After the Kyiv Post published a story on July 6 detailing how a pot of $46 million in bonuses was disbursed this year among 40 top Naftogaz employees, ex-CEO Andriy Kobolyev — who seems chronically unable to give straight answers to direct questions — fired off a Facebook post in which he made the incredible claim that “my actual monetary compensation for my work in Naftogaz for the period after the extension of my contract in March 2020 amounted to zero hryvnias.”
He also wrote: “I will comment on yet another manipulations and lies regarding the compensation of the top management of Naftogaz a little later. I promise a separate and interesting interview on this topic in the near future.”
So while Kobolyev is thinking of what to say to whom and when, it’s impossible to believe his denial of $12.7 million in total compensation, including base pay of $230,000 — amounts approved as far back as 2018 and paid out in 2021. It’s unbelievable for these reasons:
- The bonuses were a well-deserved reward, in the opinion of many people, including myself, for Naftogaz’s success in pursuing a legal case against Russia’s Gazprom over an onerous 2009 gas contract forced upon Ukraine after the Kremlin cut off supplies that winter. The settlement involved Gazprom giving Naftogaz $2.9 billion in cash and $2.1 billion in natural gas.
- The structure of the bonus arrangement was known. The supervisory board approved a 1% bonus on the $4.6 billion settlement (the extra $400 million came from accrued interest.) That’s $46 million in bonuses. Too much, too little? It’s a debate. But that was the agreement.
- There was a logical hierarchy to the distribution — more to the top executives who presumably had more to do with the victory, less to those down the line.
- But the payments were obscured because Naftogaz, under Kobolyev and the supervisory board led by Clare Spottiswoode, refused in the 2020 financial report to be transparent about salaries and bonuses for top executives. They started hiding this information after politicians criticized the compensation amounts and threatened to cap them. The 2020 official financial report, for instance, obfuscates by merely listing aggregate figures.
- If Yuriy Vitrenko, the current Naftogaz CEO fired by Kobolyev in May 2020, got $10.4 million from the company, as he declared publicly in 2020, or $16 million, as some say, then why would Kobolyev get less when he was then the CEO?
- Why would Kobolyev get nothing if the following top executives got these payments this year: Yaroslav Teklyuk, $3.4 million; Sergiy Pereloma, $2.3 million; Otto Waterlander, $2.2 million; Petrus Stephanus van Driel, $1.7 million?
Maybe Kobolyev is just a charitable guy, charging the state nothing for his services. But that’s not believable. Kobolyev rejected as unacceptable ex-Prime Minister Volodymyr Groysman’s demand on Jan. 16, 2019, that the Naftogaz CEO accept a lower salary. He stoutly defended high salaries as a safeguard against corrupt interests. In the end, he accepted less salary in a March 2020 contract extension.
But having interviewed him twice and having watched him speak in public numerous times, I can say he reveals as little as possible. In my Feb. 12, 2019, interview with him, he wouldn’t even say how much he made in 2018 because the financial report for that year had not been released. He got paid $1.7 million in 2017.
What a cesspool of infighting Naftogaz has become and maybe always has been. Now it’s Vitrenko vs. Kobolyev and the current supervisory board.
They give the impression of fighting over the spoils while doing nothing to increase gas and oil production that would enhance Ukraine’s energy independence, of doing nothing to break up exiled billionaire oligarch Dmytro Firtash’s regional gas trading monopoly that supplies 70% of Ukrainian customers, of doing nothing to attract foreign investment or modernize Naftogaz, a cushy state monopoly for those in charge of it. They couldn’t — or wouldn’t — even collect from Firtash and others for natural gas deliveries to them as debts soared into the hundreds of millions of dollars.
Kobolyev might want to try this approach instead: “I led Naftogaz when we won $5 billion from Russia’s Gazprom. The 40 employees most involved deserved a bonus for a hard and successful fight. A reasonable amount is 1% of the windfall that went to Ukrainian taxpayers because the company pursued the Stockholm arbitration case. I, as CEO, earned the largest share of the bonus.”
Simple, straightforward honesty goes a long way. It enhances credibility and might stop people from wondering what else Kobolyev and Naftogaz’s supervisory board were trying to hide.
