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.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Guru Careers: Financial Controller

£45 - £55k DOE: Guru Careers: A Financial Controller is required to join a suc...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£12500 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Recruitment Genius: Sales Adviser - OTE £24,500

£22500 - £24500 per annum: Recruitment Genius: Inbound and outbound calls with...

Recruitment Genius: Business Development Executive / Sales - OTE £40,000

£18000 - £40000 per annum: Recruitment Genius: This fast growing Insurance Bro...

Day In a Page

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

Our choice is years of Tory rule under Corbyn or a return to a Labour government

Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'
Singapore's domestic workers routinely exploited and often abused in the service of rich nationals

Singapore's hidden secret of domestic worker abuse

David Cameron was shown the country's shiniest veneer on his tour. What he didn't see was the army of foreign women who are routinely exploited and often abused in the service of rich nationals
Showdown by Shirley Jackson: A previously unpublished short story from the queen of American Gothic

Showdown, by Shirley Jackson

A previously unpublished short story from the queen of American Gothic
10 best DSLRs

Be sharp! 10 best DSLRs

Up your photography game with a versatile, powerful machine
Solved after 200 years: the mysterious deaths of 3,000 soldiers from Napoleon's army

Solved after 200 years

The mysterious deaths of 3,000 soldiers from Napoleon's army
Every regional power has betrayed the Kurds so Turkish bombing is no surprise

Robert Fisk on the Turkey conflict

Every regional power has betrayed the Kurds so Turkish bombing is no surprise
Investigation into wreck of unidentified submarine found off the coast of Sweden

Sunken sub

Investigation underway into wreck of an unidentified submarine found off the coast of Sweden
Instagram and Facebook have 'totally changed' the way people buy clothes

Age of the selfie

Instagram and Facebook have 'totally changed' the way people buy clothes
Not so square: How BBC's Bloomsbury saga is sexing up the period drama

Not so square

How Virginia Woolf saga is sexing up the BBC period drama
Rio Olympics 2016: The seven teenagers still carrying a torch for our Games hopes

Still carrying the torch

The seven teenagers given our Olympic hopes
The West likes to think that 'civilisation' will defeat Isis, but history suggests otherwise

The West likes to think that 'civilisation' will defeat Isis...

...but history suggests otherwise
The bald truth: How one author's thinning hair made him a Wayne Rooney sympathiser

The bald truth

How thinning hair made me a Wayne Rooney sympathiser
Froome wins second Tour de France after triumphant ride into Paris with Team Sky

Tour de France 2015

Froome rides into Paris to win historic second Tour
Fifteen years ago, Concorde crashed, and a dream died. Today, the desire to travel faster than the speed of sound is growing once again

A new beginning for supersonic flight?

Concorde's successors are in the works 15 years on from the Paris crash