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US probe into RosUkrEnergo



By Upstream staff 

The US Justice Department's organised crime division is investigating RosUkrEnergo, the company that supplies Russian and Central Asian natural gas to Ukraine, it was reported today.

Russian gas monopoly Gazprom owns half of RosUkrEnergo, whose opaque ownership structure has come under the spotlight amid growing fears in Europe over the security of energy supplies from Russia after Gazprom briefly halted supplies to Ukraine in January in a price dispute.

The Wall Street Journal quoted sources familiar with the probe as saying that representatives of Swiss-registered RosUkrEnergo and Raiffeisen Investment, a unit of Vienna-based Raiffeisen Bank that holds 50% of the company's shares for undisclosed owners, met recently with US investigators in Washington.

They discussed the company's ownership but details of what drew the attention of US officials remain unclear, it said.

Spokesmen at Raiffeisen and RosUkrEnergo declined comment, while a Justice Department spokesman in Washington said he could not confirm or deny the existence of a criminal probe, it said.

Officials from Gazprom, Russia and Ukraine say that they do not know the real beneficiaries behind the Raiffeisen stake.

Gazprom's chief spokesman Sergei Kupriyanov, asked about the Journal report, told Reuters: "The RosUkrEnergo business is absolutely transparent."

Asked about the company's ownership structure, Kupriyanov said: "That is a question that should be put to the Ukrainians."

Diplomats in Moscow confirmed that the US Justice Department had been making discreet inquiries about RosUkrEnergo. "There was an expression of interest," one told Reuters.

The Ukrainian government had no immediate comment, nor did a US embassy spokeswoman contacted by Reuters in Moscow. Nobody could be reached for comment at Raiffeisen Investment in Vienna.

The report comes at a time when the Kremlin is seeking to use its Group of Eight presidency to champion energy security while concerns grow in Europe over Gazprom's expansion plans.

Gazprom warned EU diplomats this week against blocking its plans to expand into Western Europe, threatening in a statement that it could sell its gas supplies elsewhere instead.

Gazprom supplies a quarter of Europe's gas, 80% of which crosses Ukraine.

The Journal said RosUkrEnergo was reconsidering plans for a public share offering that required disclosing its true owners.

Doubts about RosUkrenergo's ownership structure prompted its auditors to resign in November, said the Journal, quoting a resignation letter from the Vienna office of KPMG International obtained by Global Witness, a London-based, privately-funded non-profit organisation that investigates corruption.

A KPMG spokesman declined comment to the paper.

A forthcoming Global Witness report provides new details about RosUkrEnergo, detailing a 15-year history of arbitrage by opaque middle companies given lucrative rights to sell Central Asian gas to Ukraine via Gazprom pipelines, the Journal said.

Hermitage Capital, Russia's biggest investment fund with over $3 billion in assets under management, has said in a report that Eural Trans Gas, hired by Gazprom in 2002 to transport gas out of Central Asia to Ukraine, received $767 million which it said should have been earned by Gazprom.

Documents showed Eural Trans Gas was registered in Hungary by three Romanians and an Israeli, Hermitage said in the report last year.

Gazprom has since cancelled Eural Trans Gas's contract, replacing it with RosUkrEnergo.

Hermitage had said RosUkrEnergo reaped $478 million in 2004 - money it said Gazprom should have earned instead.

Hermitage's chief executive William Browder, a US fund manager holding a British passport, was denied entry into Russia in November and deported. He has since been refused a visa.

In Ukraine, RosUkrenergo is at the centre of a bitter political struggle with President Viktor Yushchenko under attack for giving it a central role in a deal with Gazprom to buy gas.


Friday, 21 April, 2006, 09:29 GMT  | last updated: Friday, 21 April, 2006, 10:28 GMT

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