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Dudley survives TNK-BP challenge

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Dudley survives TNK-BP challenge

By Catherine Belton in Moscow

Published: July 7 2008 23:23 | Last updated: July 7 2008 23:23

Robert Dudley, the BP-backed chief executive of TNK-BP, survived a move by BP’s Russian partners in the oil venture to have him dismissed on Monday as the two sides dug in their positions ahead of a crucial board meeting this week.

Directors in TNK-BP Management, the management unit of TNK-BP, voted three to two against a motion launched by one of the billionaire Russian shareholders to dismiss Mr Dudley, an issue at the heart of a bitter corporate battle between BP and their Russian partners for control of the venture.

The Russian billionaires, who hold their 50 per cent stake in the venture via the Alfa-Access-Renova consortium (AAR), have insisted Mr Dudley be fired, claiming he is running the company exclusively in the interests of BP and has breached Russian labour and migration laws. BP denies these claims.

Stan Polovets, chief executive of AAR, said last night the Russian partners were unsurprised by the outcome because three of the directors on the five-man board of TNK-BP Management were appointed by Mr Dudley.

But he confirmed the Russian partners would again press for Mr Dudley’s dismissal at a meeting between BP and the Russian shareholders in Cyprus this Friday, and said AAR could take the case to Russian courts should BP reject the bid again.

The Russian shareholders boycotted the last board meeting of the parent company, TNK-BP Limited, in early June after BP refused to discuss their proposal to have Mr Dudley fired. The collapse of the board meeting triggered a battle that has become a test case for foreign investment and the rule of law in Russia under Dmitry Medvedev’s presidency.

Mr Polovets said no progress had been made in talks between Lemar Mckay, BP vice-president, and AAR ahead of the board meeting, and said AAR could file in a Russian court to have Mr Dudley removed.

“Nothing has changed,” he said. “BP has not responded to our proposals?.?.?.?We think our position is very clear. If BP agrees then we don’t need to go to court.”

AAR has repeatedly threatened legal action in Russia to dismiss Mr Dudley, and to cut the number of foreign staff working at the venture via lawsuits in the Stockholm arbitration court. But it has not filed a single suit yet, although an AAR-backed director has filed a lawsuit in Siberia saying a board meeting at a key subsidiary was called illegally.

Last week BP filed a claim against the Russian partners in London’s High Court to recover $370m in debts from back-tax claims.

EDITOR’S CHOICE

Lord Robertson attacks TNK-BP Russian investors – Jul-07

Investigators to quiz TNK-BP chief – Jun-09

Copyright The Financial Times Limited 2008

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