BP faces another court case in Russia

Senior management at BP's Russian joint venture are facing further fines, and even possible suspension, after the Kremlin Labour Inspectorate's launch of a second court case alleging violations of staffing laws.

The agency has investigated TNK-BP four times since April and the company has already been to court once, and been fined. But possible future penalties include the suspension of the chief executive for between three months and three years.

Sources close to the company claim that the repeated inspections, which are unprecedented in both their number and their scope, are part of a general orchestrated campaign of harassment targeting the company, and in particular Robert Dudley, the chief executive. "This all started April and is going through, step by step, towards suspending the chief executive," the source said.

Over the past six months, the joint venture has been repeatedly rocked by power struggles between BP and the four billionaire oligarchs whose Alfa-Access-Renova (AAR) investment vehicle owns the other 50 per cent. AAR shareholders have been vocal in their criticism of the management of TNK-BP and claim it is being run as a subsidiary of BP. The UK oil major, in contrast, accuses its Russian partners of a sustained crusade aimed at wresting control, pointing to security service raids, staff banned from working, and, most recently, visa issues which saw Mr Dudley forced to leave the country altogether.

In respect of the labour agency inspections, TNK-BP claims that only insignificant breaches of Russia's labour code have been found. But the requirement to remedy the violations to avoid further penalties is not as straightforward as it sounds. For example, TNK-BP staff used to operate under fixed three-year contracts which, at the behest of the inspectorate, have now been replaced with permanent arrangements. But not all employees want to shift to the new contracts, so the company is still technically breaking the law.

In the course of the investigations, TNK-BP has provided a vast amount of data relating to everything from contract terms and conditions to leave payments to safety training and awareness schemes. The company has produced some 25,000 pages of information, which has taken many thousands of hours to compile.

Alongside BP's financial results earlier this week, the oil group re-stated its commitment to stand firm against pressure from AAR over the joint venture. Tony Hayward, the BP chief executive, said the company will "vigorously defend" its rights, and "will not be intimidated by strong arm tactics."