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In case you’d missed it, Britain is now at war with Russia.

TNK-BP shows pitfalls of doing business in Russia

In case you’d missed it, Britain is now at war with Russia. No, a new military conflagration hasn’t passed you by. The battle is in the theatre of business. In suitably Churchillian tones, Lord Robertson of Port Ellen, deputy chairman of TNK-BP and former secretary general of Nato, yesterday said: “Anyone who cares about the security of international investment and corporate governance should be concerned. This is not about British versus Russian interests as AAR has tried to portray it. It is about the actions of AAR and its affiliated executives and the resulting damage to the company and to Russia.”

The row between BP and AAR, its Russian partners, has dramatically escalated with the joint venture’s chief executive fleeing Russia and going into hiding. AAR reckons this is all part of BP’s “patter of disregarding Russian laws and insisting on special treatment”.

What is certain is that 50:50 joint ventures rarely work, in particular ones forged in distant lands. The shareholder agreement and ownership structure of the joint venture negotiated under Lord Browne’s tenure as BP chief executive was flawed. BP is now paying the price, whatever the rights and wrongs. However, TNK-BP should also stand as a business school case study of what you should be prepared for when doing business in Russia.

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