Case2_Notes - - High power distance Collectivistic Feminine...

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- High power distance - Collectivistic - Feminine - High uncertainty avoidance Details What does it mean about the totals reserves on page 1? Gazprom entered a strange transaction which took value AWAY o Sold 7 companies at a $5.5 billion loss, losing 10% if its total reserves 10% of Gazprom’s assets were stolen – not 99% Uncovered large-scale bribes by managers and their families to politicians, which led investors to call for an independent audit o Gazprom rejected idea, and used internal auditor (PwC) Gazprom executives engaged in patent misconduct for the benefit of Itera, whose assets ultimately went to the executives themselves PwC’s economic evaluations were ridiculous Purgaz: joint venture between Gazprom and Itera o Took 49% stake for nothing concrete o Sold 32% to Itera for $1200!!! o Since Purgaz was valued at $1.8 billion, 32% would be 566million – a $564,800 loss!!! PwC cash shortages led to deal But Gazprom suffered from cash shortages ($616 million) because they were funneling their money into Itera Gazprom is a poor company to make Itera rich o PwC didn’t take a firm stand against Gazprom Siberian scam: Yamal-Nenets tax scam between Gazprom and Itera o Drained $5.53 billion in cash from Gazprom over 3 years o “Gazprom owed significant back taxes in the Yamal-Nenets region in northeastern Siberia Paid in gas valued at $2-$4 Yamal-Nenets, needing something to do with the huge amounts of gas, transferred gas to gas trader – Itera for the $2-$4 Then Itera sold it for $30-$90! If Gazprom sold 5% of the gas it gave Y-N in the first place, it could have covered their debt The remaining 95% could be sold for a $5.5 billion profit Again, PwC defended Gazprom Negotiations with Niyazov: Vyakhirev negotiated with Turkmenistan on behalf of Itera o Itera bought Turkmen gas at $35.4 and resold it to Gazprom at $45 ($87 million profit)
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o Although PwC argued that the profit covered transportation cost, Gazprom reimbursed Itera for that
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This note was uploaded on 09/08/2011 for the course GEB 3375H taught by Professor Robertsweo during the Spring '11 term at University of Central Florida.

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Case2_Notes - - High power distance Collectivistic Feminine...

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