former State Duma deputy. "The manner in which he spoke to even the most senior officials was quite unpleasant. If you said something he didn't like, he immediately went on the offensive. 'You don't understand, you haven't figured it out,' he'd say.
"In business meetings, he tried to awe interlocutors with his importance," added the former legislator. "He always behaved in such a way as to make it clear to one and all who was the most important person in the country."
There were exceptions. Vyakhirev is said to have actually admired former Prime Minister Yevgeny Primakov; the Gazprom chief was reputed to have been particularly respectful in his dealings with him. Chernomyrdin, on the other hand, was treated as an equal.
Duma Deputy Valery Yazev, who knew Vyakhirev in the later years of Chernomyrdin's tenure as prime minister ?€” which ended in early 1998 ?€” said their relations grew increasingly tense because the prime minister levied a large amount from the company for the state treasury. After Yeltsin dismissed Chernomyrdin's government, Vyakhirev respected his former boss still less. Later, when Chernomyrdin was considering heading the Gazprom board, Vyakhirev became downright rude. "We think it's a good thing ?€” he'll be with us for half a year," he said. "Maybe he'll get on with business rather than sitting around somewhere."
Like many so-called "red directors" ?€” holdovers from Soviet management ?€” Vyakhirev had little respect for the younger generation of politicians. He spoke with contempt of former acting Prime Minister Yegor Gaidar ?€” called the "father" of post-Soviet reform ?€” and former First Deputy Prime Minister Boris Nemtsov, once seen as Yeltsin's possible successor. One source said Vyakhirev "literally tricked" liberal former Prime Minister Sergei Kiriyenko by refusing to pay him the amount of tax he had promised to furnish state coffers.
"This incident went all the way to Yeltsin and the question almost arose of Vyakhirev's retirement," said a former minister. "Rem understood full well that no playing about with the Gazprom charter would help him. He was extremely scared of Yeltsin." Another state official concurred that Vyakhirev feared Yeltsin, but added that deep down, the Gazprom chief also despised the president.
Those he didn't fear, the Gazprom head is said to have treated like subordinates. Igor Bakai, former management chairman of Naftogaz Ukraine, recalled: "At a meeting, Vyakhirev told me and [politician] Julia Tymoshenko: 'I've come here to do business, and if we're going to talk rubbish then I'll turn around and leave.' Rem took the initiative in negotiations and conducted them with severity."
What was Vyakhirev's main goal at Gazprom? Increasing gas extraction, maintaining the company's place on the world market or increasing the company's profits? Federal officials say Vyakhirev had become overly distracted by export projects and paid for this in the end.
A former member of the government, on the other hand, said this was a plus point. "Because Vyakhirev put his money on exporting gas from the very start, Gazprom was preserved, and the company did not go bankrupt or fall apart due to nonpayments. The state should be thankful to him for this."
Duma Deputy Yazev says extraction was the main thing: "In general, Vyakhirev thought gas extraction was more important than questions of transportation. I couldn't understand this for a long time, but now, when we have started to fall behind with extraction, I'm starting to realize that he was aware of this danger a lot earlier than many people."
But in interviews with Vyakhirev, even if they had been carefully edited by his press service, his main task seems to have been to preserve the unity of the mammoth company.
"We have the example of the oil companies. It's reached the stage where they have fallen completely silent. They were divided up and broken down with ease. If the same is done with Gazprom, there'll be a lot of trouble. Therefore, I continue to work," Vyakhirev said in one interview.
It is clear that the "young reformers" and international financial organizations were Vyakhirev's principal enemies. "The IMF and the World Bank are behind attempts to break up the company. They, unlike Gazprom, credit only the Russian government and then not particularly regularly," Vyakhirev said.
In response to officials' assertions concerning reforming the gas monopoly, Vyakhirev said: "We at Gazprom are constantly engaged in reforming and improving the company's structure. And we're not doing this for the benefit of the IMF, but in the interests of Gazprom and Russia."
Vyakhirev is said to have guarded Gazprom's interests jealously. He even spoke harshly of his colleagues in the oil sector when they asked Gazprom to use its pipeline. "There will always be rip-off merchants who want to get a free ride sending Russian gas off to Paris or Nice. So here you have them complaining."
According to Yazev, the Gazprom head valued his first deputy Vyacheslav Sheremet above all: "Vyakhirev and Sheremet have been working in tandem for a long time. They have essentially divided authority at Gazprom between themselves. Vyakhirev was involved in the big international projects, with developing the company, strategy, the relations with the powers that be, while Sheremet was responsible for economic activities, finances."
Many observers have noted that the upper levels of Gazprom's power structure were riddled with internal intrigue. A former member of the government said, for example, that a member of the management who was close to Vyakhirev ?€” Valery Remezov ?€” was forced to leave due to internal competition at Gazprom.
"Vyakhirev had several close social circles, comprising four or five people," said a federal official who frequently had dealings with Gazprom through his work "As a result, none of them knew whether they were the closest to Vyakhirev. Nor did they have a full impression of how business was going in the company. Only Sheremet knew."
Even Vyakhirev is said to have been uninformed as to what some of his subordinates were up to. "Questions of production, he somehow managed to keep to himself, but he gave the finance people a free hand, and therefore, they thought up various shady schemes like SIBUR," said a former minister who asked not to be identified. "This was what brought Vyakhirev down."
Indeed Vyakhirev is said to have only learned of the plan to set up the SIBUR petrochemicals holding from the media, when the process of buying up gas processing plants was already well under way. As one Gazprom employee said, Vyakhirev liked the plan so much that he immediately called in the people who developed it and who had been trying for two months to gain an audience with the Gazprom chief.
"Since 1996, his interests had been far from Russia. He said: 'Why am I sitting here with you. I need to be taking care of Yugoslavia and Moldova,'" recalls one government official.
At this time, Vyakhirev had lots of troubles at home that were not connected with the gas industry. From 1996 to 1997, he was the chairman of the board of trustees of Imperial bank, headed the Sibneft board of directors, was involved with the NTV television company and Promstroibank. He was also Yeltsin's representative during the 1996 presidential elections.
It is difficult to say what Vyakhirev's opinion is of President Vladimir Putin. Answering this question directly in an interview, he gave the following answer: "I don't know. He's a spy, and I'm the uneducated rank-and-file, after all."
Vyakhirev, nonetheless, supported the "spy" in the presidential elections.
"I consider Putin to be the most likely candidate for the chair of president out of the others. You have to do something, you can't just sit there," said Vyakhirev on RTR television's "Zerkalo" program in February 2000.
"Putin is a young man, he wants to work, so why not let him? It's God's will," Vyakhirev said, suggesting he again hold the post of presidential representative as he had with Yeltsin during the 1996 elections.
"I was witness to Rem Ivanovich's campaigning in the Yamal-Nenets and Khanty-Mansiisk autonomous districts and how he urged voters to choose Putin," Duma Deputy Yazev recalled. "He seemed extremely sincere."
However, Vyakhirev clearly had no particular political inclinations, indeed he seems to have had little time for politics in general.
"I have no intention in getting involved in all this stupidity [politics]. I'm an engineer after all," he said in an interview with Kommersant newspaper. And on the same occasion, he added: "They're in politics, which I don't understand at all."
Vyakhirev never tired of saying Gazprom and politics were "not particularly compatible." But he couldn't ignore the political world altogether. His participation in the election marathons was predetermined by the size of his corporation. He realized that millions of voters stood behind Gazprom.
However, not all his political experiences were successful. In the last Duma elections, Gazprom lost out, Yazev said. They were unable to push through all of their candidates.
"But essentially, Vyakhirev wasn't involved in this himself ?€” other people were responsible," Yazev said.
He added that during the onslaught of the young reformers, Vyakhirev drew closer to Moscow Mayor Yury Luzhkov.
"At this time, Luzhkov was part of the opposition and relations with him to an extent reflected badly on Vyakhirev [with the Kremlin]. I wouldn't say it was a political mistake, but it certainly played a role," Yazev said.
Retirement came as no surprise to anyone, least of all Vyakhirev. He started to speak of his coming departure at the end of 1999 and even named his successor ?€” his good friend Sheremet.
In response to a question about his future plans, he replied: "At some point, I'd like to manage a big farm. I've bought some land and started building something. God willing, I'll have a cowshed, a decent stable, hen house and sheep ?€¦ I like cattle."
"No matter what he said, I'm sure he would have wanted to stay with Gazprom and fight for it as he knew how," said a federal official.
On the eve of a general shareholders meeting in 1999 when tycoon Boris Berezovsky took up the attack on Gazprom and Vyakhirev's retirement was starting to look likely, the-then Gazprom head described the future of his company if he were to retire.
"It's unpleasant. Money will be siphoned off. Some of it will go into peoples' pockets. The majority of it will go to someone in particular."
Vyakhirev's co-workers don't believe he has left the company.
"We didn't even mark his departure yesterday, after all, in essence nothing terrible has happened, just as before, he will be alongside us," said Arngolt Bekker, head of Stroitransgaz and a member of the Gazprom board.
"And the fact that a younger man is taking his place is also perfectly natural, we will support him."
Now Bekker and Vyakhirev will be colleagues on the board of directors.
"He and I agreed that instead of drawing our pension, we'll raise chickens. But since Vyakhirev is staying, there's no rush," Bekker said.
Last week, board members unanimously ousted Rem Vyakhirev from his nine-year position as head of natural gas monopoly Gazprom, the world's largest gas company.
Often described as a state-within-a-state, Gazprom, the country's most important company, it is also considered a hotbed of grand-scale nepotism and corruption. Vyakhirev's fate was seen as a crucial test of President Vladimir Putin's political will to reform the Russian economy.
Now Vyakhirev ?€” who will almost certainly receive the consolation position of Gazprom board chairman ?€” has been replaced with a Putin loyalist, Alexei Miller, and all eyes are turned to whether the gas behemoth will be restructured and to what extent.
How did Vyakhirev land one of the most influential jobs Russia has to offer ?€” and what is he going to do next?
Humble Beginnings
The son of a blacksmith from the village of Bolshaya Chernigovka in the Samara region, Vyakhirev got his start as a graduate of the Kuibyshev Polytechnical Institute. By the age of 31, he was head of an oil stabilizing plant. He spent the next 15 years managing oil extraction companies in the Orenburg region, where he first met future boss Viktor Chernomyrdin, the longtime prime minister who helped form Gazprom from the Soviet gas industry. In 1983, Vyakhirev was called to Moscow and appointed a deputy minister for oil and gas. Six years later, he became Chernomyrdin's deputy at Gazprom, then still state-owned.
Gazprom was privatized in March 1993, the same month then-President Boris Yeltsin made Chernomyrdin his prime minister, and Vyakhirev ascended to the post of Gazprom director. Since then ?€” and until last week ?€” Vyakhirev was absolute ruler at Gazprom, answerable to no one but the president. Prime Minister Chernomyrdin helped his former colleague push forward an arsenal of government decrees and resolutions aimed at limiting the sale and purchase of Gazprom shares ?€” and concentrating control in the hands of management. The result was a joint-stock company with unrivaled restrictions imposed upon the circulation of its shares.
Vyakhirev was then able to control all major transactions involving the shares of his company. In time, he grew confident that the only way he would leave Gazprom would be as a result of his own free will. "I have enough votes, of course," he was quoted as saying in an interview prior to last week's meeting of shareholders. "My comrades and I manage this entire process."
Seat of Power
Vyakhirev's position was most stable while Chernomyrdin was prime minister. The former Gazprom boss retained his own stake in the company and was able to protect the company's interests at the highest levels of politics. Many of those dealing with Vyakhirev often spoke of his harsh and sometimes rude manner, his supreme confidence and his total lack of respect for politicians.
"He often spoke of the country's leaders ?€” including prime ministers ?€” in a disparaging and scornful tone," said one state official. "He would often comment on the stupidity of all the governments with which he had had to deal."
Politicians echoed that opinion. "He avoided meeting ministers," said a former State Duma deputy. "The manner in which he spoke to even the most senior officials was quite unpleasant. If you said something he didn't like, he immediately went on the offensive. 'You don't understand, you haven't figured it out,' he'd say.
"In business meetings, he tried to awe interlocutors with his importance," added the former legislator. "He always behaved in such a way as to make it clear to one and all who was the most important person in the country."
There were exceptions. Vyakhirev is said to have actually admired former Prime Minister Yevgeny Primakov; the Gazprom chief was reputed to have been particularly respectful in his dealings with him. Chernomyrdin, on the other hand, was treated as an equal.
Duma Deputy Valery Yazev, who knew Vyakhirev in the later years of Chernomyrdin's tenure as prime minister ?€” which ended in early 1998 ?€” said their relations grew increasingly tense because the prime minister levied a large amount from the company for the state treasury. After Yeltsin dismissed Chernomyrdin's government, Vyakhirev respected his former boss still less. Later, when Chernomyrdin was considering heading the Gazprom board, Vyakhirev became downright rude. "We think it's a good thing ?€” he'll be with us for half a year," he said. "Maybe he'll get on with business rather than sitting around somewhere."
Like many so-called "red directors" ?€” holdovers from Soviet management ?€” Vyakhirev had little respect for the younger generation of politicians. He spoke with contempt of former acting Prime Minister Yegor Gaidar ?€” called the "father" of post-Soviet reform ?€” and former First Deputy Prime Minister Boris Nemtsov, once seen as Yeltsin's possible successor. One source said Vyakhirev "literally tricked" liberal former Prime Minister Sergei Kiriyenko by refusing to pay him the amount of tax he had promised to furnish state coffers.
"This incident went all the way to Yeltsin and the question almost arose of Vyakhirev's retirement," said a former minister. "Rem understood full well that no playing about with the Gazprom charter would help him. He was extremely scared of Yeltsin." Another state official concurred that Vyakhirev feared Yeltsin, but added that deep down, the Gazprom chief also despised the president.
Those he didn't fear, the Gazprom head is said to have treated like subordinates. Igor Bakai, former management chairman of Naftogaz Ukraine, recalled: "At a meeting, Vyakhirev told me and [politician] Julia Tymoshenko: 'I've come here to do business, and if we're going to talk rubbish then I'll turn around and leave.' Rem took the initiative in negotiations and conducted them with severity."
At Gazprom's Helm
What was Vyakhirev's main goal at Gazprom? Increasing gas extraction, maintaining the company's place on the world market or increasing the company's profits? Federal officials say Vyakhirev had become overly distracted by export projects and paid for this in the end.
A former member of the government, on the other hand, said this was a plus point. "Because Vyakhirev put his money on exporting gas from the very start, Gazprom was preserved, and the company did not go bankrupt or fall apart due to nonpayments. The state should be thankful to him for this."
Duma Deputy Yazev says extraction was the main thing: "In general, Vyakhirev thought gas extraction was more important than questions of transportation. I couldn't understand this for a long time, but now, when we have started to fall behind with extraction, I'm starting to realize that he was aware of this danger a lot earlier than many people."
But in interviews with Vyakhirev, even if they had been carefully edited by his press service, his main task seems to have been to preserve the unity of the mammoth company.
"We have the example of the oil companies. It's reached the stage where they have fallen completely silent. They were divided up and broken down with ease. If the same is done with Gazprom, there'll be a lot of trouble. Therefore, I continue to work," Vyakhirev said in one interview.
It is clear that the "young reformers" and international financial organizations were Vyakhirev's principal enemies. "The IMF and the World Bank are behind attempts to break up the company. They, unlike Gazprom, credit only the Russian government and then not particularly regularly," Vyakhirev said.
In response to officials' assertions concerning reforming the gas monopoly, Vyakhirev said: "We at Gazprom are constantly engaged in reforming and improving the company's structure. And we're not doing this for the benefit of the IMF, but in the interests of Gazprom and Russia."
Vyakhirev is said to have guarded Gazprom's interests jealously. He even spoke harshly of his colleagues in the oil sector when they asked Gazprom to use its pipeline. "There will always be rip-off merchants who want to get a free ride sending Russian gas off to Paris or Nice. So here you have them complaining."
Comrades-in-Arms
According to Yazev, the Gazprom head valued his first deputy Vyacheslav Sheremet above all: "Vyakhirev and Sheremet have been working in tandem for a long time. They have essentially divided authority at Gazprom between themselves. Vyakhirev was involved in the big international projects, with developing the company, strategy, the relations with the powers that be, while Sheremet was responsible for economic activities, finances."
Many observers have noted that the upper levels of Gazprom's power structure were riddled with internal intrigue. A former member of the government said, for example, that a member of the management who was close to Vyakhirev ?€” Valery Remezov ?€” was forced to leave due to internal competition at Gazprom.
"Vyakhirev had several close social circles, comprising four or five people," said a federal official who frequently had dealings with Gazprom through his work "As a result, none of them knew whether they were the closest to Vyakhirev. Nor did they have a full impression of how business was going in the company. Only Sheremet knew."
Even Vyakhirev is said to have been uninformed as to what some of his subordinates were up to. "Questions of production, he somehow managed to keep to himself, but he gave the finance people a free hand, and therefore, they thought up various shady schemes like SIBUR," said a former minister who asked not to be identified. "This was what brought Vyakhirev down."
Indeed Vyakhirev is said to have only learned of the plan to set up the SIBUR petrochemicals holding from the media, when the process of buying up gas processing plants was already well under way. As one Gazprom employee said, Vyakhirev liked the plan so much that he immediately called in the people who developed it and who had been trying for two months to gain an audience with the Gazprom chief.
"Since 1996, his interests had been far from Russia. He said: 'Why am I sitting here with you. I need to be taking care of Yugoslavia and Moldova,'" recalls one government official.
At this time, Vyakhirev had lots of troubles at home that were not connected with the gas industry. From 1996 to 1997, he was the chairman of the board of trustees of Imperial bank, headed the Sibneft board of directors, was involved with the NTV television company and Promstroibank. He was also Yeltsin's representative during the 1996 presidential elections.
Political Loyalty
It is difficult to say what Vyakhirev's opinion is of President Vladimir Putin. Answering this question directly in an interview, he gave the following answer: "I don't know. He's a spy, and I'm the uneducated rank-and-file, after all."
Vyakhirev, nonetheless, supported the "spy" in the presidential elections.
"I consider Putin to be the most likely candidate for the chair of president out of the others. You have to do something, you can't just sit there," said Vyakhirev on RTR television's "Zerkalo" program in February 2000.
"Putin is a young man, he wants to work, so why not let him? It's God's will," Vyakhirev said, suggesting he again hold the post of presidential representative as he had with Yeltsin during the 1996 elections.
"I was witness to Rem Ivanovich's campaigning in the Yamal-Nenets and Khanty-Mansiisk autonomous districts and how he urged voters to choose Putin," Duma Deputy Yazev recalled. "He seemed extremely sincere."
However, Vyakhirev clearly had no particular political inclinations, indeed he seems to have had little time for politics in general.
"I have no intention in getting involved in all this stupidity [politics]. I'm an engineer after all," he said in an interview with Kommersant newspaper. And on the same occasion, he added: "They're in politics, which I don't understand at all."
Vyakhirev never tired of saying Gazprom and politics were "not particularly compatible." But he couldn't ignore the political world altogether. His participation in the election marathons was predetermined by the size of his corporation. He realized that millions of voters stood behind Gazprom.
However, not all his political experiences were successful. In the last Duma elections, Gazprom lost out, Yazev said. They were unable to push through all of their candidates.
"But essentially, Vyakhirev wasn't involved in this himself ?€” other people were responsible," Yazev said.
He added that during the onslaught of the young reformers, Vyakhirev drew closer to Moscow Mayor Yury Luzhkov.
"At this time, Luzhkov was part of the opposition and relations with him to an extent reflected badly on Vyakhirev [with the Kremlin]. I wouldn't say it was a political mistake, but it certainly played a role," Yazev said.
Retirement
Retirement came as no surprise to anyone, least of all Vyakhirev. He started to speak of his coming departure at the end of 1999 and even named his successor ?€” his good friend Sheremet.
In response to a question about his future plans, he replied: "At some point, I'd like to manage a big farm. I've bought some land and started building something. God willing, I'll have a cowshed, a decent stable, hen house and sheep ?€¦ I like cattle."
"No matter what he said, I'm sure he would have wanted to stay with Gazprom and fight for it as he knew how," said a federal official.
On the eve of a general shareholders meeting in 1999 when tycoon Boris Berezovsky took up the attack on Gazprom and Vyakhirev's retirement was starting to look likely, the-then Gazprom head described the future of his company if he were to retire.
"It's unpleasant. Money will be siphoned off. Some of it will go into peoples' pockets. The majority of it will go to someone in particular."
Vyakhirev's co-workers don't believe he has left the company.
"We didn't even mark his departure yesterday, after all, in essence nothing terrible has happened, just as before, he will be alongside us," said Arngolt Bekker, head of Stroitransgaz and a member of the Gazprom board.
"And the fact that a younger man is taking his place is also perfectly natural, we will support him."
Now Bekker and Vyakhirev will be colleagues on the board of directors.
"He and I agreed that instead of drawing our pension, we'll raise chickens. But since Vyakhirev is staying, there's no rush," Bekker said.
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