Smoke and mirrors
Naftogaz lost a lot of money in 2020. But it may have lost something even more precious -- its credibility.
While Ukraine is already struggling to shake off the traditional opacity that comes with the country’s Soviet past, Naftogaz, which claims to be “a pioneer” in corporate governance, seems to avoid transparency.
Despite losses of nearly $700 million in 2020, Naftogaz’s top management this year pocketed multimillion-dollar bonuses, which may not have been a problem if the management wasn’t trying to hide it.
More than $30 million of the bonuses that got paid in 2021 for the year 2020 went to six top executives, led by $12.7 million paid to Naftogaz CEO Andriy Kobolyev after his firing by the government on April 28, 2021, and $10.4 million paid to Yuriy Vitrenko, former executive director and current CEO of Naftogaz.
It’s part of the $46 million, or 1% of the $4.6 billion settlement that Gazprom paid to Naftogaz in 2018 as the result of the Stockholm arbitration, shared in bonuses among 40 company employees.
It’s a well-deserved reward after the company’s legal battle against Gazprom, and it’s not unusual to pay top executives well when they show good results.
But why not disclose it in the company’s financial report, instead of raising doubts about the management’s intentions? Instead, the company reported the general amount of 2020 payments, without revealing who is paid what. It then paid out the Stockholm bonuses in 2021 -- to ensure that they would only be detailed in next year’s financial report, if at all.
Clare Spottiswoode, the chair of Naftogaz’s supervisory board, has a bad relationship with transparency. She told the newspaper that the supervisory board, at the request of the Naftogaz executive team, decided not to break down individual compensation of top executives in 2020 because this information is “politically sensitive.” Given that stance, it’s doubtful that the Stockholm bonuses would have been broken out next year for the public to see.
After the Kyiv Post’s publication on this topic on July 6, Spottiswoode gave a detailed response to the newspaper, in which she stated that the remuneration was disclosed, but that the bonus payments were not, because they should be part of next year’s financial report.
In turn, Kobolyev took to social media to claim he didn’t receive any compensation, saying that his compensation since March 2020 “amounted to zero hryvnias.” He also promised to reveal more, soon, but is yet to do so.
Meanwhile, Naftogaz’s recent decision to avoid using Ukraine’s opensource procurement system Prozorro to buy pipelines and equipment raises even more suspicion of the company’s strategy. A strategy the Kyiv Post will closely follow, to see through the company’s smoke and mirrors.