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Argus Media: Analysis — TNK-BP left in limbo following FSB raid Link

Time:  28 Mar 2008 10:26 GMT

TNK-BP is facing fresh problems in the wake of last week’s raids by Russia’s Federal Security Service (FSB) on company offices in Moscow.

BP this week recalled 148 of its secondees to TNK-BP, citing visa problems. “The process of clarifying new visa regulations is taking a little longer than we expected. We took this step as a precaution until new work visas have been obtained under the new regulations,” a BP spokesman says, referring to recently introduced changes to Russian legislation on work permits for non-Russian residents.

Indefinite leave

Some of the employees affected will go on leave until the problem is resolved, while others, whose contracts are due to expire soon, will leave the country, BP says. But industry sources suggest that all 148 employees will have to leave the country. The 40 or so former BP executives employed directly by TNK-BP are not affected by the visa issue.

The FSB is still evaluating information obtained during last week’s raids on TNK-BP and BP offices. “The investigations continue. We will make an official announcement once we have something to say,” an FSB official tells Argus.

TNK-BP says it has not received any official notification from either the FSB or any other state agency in connection with the affair. It stresses that the detention by the FSB last week of TNK-BP gas specialist Ilya Zaslavsky was not connected with company activities. The FSB detained Zaslavsky and his brother on suspicion of industrial espionage.

The two men were subsequently released, leaving observers puzzled as to why they were arrested in the first place. “I do not see any logic in the FSB raids — the Zaslavsky brothers are too insignificant to make such a big fuss about,” says Konstantin Simonov of think-tank the National Energy Security Fund.

But last week’s raids have spread inevitable alarm among TNK-BP employees, many of whom now fear that a major campaign against the company could be under way.

In an interview with the Financial Times this week, Russia’s president-elect Dmitry Medvedev says the case is at a “preliminary stage” and that it would therefore be premature to draw any conclusions regarding FSB investigations. “I would like the final decision to be taken by a court and not by the judgment of analysts or politicians,” he says. “As far as I understand, this is not about a state crime but about a crime in the economic sphere.”

Taxing problem

On 26 March, Russia’s interior ministry announced that it is investigating a $40mn tax evasion case involving Sidanco, which became part of TNK-BP in 2003. But the ministry says last week’s raids were not connected with this. TNK-BP says it paid 1bn roubles ($42.6bn) in connection with Sidanco back in 2004, covering all of its outstanding tax debts.
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Related article Analysis — FSB targets TNK-BP Link  

Time:  25 Mar 2008 15:08 GMT

Moscow, 25 March (Argus) — Russia’s Federal Security Service (FSB) claims to have found evidence of spying in raids on the Moscow offices of TNK-BP and BP, raising fears of a Yukos-style campaign against the former.

The FSB — successor of the KGB — says the 19 March raids were in connection with the earlier arrest of TNK-BP head office employee Ilya Zaslavsky on suspicion of industrial espionage. It says the raids yielded “hard evidence” of industrial espionage, including copies of state documents and “analysis about oil and gas resources, which on preliminary estimation relate to commercial secrets”, as well as “business cards of foreign military services and the CIA”.

Zaslavsky was detained on 2 March “during an attempt to receive secret commercial information for the use of a number of foreign oil and gas companies, with the goal of giving them a concrete advantage over Russian competitors, including in CIS markets”. He was held alongside his brother who is described as linked to UK cultural organisation the British Council, whose activities the Russian government has been trying to curtail against the background of a wider deterioration in relations between Moscow and London.

TNK-BP and BP sources say the scale and scope of the 19 March raids is reminiscent of moves against Yukos that started in 2003 and culminated in the company being broken up and its main units sold to state-controlled Rosneft. “Someone must be in a hurry to get hold of our assets,” a TNK-BP source says. TNK-BP’s Russian shareholders Alfa Group and Access-Renova (AAR) have long been seen as vulnerable to pressure to sell to Gazprom or Rosneft. At the same time, TNK-BP is under pressure to finalise a delayed deal for Gazprom to take a majority stake in the 1.98 trillion m³ Kovykta gas field in east Siberia.

The FSB’s central role in the latest raids suggests that the hardline siloviki political clan could now be trying to claim TNK-BP for Rosneft. Siloviki-controlled agencies — such as the FSB and tax authorities — were central to the Yukos campaign. In contrast, Gazprom — seen as the domain of the “liberal” faction headed by president-elect Dmitry Medvedev — mobilised the support of environmental agency Rosprirodnadzor in its 2006 campaign to secure control of the formerly Shell-led Sakhalin 2 project.

The siloviki faction may have been spurred into action by the impending presidential handover. Key siloviki figure Igor Sechin — deputy presidential chief of staff and chairman of Rosneft’s board — is expected to leave the Kremlin and has been tipped by some observers to take over as chief executive of Rosneft.

In response to this week’s events TNK-BP said on 20 March: “We operate within the Russian legal framework and we do not condone illegal activities, nor do we rely on unfair competitive practices.” TNK-BP and BP decline to comment on the material removed from their offices. But the interior ministry says some of it relates to oil firm Sidanco — incorporated into TNK-BP shortly after its formation in 2003. Allegations about Sidanco could be an ideal way of putting pressure on TNK-BP. Like most big firms, Sidanco was involved in tax minimisation schemes before 2003 that were declared illegal during the campaign against Yukos. BP and TNK held stakes in Sidanco before the creation of TNK-BP.

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