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State Theft under the Environmental Cause

I have to confess that there is a certain admirable elegance to the criminal adventures of the Russian government – not only the strategies through which they drag other foreign corporations and politicians into their sticky webs of corruption and ill-gained profit, but also the style with which they do it. Take for example Gazprom at Sakhalin. One would be hard pressed to find another company with such atrocious grades on corporate governance, transparency, and social responsibility – yet when they decided to carry out a partial expropriation of the joint venture to secure the controlling stake, they sent in Oleg Mitvol, the state’s environmental watchdog. What an exquisite irony! Here we have the “socially responsible” Russian government valiantly flying the Green flag, storming in on the big evil foreign investors to cripple them with regulatory attacks while claiming to be protecting their citizens from environmental damage. You gotta give to the Russians – unlike Hugo Chavez or the Algerians, when they steal, they also send a message. A new article in Ethical Corporation today addresses the mysterious “disappearance” of environmental problems at Russian energy projects the moment that a state company takes control. The victims are not just shareholders and investors in these cases – there are real and legitimate environmental concerns that must be addressed – and I don’t know about you, but I would feel more optimistic that corporate social responsibility could be achieved when you are dealing with a firm that actually listens to its shareholders

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Extract from Ethical Corporation:

Gazprom – Moscow’s tightening grip on energy supply Russian regulators are conducting environmental inspections at the now Gazprom-run Sakhalin pipeline project. But the Kremlin’s commitment to green standards remains in doubt At the end of last year, Shell was forced to cede control of the Sakhalin oil project to Russia’s Gazprom. The move was prompted by the suspension by the Russian authorities of a key environmental certificate. Although real environmental concerns did exist, Shell’s forced demotion was widely seen as a political move by the Kremlin to reassert its control over vital resource assets. Certainly, this political explanation seems to have been borne out by subsequent events – the environmental objections to the project seem largely to have evaporated since Sakhalin II entered Gazprom hands. This has left campaigners frustrated. “I cannot say that anything is OK. Everything is probably worse than it was before,” says Dmitry Lisitsyn, the head of Sakhalin Environment Watch, an environmental group based on the island. … It would seem unwise therefore to assume that developments in Sakhalin mean either that the Kremlin has decided to take environmental issues seriously, or that Gazprom is being disciplined in the same way as international companies. A more likely explanation lies in the fact that Shell is still involved in construction at Sakhalin II, and it, not Gazprom, is being blamed for the alleged construction violations. These events seem therefore to demonstrate not a change in Putin’s policy but, rather, more of the same from Moscow’s hard-man.