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The struggle for control of TNK-BP has sunk to new depths

BP antagonist has Altimo ambitions

By Russell Hotten

Last Updated: 1:08am BST 22/06/2008

Mikhail Fridman strode onto the stage, eager to tell the waiting journalists how he and his company had been wronged. Sitting behind a wall of microphones in the offices of Moscow’s Interfax news agency, the Russian billionaire launched a bitter attack on British Petroleum, one of his partners in the TNK-BP oil venture.

The struggle for control of TNK-BP sank to new depths last week. Alfa Group and BP were involved in a tricky legal dispute in the 1990s, so the oil giant knew what to expect when Alfa and its partners created TNK-BP in 2003.

But BP can’t have anticipated the tactics Fridman used on Monday. In a newspaper interview 44-year-old Fridman – ranked by Forbes as the world’s 20th richest man – accused BP chairman Peter Sutherland of using Nazi-style propaganda tactics, and at the press conference later that day slammed BP’s “arrogance”. Fridman was responding to Sutherland’s attack the previous week that Russia was returning to 1990s-style corporate raiding.

BP owns 50 per cent of TNK-BP and now war is declared it is steeling itself for a long fight. There is ample evidence from Fridman’s other business dealings that he plays tough. Indeed, either by accident or design Alfa Group, which owns 25 per cent of TNK-BP, has a history of mud-slinging and controversy.

Andrew Neff, a Russia expert at Global Insight, says Fridman is a “bit of a bulldog”. The oligarchs who emerged in the 1990s had to have sharp elbows and thick skins. “Some of the tactics used in the 1990s are still there. Alfa has a tendency to push its own agenda,” said Neff.

Fridman built his empire in the Gorbachev-era of “openness” and during the Yeltsin years of privatisations and controls companies spanning telecoms, energy, media and banking.

At Alfa’s telecoms division, Altimo, the boardroom is full of prominent figures such as Lord (Douglas) Hurd, Kurt Hellstrom, former chief executive of Ericsson, Julian Horn-Smith, former deputy chief executive of Vodafone and Sir Francis Richards, former director of GCHQ.

Fridman operates a highly devolved business model, leaving him to concentrate on strategy. Perhaps that is why, as the businesses have grown, so has the litigation. His companies have been in fights with rivals and partners in Norway, Turkey and Indonesia.

Alfa featured in a 2005 report by Paul Volcker, former head of the US Federal Reserve, into corruption in the United Nations’ oil-for-food programme in Iraq. The company emphatically denies suggestions it was involved in channelling money to Saddam Hussein’s regime. But Volcker specifically mentions the difficulty in getting Alfa to answer questions on the matter.

Perhaps the most curious Alfa story involves espionage allegedly conducted by Diligence, an international investigative agency chaired in Europe by Michael Howard. The claims were serious enough to warrant a probe by the US House of Representatives’ chief investigations committee.

It was alleged last year that Alfa hired Diligence to obtain confidential information about Bermuda-based Ipoc International – which owned Russian telecoms assets – from auditors KPMG. The audit firm was conducting an investigation into Ipoc on behalf of the Bermuda Government amid allegations that it was involved in money laundering. The complaint was that Diligence staff impersonated secret service agents in order to get information from KPMG.

Diligence strongly denies wrongdoing. And if there was criminal activity, there is no reason to think Alfa sanctioned it. Besides, Alfa says Diligence never worked for it. However, Diligence was employed by BGR, a firm of Washington lobbyists. And BGR has worked for Alfa’s telecoms wing Altimo.

Telenor, the Nordic region’s largest telecoms company, knows all about scrapping with Altimo. Norway-based Telenor and Altimo formed a partnership in 2004 for control of a Ukrainian and a Russian phone company.

The deal unravelled into a series of lawsuits amid allegations of underhand tactics being used to help Altimo gain control of the Ukranian company. Telenor claimed last year it had evidence Altimo had paid journalists in Ukraine to publish negative articles to discredit it.

Court documents allege Altimo wanted to undermine the image of Norwegian business as a whole “in order to break the stereotype whereby Western business, and in particular Norwegian business, always plays fair”.

Alfa and Altimo deny the accusations and say the documents are forgeries. Telenor, though, insisted the documents were genuine, and came from someone with knowledge of Altimo’s plans.

Then, last June, Telenor filed a lawsuit against Alfa Group, accusing it of insider trading in relation to the purchase of VimpelCom shares. In March this year, Altimo filed a $1bn lawsuit against Telenor for delaying VempelCom’s entry to the Ukranian market.

Altimo aspires to be another Vodafone, with a string of networks around the world. It also wants to list on a stock market, probably in London. Last year, Altimo said its goal “is to be in every sense a Western-run company.” It might have to shed a lot of baggage before achieving that. and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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