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Moscow court suspends TNK-BP’s Dudley

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Moscow court suspends TNK-BP’s Dudley

By Carola Hoyos in London and Catherine Belton in Moscow

Published: August 14 2008 19:54 | Last updated: August 14 2008 19:54

A Moscow court suspended Robert Dudley as chief executive of TNK-BP for two years in a big blow to BP’s involvement in Russia’s second largest oil company.

BP said it would appeal against Thursday’s decision, insisting that Mr Dudley remained chief executive and would continue to run the company from a secret location outside Russia until the appeals process had been exhausted.

The court decision came amid an intense public battle for control over the 50/50 partnership between BP and its Russian shareholders, Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik.

BP said it was “very disappointed” by the decision and that Mr Dudley had the company’s full support. Mr Dudley said in an e-mailed statement: “This is another example of the sort of administrative interference which I referred to when I left Russia.”

The Russian shareholders have in the past denied any connection to the inquiries and investigations targeting the company.

People close to Mr Dudley said BP had 10 days to appeal against the ruling but that a court review “will likely be months away”.

Mr Dudley, a former BP executive, has been running TNK-BP from a secret location since he fled Russia last month citing concerns over systematic harassment as the dispute over strategy, planning and the running of the company escalated.

Tony Hayward, BP chief executive, said last month that Mr Dudley could remain at the head of the company while outside Russia only for a matter of months.

TNK-BP’s foreign staff have been hit by a wall of administrative pressure, including a series of probes into alleged violations of the labour code. A Moscow court this month found Mr Dudley guilty of breaking Russia’s labour code but chose to fine him $21 instead of suspending him for three years. Thursday’s ruling suspends Mr Dudley for two years as the result of a second probe.

An insider said the ruling related to a probe into whether all of TNK-BP’s 1800 staff had switched from fixed-term to open-ended contracts in line with Russia’s labour code and whether the entire staff had fully acquainted itself with reams of rules and regulations on labour practices.

The person said about 30 of the company’s 1,800 staff had been unable to do so because they were on leave and said this was the basis for the court decision to suspend Mr Dudley.

BP executives have said until now that TNK-BP’s day-to-day operations have not been significantly affected. But they and analysts warn that, just like in the case of the dismantling of Yukos, once Russia’s biggest oil company, TNK-BP’s oil reservoir management and strategic focus would suffer, impacting on the company’s production as early as next year.

TNK-BP accounts for one quarter of BP’s production, though the Russian oil is not as valuable as the barrels that BP pumps out of many other regions of the world. However, TNK-BP’s rapid growth has been critical as BP has struggled to expand output elsewhere.

EDITOR’S CHOICE

Pressure mounts on TNK-BP chief – Jul-26

Copyright The Financial Times Limited 2008

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