Mikhail Gutseriev, the owner of Russneft, accuses Putin of forcing a sale
By Andrew E. Kramer
Published: July 30, 2007
MOSCOW: The owner of Russneft, one of Russia's largest private oil companies, confirmed Monday that he would sell the business to an investor loyal to the Kremlin, but he added in an open letter that the sale was not voluntary.
Mikhail Gutseriev, once an insider in the tight coterie of Russian billionaires known as oligarchs who has since fallen from favor, accused the government of President Vladimir Putin of "illegally" forcing him out of the company using trumped-up tax claims.
The critical letter marked the first significant public challenge to Putin from an influential businessman since the imprisonment of the former chairman of Yukos Oil, Mikhail Khodorkovsky, four years ago.
The development left analysts wondering what the future holds now for the former owner of Russneft. Some speculated Gutseriev, too, could be imprisoned. Khodorkovsky is serving an eight year prison sentence in Siberia.
Gutseriev, in a letter that was published on his company Web site on Monday but had been removed by Monday evening, laid out a theory of recent Russian energy policy echoing what analysts have said for months but that has been denied by the Russian government.
He maintained that regulatory pressure on both foreign and domestic producers was serving as a pretext to expropriate oil and natural gas property privatized in the 1990s as part of an effort by Putin to nationalize the energy industry.
"They made me an offer to leave the oil business, to leave 'on good terms,' " Gutseriev wrote in the letter, which was also published in Russia's largest business newspaper, Vedomosti. "I refused."
"Then, to make me more amenable, they tightened the screws on the company with unprecedented persecution," he wrote. "Who didn't check us in the past two years! Particularly in the last year: The General Prosecutor, the tax service, structures in the Interior Ministry."
Gutseriev, who is one of Russia's most successful Muslim businessmen, did not name the buyer in his letter.
Oleg Deripaska, the principal owner of the Basic Element holding company, however, applied on Friday for regulatory approval to acquire the oil company. In a statement, Basic Element said Russneft would be incorporated into a subsidiary called En+, which is also the owner of Rusal, Russia's largest aluminum producer, and would bolster the group's oil business.
Gutseriev, a former oil bureaucrat who parlayed his insider position into ownership of oil assets grouped into his Russneft company, said he decided to sell rather than risk his company's dismantlement and further harassment of his employees. He has denied any wrongdoing in forming Russneft in 2002.
"I am giving control of the holding to an owner, with whose appearance, I am certain, all the problems of Russneft will in time be solved," Gutseriev wrote. In an echo of the Yukos case that began in 2003, police charged Gutseriev with illegal business activity in May.
Last autumn, Russian regulators put pressure on Royal Dutch Shell about environmental infractions in increasingly shrill terms, at one point threatening to sue Shell for each tree cut down while building a pipeline on Sakhalin Island. Shell, in response, sold 50 percent plus one share in the Sakhalin II project to the state energy giant Gazprom.
Then, in June, BP's local joint venture in Russia, TNK-BP, sold a controlling stake in a large natural gas project to Gazprom for a below-market price, after being pressed by regulators about a license technicality.
In both cases, the foreign companies made no public protest or statement pointing out that the nominal claims against their operations in Russia were merely pretexts to force a sale, the point that Gutseriev made Monday.
After his settlement with Gazprom, Shell's chief executive, Jeroen van der Veer, thanked Putin for resolving the dispute. "Thank you very much for your support," van der Veer told Putin at a Kremlin ceremony.
"As everybody in the world knows, you don't fight city hall, and in Russia you don't fight the Kremlin," Chris Weafer, the chief analyst at Alfa Bank, said. "When the Kremlin comes calling and says 'we want to buy your business,' the only talk is about price and terms."
A spokesman for Basic Element did not return calls requesting comment on Gutseriev's claim that the transaction involving Russneft was not voluntary.
Basic Element, through its subsidiaries, has invested extensively outside Russia and is transforming itself from a company principally focused on aluminum to a diversified metals and mining enterprise. Rusal plans an initial public offering in November on the London Stock Exchange that could raise $7.5 billion.
Just this month, Basic Element's automotive subsidiary bought a stake in Magna International of Canada, an automotive parts supplier that earlier this year floated a plan to buy Chrysler together with Deripaska's group.
Gutseriev fell from favor about two years ago for reportedly purchasing Yukos assets without approval. The letter Monday seemed to come as a surprise.
The board of Russneft issued a statement Monday saying Gutseriev had resigned as director and would halt other business activity in Russia as well. Gutseriev has real estate and coal investments.
Mikhail Gutseriev, the owner of Russneft, accuses Putin of forcing a sale
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