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The Moscow Times: Billion-Dollar Principles

Wednesday, August 1, 2007. Issue 3711. Page 7.
By Yulia Latynina
The president and owner of Russneft, Mikhail Gutseriyev, wrote an open letter in which he accused authorities of “unprecedented persecution” in an effort to make him “more compliant.” Gutseriyev also announced that he would leave his post in order to keep the company intact. It is widely known that Oleg Deripaska, who is one of the Kremlin’s favored oligarchs, will buy Russneft. In this context, it is important to remember Deripaska’s interview with the Financial Times in which he said he was prepared to hand his company over to the state if requested to do so.

Deripaska’s role in the Russneft deal is quite similar to that of Baikal Finance Group, the little-known investment company that purchased Yukos’ largest production unit, Yuganskneftegaz, in December 2004. He could function as an intermediary for the state, which could end up being the ultimate buyer. In this arrangement, Deripaska would shoulder all of the legal risks of the transaction, which are considerable, Gutseriyev’s letter said.

There are two reasons why Russneft has undergone “unprecedented persecution.” The first is purely technical. Gutseriyev rankled Kremlin authorities by buying up shares of Yukos without their permission. Having gone through all the trouble of plundering Yukos and sending former CEO Mikhail Khodorkovsky to jail in the Siberian city of Krasnokamensk, the Kremlin would hardly want an outsider to come along and pick up Yukos’ crumbs for himself. Buying Yukos shares without the sanction of the Kremlin is tantamount to a direct attack on the country’s foundation.
The second reason is broader and has nothing to do with Gutseriyev’s shocking impudence, but stems from the Kremlin’s overall strategy to use oil and gas to transform Russia into a global superpower. It is generally understood that Russia will become a major energy superpower only after the country’s oil and gas companies are consolidated under the faithful leadership and ownership of President Vladimir Putin’s friends. An independent and privately owned Russneft, which attained amazing growth in recent years, does not fit at all into the Kremlin’s conception of Russia as a superpower. It could even be said Russneft posed a direct threat to attaining that goal.

There was even a third risk factor for Gutseriyev. He is from Ingushetia, and God only knows what goes on there. Ingushetia suffers terrorist acts regularly, and the business of kidnapping President Murat Zyazikov’s relatives has become a regular event. In fact, they are kidnapped as frequently as the FSB announces it has thwarted terrorist attacks against summits in St. Petersburg, Sochi and Samara.

Gutseriyev’s letter was unprecedented. Other businessmen who found themselves in similar situations could have written such letters in the past. For example, Vyacheslav Bresht and Vladislav Tetyukhin, the co-owners of VSMPO-Avisma, a company that was purchased by Rosoboronexport on the cheap, or Farkhat Akhmedov, the owner of oil and gas services company Nortgaz. Even Royal Dutch Shell, which the Kremlin muscled out of the Sakhalin-2 deal, could have written such a letter but didn’t bother. This is because businessmen — Russian or foreign — are cowardly and cautious, and they understand that letters of this type may gratify one’s sense of pride, but ultimately cost them billions of dollars in lost profits.

In most cases, businessmen gain much more satisfaction from their billion-dollar profits than from standing on principle and going against the ruling elite. For Gutseriyev, an Ingush, principle is apparently worth more than profits, however.

It is never a good idea to force a mountain dweller into a corner. This will only result in vitriolic war of words splashed all over the newspapers.

In the end, Gutseriyev’s letter will serve to strengthen his position only if a change in the political climate allows him to win his company back through a court battle.

Yulia Latynina hosts a political talk show on Ekho Moskvy radio. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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