Russians issue legal threat to TNK- BP’s Robert Dudley

By Russell Hotten, Industry Editor

 

 

The Russian billionaires fighting BP for control of their joint venture, TNK-BP, have turned up the heat on its chief executive, Robert Dudley, accusing him of breaching his duties and warning they may seek damages running into hundreds of millions of pounds.

	BP’s former chief Lord Browne with Vladimir Putin

In a letter to Mr Dudley, seen by The Daily Telegraph, the Russians claim Mr Dudley approved investments despite their opposition, and so they “reserve the right to seek all available remedies against you personally…because you have failed to act in the best interests of all shareholders”.

Mr Dudley has for months been at the centre of a power struggle between BP and the Russians, who operate under a consortium called AAR.

His visa expires next week, and, with AAR opposing its renewal, it looks likely that Mr Dudley will have to leave the country. It is understood that AAR is already making preparations to run the company should he leave.

AAR – controlled by Mikhail Fridman, Viktor Vekselberg, and Leonid Blavatnik – claims Mr Dudley sanctioned capital expenditure above an agreed $3.5bn (£1.75bn) limit.

The letter to Mr Dudley says spending is at least $900m higher. “Such action on your part represents a serious breach of your duties to TNK-BP,” it says.

The Russians want higher dividend payments and for TNK-BP to seek out new investment opportunities abroad. But the letter, from AAR’s chief executive, Stan Polovets, accuses Mr Dudley of focusing on increasing TNK-BP’s oil and gas reserves

. “While the emphasis on reserve replacement may be in the interests of BP, it is not in the interest of AAR and TNK-BP’s minority shareholders,” Mr Polovets writes. Last night, a BP spokesman rejected the allegations: “We are confident TNK-BP’s capital spending plan is being carried out according to a plan agreed by the TNK-BP board.”

More on oil

BP, like all major oil companies, is trying to bolster its reserves, and cutbacks on capital expenditure could be damaging for all TNK-BP shareholders, analysts said yesterday.

However, this latest pressure on Mr Dudley is seen as part of a wider long-term battle for control of Russia’s third largest oil producer, which last year made profits of $5bn on sales of $38bn.

BP has been under siege in Russia for months, with police raids on its Moscow office, problems getting visas for staff seconded to TNK-BP, and legal action from a minority investor. On Wednesday, the UK company withdrew its remaining 60 engineers.

Last month, AAR tried to sack Mr Dudley, a move blocked by BP. But a dispute over whether he has a valid employment contract threatens his right to a work visa, which expires next Thursday. BP says it will not be “bullied” out of Russia and that it will use legal action to retain its assets.

However, AAR is already making plans for a new management team at TNK-BP. It expects Timothy Summers, TNK-BP’s chief operating officer, to take over until a new chief executive is found. Until joining TNK-BP in April 2006, Mr Summers was executive assistant to Lord Browne of Madingley, BP’s former chief executive.

Under the joint venture terms, BP has the right to nominate a chief executive, which AAR can approve or reject. But BP said yesterday that even if Mr Dudley leaves Russia, he will still be TNK-BP’s legal chief executive and so there is no need for a new candidate.

 

 

 

 

This website and sisters royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.