Russians keep up the pressure on BP with new threat on tax action

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The Independent Online

AAR, the Russian investment group locked in a bitter dispute with BP over their joint venture in the country, yesterday sought to ramp up the pressure on its rival with a new attack.

Stan Polovets, the oligarch who is chief executive of AAR, released a letter he has written to TNK-BP, the Russian unit it co-owns with BP, warning that the decision of its chief executive Robert Dudley to base himself overseas could cause it substantial tax liabilities.

Mr Dudley left Russia last week after failing to secure an extension of his work permit. Both he and BP allege he has been the victim of a harassment campaign run by AAR, which has repeatedly called for him to step down from his post.

Mr Polovets said: "We are deeply alarmed that if the centre of TNK-BP's management and decision-making is transferred to a country other than Russia, then the TNK-BP group, or companies within the group, may become liable for the payment of profits tax or other taxes in that country."

AAR also warned that it would take legal action against BP and Mr Dudley personally if TNK-BP did end up facing a higher tax bill because of his relocation. It said its legal advisers had warned there was a possibility of a tax bill from overseas, and the group has asked accountant PricewaterhouseCoopers to investigate.

AAR is deeply frustrated by Mr Dudley's refusal to stand down from the chief executive's role, and by BP's backing of him. However, Mr Dudley said last week that he had taken legal advice on the ramifications of working from an overseas base and that he had been advised there would not be any difficulties.

A spokesman for BP said last night: "We have received the letter and we consider it private – we will respond in due course."

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