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Russia’s Medvedev warns officials against ‘terrifying’ businesses

Russia’s Medvedev warns officials against ‘terrifying’ businesses

By Peter Taylor

Last Updated: 12:30am BST 01/08/2008



Russian President Dmitry Medvedev has warned officials against “terrifying” business a day after BP chief executive Tony Hayward met one of the Russian billionaires fighting for control of TNK-BP. 

In an address to Russian ministers yesterday, Mr Medvedev said “law enforcement and state institutions should stop terrifying business” – a comment widely interpreted as a response to the escalating TNK-BP battle. 

“We’ve had enough of inspections and all sorts of raids,” he said. “You can consider that the signal has been given.” His address came as a Russian court declared illegal part of the process that led to the re-election last month of the TNK-BP Holding board. TNK-BP Holding is a subsidiary of TNK-BP, 95pc owned by the joint venture, and owns all of its Russian assets. 

BP nominates five of the board’s nine directors, despite the fact TNK-BP is a 50-50 joint venture. It has resisted a forceful push for boardroom parity by the Russian camp fighting for control, a consortium called Alfa-Access-Renova (AAR).

The court ruling yesterday arose from a lawsuit filed by one of the Russian directors, Alexander Gorshkov. Separate legal action would be required for the board to be disbanded but the British oil giant is expected to challenge the ruling regardless. BP has accused AAR of trying to take control of the joint venture illegally.

Mr Hayward met Mikhail Fridman, a leading agitator in the Russian camp, in Prague on Wednesday in an attempt to resolve the increasingly bitter dispute. Mr Fridman controls AAR with Viktor Vekselberg and Len Blavatnik.

BP and AAR spokesmen would not say yesterday what was discussed between Mr Hayward and Mr Fridman or whether the meeting had improved relations that have become severely strained.

It came after Robert Dudley, TNK-BP’s chief executive, left Russia last week – citing “sustained harassment” – to run the company from a secret location elsewhere in Europe.

The battle has become increasingly political in recent months, with police raiding BP’s Moscow office and TNK-BP’s foreign staff having to leave Russia because their visas were not renewed. Russian authorities are yet to renew Mr Dudley’s work visa, which expired on Tuesday.

BP would not comment on Mr Medvedev’s warning to Russian officials yesterday, saying that the dispute with AAR was a commercial conflict and not political.

TNK-BP accounts for about a quarter of BP’s oil output and is Russia’s third-largest oil firm.

Meanwhile a report released yesterday by the Organisation for Economic Cooperation and Development (OECD) said that while Russia had record levels of foreign investment last year, businesses remained scared of the government. The risk of state interference was among concerns, and “the biggest obstacle to further domestic and foreign investment in Russia remains uncertainty over government policy”.

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