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Fight for control of BP-TNK escalates

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Fight for control of BP-TNK escalates

By Catherine Belton in Moscow

Published: August 4 2008 11:43 | Last updated: August 5 2008 00:04

The turmoil at BP’s TNK-BP joint venture in Russia deepened on Monday as its chief financial officer resigned, blaming the escalating battle for control of the group for his departure.

James Owen’s resignation comes 10 days after Robert Dudley, TNK-BP’s chief executive, left Russia citing a campaign of harassment. It will leave only three members of the group’s original five-member core executive committee in Russia.

Mr Dudley’s location remains a secret, in spite of a claim by Tony Hayward, BP’s chief executive, that it would be disclosed by the end of last week.

The battle between BP and its Russian partners for control of the group made Mr Owen’s position as CFO increasingly untenable, people close to the group said. “He’s seen what’s happened at the company over the last six months and he no longer feels he should be putting himself on the line by signing documents that are not supported by governance systems he can trust,” said one.

In a letter on Monday to Mr Dudley and TNK-BP’s board, Mr Owen said that as long as the shareholder dispute remained unresolved “he feels it difficult for him to continue working independently”, TNK-BP said.

Mr Owen, who joined the company as chief financial officer from Chevron in 2006, had held a uniquely independent position, having been appointed by both sets of shareholders.

The departure from Russia of Mr Dudley, who had warned that pressure by the Russian shareholders was threatening to tear the company apart, has heightened concerns about governance at the company. As chief financial officer reporting to regulators and external auditors, Mr Owen held one of the most sensitive positions in the company.

The Russian shareholders have denied they will seek to seize control of the group but continue to push for an independent chief executive to replace Mr Dudley.

“The potential for the governance model of the company to break down is there,” said another person close to the company. “This guy was giving guarantees and undertakings to outside auditors. His position in this situation becomes untenable very quickly.”

Of the group’s 88 foreign staff, 10 have been forced to leave the country in the past two weeks because their work permits were not renewed, including Matthew Murray, the executive in charge of corruption risk analysis in Mr Owen’s finance team. Another seven are due to leave in the next few weeks.

BP has also withdrawn 148 technical staff seconded to TNK-BP after it was set up in 2003. TNK-BP’s vice-president for exploration also resigned last week after getting an offer from another Russian oil company.

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