Enron — The New U.S.-Russian Brotherhood

Top managers of an energy giant have been taken into custody. They are charged with using shady subsidiaries and accounting practices to transfer hundreds of millions of shareholders’ dollars into their own pockets.

The arrests came despite the fact that the company in question — a world leader in its sector — has excellent political connections. These executives, if convicted, will face lengthy jail sentences.

If you think we’re talking about Enron, the U.S. energy giant whose sudden collapse in late 2001 has shaken America’s business and political establishment, think again. The corporate culprits we are referring to worked for Gazprom, Russia’s largest company — and the world’s biggest producer and distributor of natural gas.

In 2001, Russia’s President Vladimir Putin reasserted the government’s role in Gazprom’s management. Partly state-owned, Gazprom had been run as a personal fiefdom by its former head Rem Vyakirev and his associates. Mr. Putin appointed his own man, Alexei Miller, as Gazprom’s chief executive — and gave him a mandate to clean up the mess.

The executives now under arrest were associated with Sibur, a little-known Gazprom petrochemical subsidiary. Sibur’s main function appears to have been the enrichment of its managers.

The subsidiary plunged into a spree of acquisitions — and its transactions illegally shifted shareholder assets to companies controlled by Gazprom executives.

This business practice is commonplace in Russia. But the Gazprom crackdown has other Russian energy magnates quavering in their shoes. Despite generous contributions to Mr. Putin’s presidential campaign, they wonder if they will now be saved from jail.

The United States prides itself on being world leader in corporate governance, accounting transparency and financial market oversight. Yet, as details about Enron’s business practices and the political ramifications emerge, the story seems to come straight from Russia.

One key difference is that Gazprom’s executives embezzled money that at least partially belonged to the Russian state which is quite able to defend itself. By contrast, the victims of Enron’s financial shenanigans are mainly small-fry — its workers and numerous small investors.

The only good news for Russia in the Gazprom case, or so it seems, is that no major accounting firm is on the hook for aiding and abetting shady corporate practices — as Arthur Andersen is in the United States. What’s saved Russia from this embarrassment, of course, is that the country’s accounting profession is still in its infancy.

Now that investigations have begun, Enron’s defrauded shareholders and jilted employees might wonder if anyone in the company’s management ranks will share the fate of Gazprom’s executives.

Enron’s generous political contributions to both Democrats and Republicans were not enough to save the company from bankruptcy. But will they suffice to keep its executives out of prison?

Indeed, one wonders if the characters in the dark fable of oil and power in the United States, so similar to those in Russia’s tale, will meet the same unhappy end?.