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The Moscow Times: Mitvol’s Agency to Probe TNK-BP

By Miriam Elder and Max Delany
Staff Writers
Monday, March 24, 2008. Issue 3867. Page 1.  

The Natural Resources Ministry said Friday that it would investigate TNK-BP’s largest oil field, putting further pressure on the Russian-British firm one day after the Federal Security Service said it had charged an employee with industrial espionage.

Oleg Mitvol, deputy head of the ministry’s environmental watchdog, will lead the investigation into the Samotlor field in western Siberia, the ministry said in a statement.

The latest move against TNK-BP added to concern that a state-run firm was aiming to muscle into the company, a private 50-50 joint venture between British energy major BP and three Russian oligarchs.

TNK-BP spokeswoman Marina Dracheva insisted Sunday that the environmental agency’s investigation was “a regular check, which is done for all fields and license users every two years. The last one at Samotlor was done in 2005, so we see it as a routine compliance check.”

Mitvol’s sustained campaign against Shell for purported environmental violations at Sakhalin-2 ended in late 2007, after the British-Dutch firm and its Japanese partners agreed to sell a controlling stake in the $20 billion project to state-run Gazprom.

Mitvol also issued repeated threats to revoke TNK-BP’s license at its flagship Kovykta gas field in eastern Siberia for failing to fulfill license terms there. TNK-BP agreed to sell its entire 63 percent stake in the project to Gazprom last summer, but has yet to finalize the deal.
The FSB last week brought charges of industrial espionage against TNK-BP employee Ilya Zaslavsky and his brother Alexander, an independent energy consultant who heads the British Council’s Alumni Club.

The charges against the Oxford-educated brothers, who hold dual U.S. and Russian citizenship but maintain strong links to Britain, also sparked fears that Russia was intensifying attacks on British organizations in the country.

“It is possible that there could be some political elements to this case, but that is only something of limited significance,” Gennady Gudkov, deputy head of the State Duma Security Committee, said by telephone Friday.

“Whatever the political situation, one thing is for sure — this is the result of a lot of planning and work by the security services,” said Gudkov, a member of the Kremlin-friendly A Just Russia party and a former KGB agent.

“This will not be resolved in two days,” he warned.

The quickly mounting pressure against TNK-BP has prompted speculation that the Kremlin is hoping to reshape the firm to fit the standard of majority state control over the energy industry. The State Duma on Friday passed a key second reading of a bill restricting foreign ownership across a total of 42 so-called strategic industries.

Gazprom, whose board is chaired by President-elect Dmitry Medvedev, has benefited most from the state’s campaign against foreign energy majors. Rosneft, whose board is chaired by Igor Sechin, President Vladimir Putin’s deputy chief of staff, became the state’s oil champion after gobbling up the remains of bankrupted Yukos.

Former Yukos CEO Mikhail Khodorkovsky accused Sechin, a close ally of FSB chief Nikolai Patrushev, of orchestrating the campaign to bankrupt his company.

TNK-BP’s Russian shareholders — Viktor Vekselberg’s Renova, Len Blavatnik’s Access Industries and Mikhail Fridman’s Alfa Group — issued a statement in February saying they had no plans to sell.

Vekselberg said in January that he would only consider selling if potential buyers met his $60 billion valuation. TNK-BP’s current market capitalization is $27 billion, near its record low.

Russia accounts for one-quarter of BP’s total oil and gas production worldwide.

Plainclothes law enforcement officers raided the offices of BP and TNK-BP on Wednesday, in what was the first public sign of increasing pressure on the firms.
Spokespeople for the two companies denied reports in Vedomosti and Kommersant that senior management had been brought in for questioning last week.

“It’s [expletive],” said BP spokesman Vladimir Buyanov, when asked to comment on whether BP Russia president Richard Spies had been questioned.

Dracheva, the TNK-BP spokeswoman, said reports that the company’s vice president for international affairs, Shawn McCormack, had also been questioned “had nothing to do with reality.”

“We understand well that the activities of law enforcement can give rise to all sorts of assumptions, especially to people with overactive imaginations,” she said.

The Zaslavsky brothers, who were briefly detained March 12, then released on orders not to leave the country, remained unavailable for comment Sunday.

A source inside TNK-BP said Ilya Zaslavsky remained an employee of the firm, where he works as a gas business adviser, Interfax reported. “He has not quit and he has not been fired,” the employee said.

Lawyers said industrial espionage cases had to be initiated by one of the firms involved.

The FSB said last week that the Zaslavsky brothers were arrested while trying to obtain classified information from an employee of a “national hydrocarbon institution.” The two men were working to undermine the competitiveness of Russian firms, it said.

“The original owners of the information that is being stolen must first go to the police,” said Boris Kuznetsov, a lawyer who received political asylum in the United States last month after alleging FSB harassment.

Pavel Krasheninnikov, chairman of the State Duma’s Legislation Committee, hinted Friday that the two men were unlikely to face the full force of the law.

Industrial espionage cases are rare in Russia, he said, so “this investigation will be to a certain extent unique,” Interfax reported. But, he added, “As a rule, in America and Europe such cases make it to court but end in amicable agreements.”

Companies are loath to publicize commercial secrets, so cases rarely go to trial, said Yury Gervis, a prominent lawyer, Interfax reported.

The men face up to three years in prison if found guilty of industrial espionage. Yet since the charges relate to the strategic natural resources sector, they could classify as state secrets, prompting stiffer penalties. Punishments for espionage range from 10 to 20 years in jail.

“The law says that if the information threatens the economic security of the country then it can be considered a state secret,” said Igor Trunov, a high-profile lawyer who has represented former hostages in the Dubrovka theater siege.

The Zaslavsky brothers were born in Moscow but raised in the United States and educated at Oxford University. Ilya Zaslavsky, 29, heads Moscow’s Oxford alumni club, while Alexander Zaslavsky, 33, in December was voted president of the British Alumni Club, which was created by the British Council to maintain contacts among graduates of British universities.

“We have seen the press reports and are working to confirm the information in them,” a U.S. Embassy spokesperson said. “If any U.S. citizens were arrested, we will request access to speak them, as is customary in these situations,” the spokesperson said.

A Foreign Ministry spokesperson denied that the arrests of the two men were linked to increasingly tense relations between Moscow and London.

“It makes no sense looking for links between issues that are not connected,” Foreign Ministry spokesman Andrei Krivtsov said Friday, Russian news agencies reported. “It is not related to the current situation in Russian-British relations,” he said.

Earlier this year, the Foreign Ministry ordered the British Council, which acts as the British Embassy’s cultural arm, to close its offices in St. Petersburg and Yekaterinburg. The council initially refused but later closed the offices, citing pressure by police and the FSB.

The head of the British Council, Lord Kinnock, a former leader of the British Labour Party, lashed out at Russia in an interview with Moskovsky Komsomolets published Saturday.

“It was almost 100 percent a game of political chess by the Russian government,” Kinnock said of the campaign against the British Council.

Kinnock’s son Stephen headed the British Council’s St Petersburg office and in early January was briefly detained by traffic police and accused of drunk driving.

“Like hundreds of thousands of Russian citizens, we would like to return to normal relations as quickly as possible,” Kinnock said.

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