Fresh pressure on BP as its chief in Russia faces inquiry

TNK-BP chief executive to be interrogated by Russian investigators over 'corporate tax evasion'

At BP's headquarters in St James's Square, there is a distinct sense that, after months of scattered but sustained disruptions to its vital Russian business, the end game is approaching.

Next Monday, Robert Dudley, the BP-appointed chief executive of TNK-BP, will face interrogation by Russian investigators after receiving a summons last week. The questioning, ostensibly over possible corporate tax evasion at TNK-BP's predecessor company between 2001 and 2003 – Mr Dudley took over in late August 2003 – and labour violations, is the latest turn amid a bitter and escalating struggle for control of Russia's third largest oil producer.

TNK-BP put a brave face on the targeting of its American-born executive. In a statement, the company said it regarded the development as "a routine procedural matter which is not connected with current shareholders discussions".

Few believe this to be the case. Last week, the trio of billionaire oligarchs who share ownership of the business with BP called for Mr Dudley's removal, arguing that he was managing the business in the interests of the UK giant, to their detriment.

BP flatly turned down their demand. The oligarchs – Viktor Vekselberg, Mikhail Fridman and Len Blavatnik – are infuriated with Mr Dudley since he rejected an earlier proposal they put forward outlining an aggressive international expansion plan.

Instead, he wants to pour more money into increasing its domestic output. A long-scheduled board meeting was cancelled last week. Jean-Luc Vermeulen, an independent director, resigned over the impasse.

The deteriorating situation has, so far, not deterred BP. Its chief executive, Tony Hayward, said yesterday that he remained committed to the company and to Russia.

He was in Moscow to deliver a speech at Rosneft's annual general meeting, where he surely had a word or two with Igor Sechin, Russia's deputy prime minister and the chairman of Rosneft.

TNK-BP earned $5.3bn (£2.7bn) on $39bn in turnover last year, and accounts for a quarter of BP's global production. It is the only oil and gas group in Russia in which the Kremlin has no economic interest. Since the jailing of the former Yukos head, Mikhail Khodorkovsky, in 2003, the Russian state has systematically taken over and or reacquired major interests in its biggest natural resource groups. Speculation that TNK-BP would get the same treatment has been rife almost since the day it was created in 2003. Against the odds, it has so far retained its independence.

Since March, BP's Mos-cow offices have been raided, a former TNK-BP employee was arrested for alleged industrial espionage, and 148 top executives and technical staff – all seconded from BP – have been prohibited from working by a Siberian court after a lawsuit was filed by a tiny company run by men who used to work for Mr Fridman's Alfa Group.

Most observers find it hard to view the drumbeat of bad news as anything other than a concerted campaign by AAR, as the oligarch's consortium is known, to wrest control of the company. Through that prism, the shenanigans are seen simply as a form of negotiations, Russian-style.

Most expect the oligarchs to be the ones forced to sell, either to Gazprom or Rosneft. "Ahead of selling out, they want to be intimately involved, if not running the game, in any deal between BP and Gazprom. They don't want to be the patsies that are presented something as a fait accompli," a person close to the company said.

The clock is ticking. German Khan, an executive director at TNK-BP, who also sits on the board of Mr Fridman's Alfa Bank, requested government approval for work permits for fewer than half of the company's current foreign staff – the 148 BP secondees already barred from working. If it is not resolved before their current permits expire in July, they could be turned out permanently, potentially crippling the group and vastly reducing BP's influence at the company.

The Kremlin has an interest in letting BP keep its stake. If it were forced out or reduced to a minority shareholder, foreign investor sentiment – improved markedly since the vodka-soaked regime of Boris Yeltsin – would surely sour.

How it is resolved will also be used as a reference point for the business environment under Dmitry Medvedev, the country's newly minted president.

PROMOTED VIDEO
Arts and Entertainment
Stik on the crane as he completed the mural
art
News
Happy in his hat: Pharrell Williams
people
News
i100(More than you think)
News
Phyllis Dorothy James on stage during a reading of her book 'Death Comes to Pemberley' last year
peopleJohn Walsh pays tribute to PD James, who died today
News
peopleExclusive: Maryum and Hana Ali share their stories of the family man behind the boxing gloves
Arts and Entertainment
John Hurt will voice Prince Bolkonsky in Radio 4's War and Peace
radioRadio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Argyll Scott International: Service Desk Analyst

£20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...

Argyll Scott International: 2x Service Desk Analyst

£20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...

Recruitment Genius: Senior Execution Trader

£30000 - £250000 per annum: Recruitment Genius: A global Rolling Spot FX, Comm...

Citifocus Ltd: ACA - Financial Reporting

£Attractive Package: Citifocus Ltd: Chartered accountant (ACA or CPA), must be...

Day In a Page

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game
There's a Good Girl exhibition: How female creatives are changing the way women are portrayed in advertising

In pictures: There's a Good Girl exhibition

The new exhibition reveals how female creatives are changing the way women are portrayed in advertising
UK firm Biscuiteers is giving cookies a makeover - from advent calendars to doll's houses

UK firm Biscuiteers is giving cookies a makeover

It worked with cupcakes, doughnuts and macarons so no wonder someone decided to revamp the humble biscuit
Can SkySaga capture the Minecraft magic?

Can SkySaga capture the Minecraft magic?

It's no surprise that the building game born in Sweden in 2009 and now played by millions, has imitators keen to construct their own mega money-spinner
The King's School is way ahead of the pack when it comes to using the latest classroom technology

Staying connected: The King's School

The school in Cambridgeshire is ahead of the pack when it comes to using the latest classroom technology. Richard Garner discovers how teachers and pupils stay connected
Christmas 2014: 23 best women's perfumes

Festively fragrant: the best women's perfumes

Give a loved one a luxe fragrance this year or treat yourself to a sensual pick-me-up
Arsenal vs Borussia Dortmund: Alex Oxlade-Chamberlain celebrates century with trademark display of speed and intuition

Arsenal vs Borussia Dortmund

The Ox celebrates century with trademark display of speed and intuition
Billy Joe Saunders vs Chris Eubank Jnr: When two worlds collide

When two worlds collide

Traveller Billy Joe Saunders did not have a pampered public-school upbringing - unlike Saturday’s opponent Chris Eubank Jnr
Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?