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. Last Updated: 07/27/2016

Gazprom Yo-Yos on Threats and Rumors

Gazprom shares clawed back losses Wednesday, a day after the gas giant's market capitalization fell $1.1 billion in response to a Tax Police warning that the company could face criminal charges for tax fraud.

Gazprom local shares closed at $0.725, an increase of 6.48 percent. On Tuesday, the stock fell 7.6 percent to $0.681, the largest drop seen in nine months.

Analysts said Wednesday's gain underscored the Tax Police's weak case. At a Tuesday news conference, Moscow Tax Police chief General Viktor Vasilyev said that Gazprom had failed to pay about 30 billion rubles ($966 million) in taxes. The company denied the charges and called Vasilyev's declaration a slap in the face.

As of Wednesday afternoon, the Tax Police's story had already changed. A source told Interfax that a decision based on the results of the investigation -- expected to be finished by the end of the month -- had not been made.

"Any kind of conclusions about any violations found are premature," the source said.

Vasilyev said his organization had discovered a series of violations during an investigation of Gazprom's business activities from Jan. 1, 1999, to July 1, 2001. For example, Gazprom failed to include in its taxable base the value of natural gas used in internal operations. Vasilyev also accused the gas giant of selling gas below market prices and decreasing its revenues on paper.

In a statement, deputy CEO Vitaly Savelyov said the accusations were unethical because they were levied before the investigation's completion.

"It's worth remembering that 38.7 percent of Gazprom belongs to the government," Savelyov said. "And on the board of directors, the government has a majority. As they come forward with hurried conclusions about big business, government officials should remind themselves of the consequences these kinds of announcements can wreak -- on business and on the country."

Local media on Wednesday reported rumors that the resignation of Gazprom CEO Alexei Miller was imminent. Miller, who is on vacation until March 22, will miss a key board meeting Friday. The company's finances and investment program are on the agenda.

Local media outlets Wednesday offered up a multitude of theories on the motive behind the Tax Police's actions. Kommersant said that tax authorities might be compelled to put pressure on Gazprom to make up for falling tax revenues from oil companies caused by lower oil prices. Another possibility is that Gazprom's old guard -- led by former Gazprom CEO Rem Vyakhirev -- is using the Tax Police to threaten Miller and his new management team.

This theory is a little far-fetched, said Vladislav Metnyov, an oil analyst for the Renaissance Capital brokerage. More likely, these actions are directed against managers left over from Vyakhirev's reign.

"It's unlikely that we will ever know the real truth behind [the Tax Police's] motives," Metnyov said. "And although their announcement had an effect on the stock, the fall in price was mostly a technical correction."

Gazprom on Wednesday also released unaudited financial results, compiled to international accounting standards, for the first nine months of 2001. Pretax profit increased by 30 percent to 168.8 billion rubles.