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“Gazprom is Both Non-Transparent and Inefficient on a Heroic Scale,” says Dr. Martin Smith

A very compelling letter to the editor in today’s Financial Times:

Four reasons why PR cannot come to Gazprom’s aid By DR Martin Smith Sir, Gazprom does indeed have severe image problems (“Gazprom in PR drive to improve its image”, January 17). But there are at least four reasons why, in current conditions, these problems cannot be fixed by any public relations company. The real issues are substantive, not presentational. First, Gazprom is not a commercial business in western terms. Key decisions, such as the appointment of the chief executive and the pricing of major international supply contracts, are taken by the president of the Russian Federation. Second, Gazprom itself, through its subsidiary Gazprom Media, owns considerable media assets, including NTV. As a company it is accustomed both to spinning a government line and to treating journalists with some disdain. This is not good PR. Third, like that of Transneft, Russia’s national oil pipeline company, Gazprom’s business culture is monopolistic to the core. The company is not accustomed to operating in competitive markets. Accordingly the company’s corporate communications tend towards command and control, not persuasion and argument. This does not work in the west. Fourth, though considerably improved since the days of former CEO Rem Viakhirev, Gazprom is still both non-transparent and inefficient on a heroic scale. The biggest private investor in Russia, Hermitage Capital Management, whose chief executive, William Browder, is currently prevented from entering the country, has frequently confronted the company on these issues and other governance failures. Gazprom started out as the Russian ministry of gas in the 1990s. It is still a critical lever of the Russian state. By definition, therefore, it cannot develop a reputation as an independent business. Martin Smith, Managing Director, West Bridge Consulting, London SW1Y 5HP