Example 1 Memo- Gazprom and Itera
In case study of Gazprom and Itera, we see how diverse companies and governmental organizations can potentially manage to exploit a large company including Gazprom for the large earnings. Gazprom can be described as large gas and essential oil company that is certainly valued extremely cheaply in comparison to other significant oil and gas companies (such because Exxon Mobil). Browder is a shareholder of Gazprom that identifies a lot of questionable deals that were done by Gazprom and other organizations which have relationships with Gazprom. He can questioning how come the undervaluation could have took place based on the business being conducted by the oil giant.
The challenge that is out there for Gazprom is that the market perceives the organization to have lost 99 percent of their assets, entirely devaluing the buying price of its items. In reality, only 10 percent of its possessions were thieved, and the market is slowly trying to catch up to this truth. Browder is attempting to identify the transactions to be able to solve the best problem currently happening. These transactions include companies that work with Gazprom including Itera (a gas trading company) and PricewaterhouseCoopers (their internal auditor) devaluing the gas and oil Gazprom held in specific situations and reselling that for a profit. In a single example, Itera bought gas valued for $35 a barrel by Turkmen gas and re-sold it to Gazprom to get $45 a barrel. PwC thought this difference was acceptable because of transportation costs, even though all those were previously taken care of independently. In general, having less transparency and accountability getting administered simply by management in Gazprom and its partner businesses was a inability to their stockholders.
Browder's recommendations towards the Russian federal government are essential, mainly because it has a 38% controlling stake in Gazprom. Because the great majority of the operations conducted simply by Gazprom arise within Russia's boundaries, it really is up to the authorities to set the correct standards...