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
ebooks
ebooksAn introduction to the ground rules of British democracy
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

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there