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Robert Dudley clings on by fingertips to TNK-BP job

Times Online
The Times
July 8, 2008

Robert Dudley clings on by fingertips to TNK-BP job

The head of Russian-British oil firm TNK-BP, Robert Dudley

Robert Dudley, the head of TNK-BP, the Russian-British oil company, faces another board meeting on Friday

Robert Dudley, the embattled chief executive of TNK-BP, has held on to his job after a quartet of Russian billionaires failed in their attempt to fire him.

An extraordinary board meeting of TNK-BP Management voted 3-2 against dismissing Mr Dudley in response to a demand from its Russian shareholders. However, he appears to have won only a temporary respite from their attempts to remove him.

The four billionaires – Mikhail Fridman, Viktor Vekselberg, Len Blavatnik and German Khan – own 50 per cent of Russia’s third-largest oil company through their AAR consortium, with BP holding the other 50 per cent. This ownership structure is reflected fully only on the board of TNK-BP International, the parent company, to which TNK-BP Management reports.

TNK-BP International holds its board meeting on Friday and the Russian side is expected to press again for Mr Dudley’s resignation. The Russians boycotted the last board meeting in Cyprus in May after BP had rejected their demand for Mr Dudley to go. BP has consistently backed the chief executive, who has led the joint venture since its formation in 2003.

The extraordinary meeting in Moscow split along predictable lines as three of the management company’s five board members were nominated by Mr Dudley. Mr Vekselberg demanded the vote after AAR had accused Mr Dudley of representing only BP’s interests and of committing “repeated infringements” of Russian employment, tax and migration laws.

The controversy over the beleaguered $38 billion (£19.2 billion) company was raised by Gordon Brown during his first meeting with President Medvedev at the G8 summit in Hokkaido, yesterday. Sergei Prikhodko, Mr Medvedev’s foreign policy aide, said that the President had reiterated his view that this was a private dispute between shareholders.

The Russian partners are demanding greater representation on TNK-BP’s boards and fewer BP secondees at the company. They are also at loggerheads with BP over the company’s future strategy, arguing that the British side is blocking their demand for overseas expansion.

The company produces a quarter of BP’s global oil output and made net profits of $5.7 billion last year. Mr Fridman said that the conflict was about control of TNK-BP’s development. “We want the company to be managed as an independent oil company in the interest of all shareholders. BP wants to operate our joint venture like a BP subsidiary and it wants to control all aspects of its business,” he said.

Stan Polovets, AAR chief executive, said: “We have asked our partners from BP to cast a wide net and recruit the new chief executive from any other major oil company, except BP.”

BP said last weekend that it was suing its partners in London for $365 million in back taxes owed before the joint venture was formed. The Russians have threatened legal action to try to strip BP-nominated directors of their powers.

Lord Robertson, deputy chairman of TNK-BP and former NATO Secretary-General, condemned the oligarchs’ latest attempt to oust Mr Dudley. In a letter to a national newspaper, he wrote that it was “the latest episode in a campaign . . . to overturn the joint venture agreement and to wrestle control of the company for its own purposes.”

Diary of decline

August 2003 BP and TNK sign joint venture agreement to form TNK-BP

June 2007 TNK-BP gives up a controlling stake in the giant Kovykta gasfield to the state-controlled Gazprom

October President Putin says that Russian companies should push out foreign managers

March 19, 2008 The Russian Federal Security Service (FSB) raids TNK-BP and BP offices in Moscow after a TNK-BP employee and his brother are charged with spying for foreign companies

March 25 BP is forced to suspend 148 foreign staff seconded to TNK-BP over visa issues

April Rumours emerge of a split between BP and Mikhail Fridman, Viktor Vekselberg, German Khan and Len Blavatnik, its four Russian billionaire shareholders

May 20 FSB raids BP’s Moscow office again

May 29 Russian investors boycott a board meeting after BP rejects a demand for Robert Dudley to quit

June 9 TNK-BP executives are questioned over violations of employment law

June 27 Peter Mandelson, the European Trade Commissioner, criticises what he calls the “menacing behaviour” of TNK-BP’s Russian shareholders

June 30 The Russian Government approves only 71 of 146 requests for working visas

July 1 Working visas for 49 foreign TNK-BP staff, including Mr Dudley, are approved. BP withdraws 88 foreign secondees from TNK-BP

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