BP Losing Power Struggle in Russia?

[World Traveler]

TNK-BP is a joint venture between BP (50%) and a consortium of Russian oligarchs (50%). Russian government claims that it has not been involved in power struggle (but who knows?). Russian oligarchs have objected to what they say has been too much control from BP headquarters over TNK-BP. BP has denied that this has been an issue.

Latest update is below - BP specialists have been forced out of Russia and oligarchs want TNK-BP CEO Dudley removed.

Another sign of the times in the ongoing power struggle worldwide as nations and local nationals seize more control in the era of Peak Cheap Oil.

As an aside, Dudley is actually an American, who lived in northwest Houston and worked at Amoco in the early '90's. His children attended the local primary school and I talked with him several times at local "kiddie events". Nice man. That's probably why I've followed this saga...you never know when former neighbors will show up in the news...

Oil: BP's Russian venture put in doubt after staff are pulled out

· Last 60 of British firm's 148 specialists to leave
· Shareholders deny loss of experts will hit business

• Terry Macalister and Luke Harding
• The Guardian,
• Wednesday July 23, 2008
• Article history

BP's appetite for remaining in Russia was being questioned last night after it announced plans to pull out the last 60 of its 148 technical experts employed inside TNK-BP and agreed that the Russian joint venture should pursue opportunities in Venezuela.

Both of these initiatives had been demanded by its TNK-BP fellow shareholders from the Alfa and Access/Renova (AAR) consortium with whom it has been waging a war for control of a business that provides BP with one quarter of its global oil production.

Lamar McKay, executive vice-president of BP, said: "We are taking this action [removing staff] reluctantly. These technical experts have played a huge part in making TNK-BP one of Russia's most successful oil companies in the last few years."

The removal of the secondees would affect the performance of the business by the first quarter of 2009 at the latest but they had been unable to work since the beginning of April, leaving the British company to foot the bill, said a BP spokesman.

Oil analysts in Moscow said it was difficult to tell whether the retreat on staff deployments was the beginning of the end for BP in Russia. "They have clearly decided this is one particular battle they do not want to fight but only time will tell whether it is something more serious," said Artyom Konchin, analyst from Aton Capital brokerage.

The Russian shareholders denied that the removal of the BP secondees would damage the business. Stan Polovets, AAR's chief executive officer, said: "We respect BP's decision and are confident it will not have an adverse impact on TNK-BP's operations. The BP secondees have not been working for TNK-BP for many months now, and the company's operations have not been hampered in any way. In fact, production has been up for the past three quarters, as our colleagues from BP have noted.

"AAR's position has always been that we welcome foreign talent and consider it critical to the evolution of TNK-BP into a global industry player. At the same time, we believe it is critical that foreign managers and technical experts who work for TNK-BP are employed by TNK-BP, and not by one of its shareholders," he added.

The technical experts were originally refused visas by the Russian immigration authorities. But even when the permits finally came through, the staff were unable to enter the TNK-BP building in Moscow because the head of security at TNK-BP had changed their access codes.
Staff described the announcement as not unexpected. They expressed sadness at the manner of their departure and at being forced out. Many secondees were scrambling last night to find new places to live - with many heading back to London - and to arrange new schools for their children in time for September. Many have still been unable to retrieve personal items from TNK-BP's office in central Moscow.

BP is still waiting to hear about the fate of TNK-BP's chief executive, Robert Dudley, who has also been struggling with visa difficulties and could be forced to leave Russia next week. Dudley has been under fire from Mikhail Fridman and the other oligarch owners of AAR, who want the former BP man removed from his post.

AAR has accused BP of running the joint venture for its own purposes and claims the British company has turned down opportunities to work abroad for fear of being in conflict with its existing business interests, something denied by BP.

Yesterday the company said it had agreed with TNK-BP signing a deal with the Venezuelan state oil group PDVSA but played down its significance. BP is already independently involved in Venezuela through a series of small joint ventures and produces net volumes of 20,000 barrels a day there.

BP said it had agreed to support five foreign proposals put forward by the TNK-BP executives and three of them - including the Venezuelan one - were currently moving forward. The other two are in Kazakhstan and Turkmenistan but BP said it was always supportive of "realistic" opportunities.

http://www.guardian.co.uk/business/2...l/22/bp.russia

[GRG55]

Re: BP Losing Power Struggle in Russia?

TNK-BP is a joint venture between BP (50%) and a consortium of Russian oligarchs (50%). Russian government claims that it has not been involved in power struggle (but who knows?). Russian oligarchs have objected to what they say has been too much control from BP headquarters over TNK-BP. BP has denied that this has been an issue.

Latest update is below - BP specialists have been forced out of Russia and oligarchs want TNK-BP CEO Dudley removed.

Another sign of the times in the ongoing power struggle worldwide as nations and local nationals seize more control in the era of Peak Cheap Oil.

As an aside, Dudley is actually an American, who lived in northwest Houston and worked at Amoco in the early '90's. His children attended the local primary school and I talked with him several times at local "kiddie events". Nice man. That's probably why I've followed this saga...you never know when former neighbors will show up in the news...

Oil: BP's Russian venture put in doubt after staff are pulled out

· Last 60 of British firm's 148 specialists to leave
· Shareholders deny loss of experts will hit business

• Terry Macalister and Luke Harding
• The Guardian,
• Wednesday July 23, 2008
• Article history

BP's appetite for remaining in Russia was being questioned last night after it announced plans to pull out the last 60 of its 148 technical experts employed inside TNK-BP and agreed that the Russian joint venture should pursue opportunities in Venezuela.

Both of these initiatives had been demanded by its TNK-BP fellow shareholders from the Alfa and Access/Renova (AAR) consortium with whom it has been waging a war for control of a business that provides BP with one quarter of its global oil production.

Lamar McKay, executive vice-president of BP, said: "We are taking this action [removing staff] reluctantly. These technical experts have played a huge part in making TNK-BP one of Russia's most successful oil companies in the last few years."

The removal of the secondees would affect the performance of the business by the first quarter of 2009 at the latest but they had been unable to work since the beginning of April, leaving the British company to foot the bill, said a BP spokesman.

Oil analysts in Moscow said it was difficult to tell whether the retreat on staff deployments was the beginning of the end for BP in Russia. "They have clearly decided this is one particular battle they do not want to fight but only time will tell whether it is something more serious," said Artyom Konchin, analyst from Aton Capital brokerage.

The Russian shareholders denied that the removal of the BP secondees would damage the business. Stan Polovets, AAR's chief executive officer, said: "We respect BP's decision and are confident it will not have an adverse impact on TNK-BP's operations. The BP secondees have not been working for TNK-BP for many months now, and the company's operations have not been hampered in any way. In fact, production has been up for the past three quarters, as our colleagues from BP have noted.

"AAR's position has always been that we welcome foreign talent and consider it critical to the evolution of TNK-BP into a global industry player. At the same time, we believe it is critical that foreign managers and technical experts who work for TNK-BP are employed by TNK-BP, and not by one of its shareholders," he added.

The technical experts were originally refused visas by the Russian immigration authorities. But even when the permits finally came through, the staff were unable to enter the TNK-BP building in Moscow because the head of security at TNK-BP had changed their access codes.
Staff described the announcement as not unexpected. They expressed sadness at the manner of their departure and at being forced out. Many secondees were scrambling last night to find new places to live - with many heading back to London - and to arrange new schools for their children in time for September. Many have still been unable to retrieve personal items from TNK-BP's office in central Moscow.

BP is still waiting to hear about the fate of TNK-BP's chief executive, Robert Dudley, who has also been struggling with visa difficulties and could be forced to leave Russia next week. Dudley has been under fire from Mikhail Fridman and the other oligarch owners of AAR, who want the former BP man removed from his post.

AAR has accused BP of running the joint venture for its own purposes and claims the British company has turned down opportunities to work abroad for fear of being in conflict with its existing business interests, something denied by BP.

Yesterday the company said it had agreed with TNK-BP signing a deal with the Venezuelan state oil group PDVSA but played down its significance. BP is already independently involved in Venezuela through a series of small joint ventures and produces net volumes of 20,000 barrels a day there.

BP said it had agreed to support five foreign proposals put forward by the TNK-BP executives and three of them - including the Venezuelan one - were currently moving forward. The other two are in Kazakhstan and Turkmenistan but BP said it was always supportive of "realistic" opportunities.

http://www.guardian.co.uk/business/2...l/22/bp.russia

As C1ue has pointed out, the fight seems to be with Alfa and the oligarchs, but I can't help but think that BP should be considering a new slogan..."Beyond Putin".

[c1ue]

Re: BP Losing Power Struggle in Russia?

The oligarchs in question are the ones behind Alfa consortium.

The last remaining Jewigarchs still in the oil business.

Government is not involved so long as TNK-BP pays its promised royalties.

[GRG55]

Re: BP Losing Power Struggle in Russia?

The oligarchs in question are the ones behind Alfa consortium.

The last remaining Jewigarchs still in the oil business.

Government is not involved so long as TNK-BP pays its promised royalties.

Is it not the government that issues work and residency visas? If so, how can it be said the government is not involved? Clearly somebody is being "influenced".

I have a former employee of mine who has been based in BP's Moscow office for 5 years. I've been getting first hand reports from him as the visa situation that he and a large number of his colleagues have been dealing with has unfolded.

Interesting times all over the world, indeed.

[GRG55]

Re: BP Losing Power Struggle in Russia?

The oligarchs in question are the ones behind Alfa consortium.

The last remaining Jewigarchs still in the oil business.

Government is not involved so long as TNK-BP pays its promised royalties.

Beyond Putin inches closer...

BP Losing 23% of Production Looms as Russians Assail Investment

By Stephanie Baker-Said and Torrey Clark
July 24 (Bloomberg) -- The dispute that has come to symbolize the challenges of producing oil in an era of high prices and short supplies boiled over in May. That's when BP Plc, the world's third-largest oil company by sales, faced off in a private meeting with its billionaire partners in a 50-50 Russian joint venture called TNK-BP Ltd. at the beachfront Four Seasons Hotel near Limassol, Cyprus.
The Russian side had a demand: The ouster of Robert Dudley, the American oil executive who had been running the venture since it was formed in 2003. They held Dudley responsible for crippling profits at TNK-BP, Russia's third-largest oil producer...

...State agencies have begun investigating possible labor violations, focusing on foreign workers at TNK-BP. At the same time, the billionaire shareholders have been complaining about the high costs of those employees and taking steps to force the company to reduce their number. Russian officials and Vekselberg both say there's no connection...

...BP will be the loser in this dispute, says James Fenkner, managing director at Moscow-based Red Star Asset Management, which oversees about $100 million. ``It's like a Russian fairy tale, and they never end well,'' says Fenkner. ``The fox eats the chicken.'' More...

[c1ue]

Re: BP Losing Power Struggle in Russia?

Is it not the government that issues work and residency visas? If so, how can it be said the government is not involved? Clearly somebody is being "influenced".

Yes, the government is the one that issues visas.

But the mistake is thinking that all levels of government are unified.

This is patently untrue.

One of Russia's issues right now is a maze of laws - between those pre-fall plus all the ones that have appeared since then.

The effect is that it requires a great deal of local expertise in navigating this maze.

The analogy would be like this:

You can pay the Godfather - who would then control the lieutenants.

You can pay the lieutenants, who then control the wise-guys.

You can pay several wise-guys, who control the made-men.

You can pay the made-men, who control the soldiers.

Or you can follow the rules which are inconsistent, constantly changing and unwritten.

Each level has its effect, particularly if focused, on the lower levels. But each level also has its own agenda.

As a large entity which previously almost indubitably got around by paying previously, the situation now is where the 'efficiency agents' have their own agendas beyond short term 'efficiency' consulting to make money.

The previous local assistance was to navigate the remaining levels - irritating, bean counting, back scratching work as well as identifying the right 'efficiency consultants'.

Now that Alfa is no longer doing this work, unsurprisingly the bureaucratic BS coming through is paralyzing the foreign component of the company.

[World Traveler]

CEO Dudley Leaves Russia

Last Updated: 1:36am BST 25/07/2008 Personal Statement from Robert Dudley, the General Director (CEO), Group CEO and Chairman of the Management Board of OJSC TNK-BP Management In the light of the uncertainties surrounding the status of my work visa and the sustained harassment of the company and myself I have decided to leave and to work outside Russia temporarily. Despite having a valid employment contract I have been unable to obtain a work visa. The uncertainty which has been created by the transit visa, expiring this Sunday, that I now have creates acutely unstable working conditions for me and a distraction to the TNK-BP Group. In addition to the much-publicised dispute between shareholders, the company and I have faced unprecedented investigations, proceedings, enquiries and other burdens. I have taken this decision after appropriate reflection, on the basis of unequivocal external legal advice and I shall continue as Chief Executive of TNK-BP, Group CEO and Chairman of the Management Board. I shall seek to provide continuity of management in the best interests of all shareholders pending a resolution of the differences between Alfa, Access, Renova and BP. During this period I will continue to discharge my duties and I have all necessary authority to do so. I have been advised that this temporary exercise of authority whilst outside Russia is both lawful and better for all shareholders than the alternatives... Lord Robertson expresses outrage at AAR over TNK-BP CEO's Russian exit Deputy TNK-BP chairman Lord Robertson today expressed his outrage at the behaviour of Alfa, Access and Renova (AAR) and affiliated executives Viktor Vekselberg and German Khan... Lord Robertson said: "Bob Dudley has decided he can most effectively manage the company from outside Russia. This has clearly been a difficult decision for him. Bob Dudley is an outstanding chief executive and under his leadership, BP and AAR have seen the value of their original investments multiplied many times. "Alfa Access and Renova are threatening the viability of this historic joint venture that has been so good for Russia, and for all its shareholders... "There is a legitimate way of bringing about change in a company - through negotiation and discussion. AAR's efforts to wrest control of the company through illegitimate means are damaging the company and, regrettably, Russia's reputation among international investors. "Since TNK-BP was set up in 2003 to invest in Russia and Ukraine, it has led the Russian oil industry on almost all measures on which investors focus. Production and reserves growth and shareholder return have all been industry-leading. In addition it has improved safety and environmental standards and paid more than $70bn of taxes and duties to the Russian Federation. That is an outstanding record. "Anyone who cares about the security of international investment, and corporate governance should be concerned. This is not about British versus Russian interests as AAR has tried to portray it. It is about the actions of AAR and its affiliated executives..."

http://www.telegraph.co.uk/money/mai...25/cnbp225.xml

[World Traveler]

New York Times Analysis

"The development is the latest twist in a rising nationalism that is shutting Western oil companies out of energy-rich regions and has wide implications for BP, which pumps about a quarter of its worldwide oil output in Russia.

While BP retains ownership of 50 percent of the TNK-BP venture, the departure of the executive, Robert Dudley, an American, will probably lead to the passing of greater operational control to the Russian partners...

Mr. Dudley called his departure “temporary,” but it was unclear when he might return, or how he would manage the company, which has more than 60,000 employees and nearly 100 subsidiaries, from outside the country...

[BP Chairman] Sutherland, in a statement, said BP was fighting a corporate takeover by its Russian partners that appeared to be backed by the Russian authorities. The government, however, maintains that it is a private shareholder dispute. "

"The implications for BP’s future oil supply from Russia were unclear.
Many industry analysts predict that a company controlled by the Russian government, like Gazprom or Rosneft, will eventually assume control of the joint venture, while BP may remain as a minority partner."

http://www.nytimes.com/2008/07/25/bu...ogi&oref=login

[Shakespear]

Re: BP Losing Power Struggle in Russia?

Yes there is a maze of laws but this maze is used as required in a particular situation requires. Sachalin Island is one such example. Suddenly environmental issues came into play requiring a Russian partner take over to resolve it. What a joke, or should I say highway robbery :-)

I once worked on a project there and in this particular situation the drilling rig could have been gotten cheaper in Poland than in the middle of Siberia. We had to contract the local rig because we were told the Polish rig would never make it through customs. Very direct message that locals will make the money. Period!!! We got the message and when the rig arrived realized that we had something that was built in the '60s requiring frequent modifications as the drilling went on. Time was lost and the project cost more money than it should have.

In this case and I suspect in others that involves foreign companies, the locals call all the shots. If they don't like something YOU WILL lose. BP needs to lose, because Kremlin wants it.

Russia is pulling in the rains. HC are a strategic commodity and they do not want foreigners to control it. It is as simple as that IMHO :-)

[c1ue]

Re: BP Losing Power Struggle in Russia?

In this case and I suspect in others that involves foreign companies, the locals call all the shots. If they don't like something YOU WILL lose. BP needs to lose, because Kremlin wants it.

Russia is pulling in the rains. HC are a strategic commodity and they do not want foreigners to control it. It is as simple as that IMHO :-)

S,

I've written above that the Russian government isn't the big factor here - at least at the national level.

So long as Russia gets the royalties and the resources can't get sold to a foreigner, no problem.

As a 50% venture, TNK-BP fits all of the above and furthermore has much more realistic royalty rates.

Sakhalin, for example, was different both in the ownership angle and in the royalty rates that were negotiated in pre-1996 time frame.

The other thing to keep in mind is that Russians don't forget the past.

Unlike in the US, where past indiscretions which were gotten away with are considered history (with the notable exception of RICO statutes and the IRS), in Russia they keep the tallies. That's why back taxes are such a big deal!

[World Traveler]

CEO Dudley in Hiding-Gov'ts Taking Sides

Cloak and dagger? A major international incident?

Spouse and I have been watching this unfold with dropped jaws. Our sons are the same age and played together for 2 years before the Dudleys left for Russia the first time in the mid 1990's. Both Bob and his wife are genuine, down-to-earth, friendly, nice people. Never in a million years would we have thought they would one day be involved in a major, international power struggle.

July 27, 2008


BP's Russian boss goes into hiding

TNK-BP boss Bob Dudley has gone into hiding this weekend as the battle between BP and its Russian partners threatens to turn into a diplomatic incident.

Dudley, who left Russia last week, has set up a secret European command centre from which he will attempt to keep control over TNK-BP, a lucrative joint-venture between BP and Russian investors.

Dudley has gone to extraordinary lengths to conceal his whereabouts, including extensive security measures to ensure his phone calls and e-mails are untraceable. His location is known only to a handful of BP executives and he has been joined by a small, hand-picked support team.

American and European governments have been drawn into the row.

Gordon Brown, US Treasury secretary Hank Paulson and EU trade commissioner Peter Mandelson are understood to have made representations to Vladimir Putin, Russia’s prime minister, to resolve the issue.

BP has hired the City law firm Linklaters and is preparing to begin arbitration proceedings in Sweden over alleged violations of TNK-BP’s legal framework by AAR, the consortium of Russian billionaires — Mikhail Fridman, Viktor Vekselberg, Leonard Blavatnik and German Khan — who own the other half of TNK-BP.

http://business.timesonline.co.uk/to...cle4407496.ece

[c1ue]

Re: BP Losing Power Struggle in Russia?

Check out this interview with Dr. Michael Hudson to get a better understanding of why TK-BNP is NOT a government issue...

http://www.counterpunch.org/schaefer02272004.html

SS: What are likely to be the first or most controversial steps?

MH: The rent tax. Putin is coming to realize is that it is not necessary for the state to own Russia's natural resources outright. Despite the fact that it has sold them off, the government has the power to tax their rental income.

SS: Isn't Russian industry already so tax-ridden that new investment is uneconomic?

MH: Yes indeed, but a rent-tax would not be an income tax. It would fall on the "unearned increment" that derives from natural endowments.

SS: Is Putin mobilizing support for this?

MH: At a news conference on Nov. 6, former President Gorbachev was asked for his response to the Khodorkovsky affair. "If authorities had solved the question of the rational in the interests of the nation, the question of natural rent and all related issues on time," he replied, "this case might not have come round." Rent can be estimated and taxed at any time.
Two days earlier Mr. Primakov noted that the wealthiest individuals in China were men who had developed high technologies, automotives and construction, but "in Russia it's only oil or gas. But why? Apparently these people have huge funds that they have acquired not because of excellent management but because they use resources that were given by God to all people. And they pocket these funds." Russian processing industries reported profits of 12 to 14 percent, but the oil industry reported 27 percent--and this is net of its offshore price maneuverings and quasi-embezzlements! "Now, this group of people . . . uses various schemes to evade taxes," Mr. Primakov continued. "I have recently made a trip to the North, and everybody told me openly that most oil companies create subsidiaries. These subsidiaries are fully owned by these companies but are registered either in special territorial zones where taxes are low or in off-shore zones abroad. Then products are sold to these enterprises at an artificially low price and these enterprises do not pay taxes to our budget at all."
Later in the month Yegor Gaidar, director of the Institute for the Economy in Transition and an SPS (Union of Right Forces) candidate in the upcoming State Duma elections, announced in a radio interview that "Revenue from the Russian oil industry has risen by $11 billion since 2002. This is currently the fastest-growing source of income for the national budget." However, since May-June 2003 the oil industry had opposed government plans to raise taxes on extracting minerals in 2004. He estimated that another $3 to $4 billion could be taxed without restricting the oil industry's growth. So the ground was being prepared for much higher oil taxation.
The most practical means of doing this is by calculating the rent or "surplus profit" being taken. This is why the Rodina or Motherland Party of Glaziev and Dmitri Rogozin "has sent shivers through Russia's biggest industry, oil production, by advocating a controversial 'rent' program that would require oil companies to return a major share of their profits to the public for the right to use natural resources. 'Today the people gave a clear answer that an end will be put to the irresponsible course under which oligarchs fill their pockets at the expense of social justice,' Glaziev declared Sunday night [Dec. 7]." The idea of using land and resource rent as the tax base also has been adopted by the Pensioners' Party. The right-wing Yabloko "is warning that natural rent will melt away when oil prices fall, but in principle has no objection to confiscating natural rent in one form or another." Finally, the SPS is calling for an excessive profits tax on the oil industry, which in practice means "the confiscation of natural rent. No party is opposed to natural rent."
Putin has announced the government is considering how to redistribute oil company windfalls, and that he wants representatives of the business community to participate voluntarily in making the decision. "One of the mechanisms would be an export duty, another would be a tax on the extraction of natural resources," he said, while recognizing that the government should tax oil fields based on their individual characteristics rather than through the existing flat-rate system that encourages companies to increase extraction at less productive wells.
What has been realized is that it is not necessary to take the radical step of (re)nationalizing the oil and gas, minerals and land. The rent itself can be taxed, in a specific tax based on "economic" or "natural-resource" rent (basically the Ricardian concept) rather than profit. As long as this tax is applied evenly through the economy as a whole it is legal under international law.

[c1ue]

Re: BP Losing Power Struggle in Russia?

Amusing look at how the apparent reality of Dudly and BP were in contrast to the 'Russian oligarchs bad, democratic corporatists good' spin put on the original story.

http://www.courthousenews.com/2012/02/27/44190.htm

A former employee filed a state RICO complaint against BP, claiming the oil giant fired her for reporting the bribes it paid to run a joint venture in Ukraine.

Lillian Borich sued British Petroleum, three of its U.S. subsidiaries, and Robert Dudley, former CEO of BP and of TNK-BP, Russia's third-largest oil company, which she says is 50 percent owed by BP. The other half is owned by a group of Russian businessmen, the Alfa-Access-Renova (AAR) consortium, according to the complaint in Cook County Court.

Borich claims she worked in BP's Warrenville, Ill. office, from 2004 to 2007, when she was offered a job as a commercial marketing manager in Kiev, Ukraine.

Unbeknown to Borich, she says, that job would put her at the focal point of a corporate "civil war" initiated by BP's attempt to take over the entire venture. Accepting the job was "career suicide," Borich says in her complaint.

"BP Defendants scheme was coordinated by Robert Dudley and is referred to in this complaint as the Dudley Plan," according to the complaint.

The complaint states: "The Dudley Plan was essentially BP p.l.c.'s attempts to impose its will on TNK-BP with an eye to ultimately taking it over, and was facilitated by an ostensible Western-style sales and distribution network conjured up by the Boston Consulting Group and Robert Dudley in early 2006. The Dudley Plan was introduced into an environment that was not only unreceptive to such strategy, but one in which such a strategy created significant and substantial tension between BP p.l.c. and AAR and ultimately caused a civil war within TNK-BP. By the time Ms. Borich was tasked with the role of commercial marketing manager in Kiev, Ukraine the AAR partners had recognized BP p.l.c.'s power play for what it was and had implemented a counterstrategy to thwart BP p.l.c.'s attempts to gain control of BP-TNK.

"The Dudley Plan for TNK-BP was also vigorously contested by the AAR partners who comprised TNK because they viewed the Dudley Plan as incompatible with the Russian/Ukranian marketplace. The Russian/Ukrainian marketplace was then and on information and belief remains governed by personal relationships, protected territories and previously established written and unwritten rules and agreements, many of which were of questionable legality under United States law and the Laws of England and Wales, irrespective of their legality (or lack of legality), propriety or acceptance in Russia and Ukraine. BP defendants and Robert Dudley were at all times relevant to the allegations and claims contained in this complaint aware of these facts but never disclosed them to anyone, including Ms. Borich."

Borich says she was "tasked with carrying out the ulterior motives of the Dudley plan (i.e. favoring BP p.l.c. over AAR) by circumventing TNK's existing personal relationships with its re-sellers, jobbers and joint venture partners by marketing BP-TNK products directly to end customers and consumers, with no regard for these existing personal relationships, protected territories, established rules or agreements or the illegalities associated with this activity."

She adds: "Robert Dudley and BP p.l.c. knew, or should have known, that the Dudley Plan was no longer viable, if it ever was, and that it was never legitimate and would never succeed in the Russian or Ukrainian markets. On information and belief, others employed by BP defendants also knew of the Dudley Plan and its ulterior purpose, and that it was not only unachievable at the time Ms. Borich was offered the commercial marketing manager position, but that by placing her into this position Ms. Borich was being asked to commit career suicide and imperil her personal safety."
She adds: "Had Ms. Borich been told the true facts and circumstances by defendants, Ms. Borich would not have accepted the position."

After she arrived in Kiev, Borich says, "the utter failure that was the Dudley Plan was evidenced in part by AAR subsequently overturning Robert Dudley's strategy for TNK-BP with AAR's rogue purchase or a Ukrainian retail chain, Golden Cheetah, in the traditional ways of doing business in Russia and Ukraine. On information and belief, these traditional ways of doing business in Russia and Ukraine included acts and omissions that are illegal under U.S. law and the laws of the United Kingdom and Wales, including illegal payments, protection schemes and other forms of nefarious activity. Indeed, this way of doing business is well-known in the Ukraine and Russia and is euphemistically referred to as 'krysha,' which literally translates from Russian to English to 'roof'. It is under this roof that business is sometimes done in Russia and Ukraine and was specifically the system under which TNK-BP operated at the time that Ms. Borich arrived in Kiev, Ukraine in June of 2007. The implementation of the purchase of the Golden Cheetah retail chain became known internally as 'Project Jupiter' and was headed by a Russian-speaking implementation manager named Felix Lunev. The purchase of the Golden Cheetah retail chain signaled the inflection point of AAR's internal takeover within TNK-BP.

"The Dudley Plan's fraudulent nature was covered up by Robert Dudley and BP defendants who were unwilling to convey the true facts publicly, instead using Ms. Borich as a pawn to continue Robert Dudley and BP defendants' attempt to defraud the public, including BP shareholders and investors, into thinking (a) that the Dudley Plan for the TNK-BP joint venture was legitimate and viable; (b) that the Dudley Plan for the joint venture enjoyed continued success; and (c) that the Dudley Plan for the joint venture could legitimately and legally exploit the Russian and Ukrainian markets and provide valuable economic returns to BP through its investment in to the TNK-BP joint venture."

Borich claims that BP knew its operations were illegal: "After Ms. Borich transferred to Kiev, Ukraine, she became aware of a number of improprieties that were already occurring including illegal payments to various persons in Russia and Ukraine that were rationalized by BP defendants to Ms. Borich as being the necessary way that business was done in Ukraine."

She claims that "meeting notes make clear that bribes and kickbacks were a necessary component to obtaining government contracts, by providing 50 percent of profits to individuals solely because of their relationship with local officials, and setting up a business front through third-party intermediaries in an attempt to legitimize illegal activity.

"Thus while BP p.l.c. was holding itself out to the world as conducting legitimate and legal business practices through its participation in the TNK-BP joint venture, BP p.l.c. and Robert Dudley, on information and belief, either actively participated in illegal payments and bribes or was fully aware that these illegal payments and bribes were being made."

Borich says her contract was canceled in March 2008, and she was placed on "garden leave." She claims that "'garden leave' is not an official documented policy by BP defendants, but is instead a procedural device that BP defendants use arbitrarily and capriciously in an attempt to weed out employees from BP when BP defendants do not have legitimate grounds for termination, demotion or for other adverse employment actions."

Borich says she was fired in November 2008.

"BP defendants were clearly using all means available to it to rid itself of Ms. Borich and her knowledge of the events transpiring in Ukraine and the improprieties that BP defendants perpetrated there," the complaint states. "BP defendants' stated reason for terminating Ms. Borich was job redundancy, but in reality Ms. Borich was retaliated against for what she learned about TNK-BP's operation in Ukraine, the abject failure of the Dudley Plan and her reporting of the improprieties to BP's ombudsman, Judge Stanley Sporkin, in August of 2008."

Borich seeks punitive damages for racketeering, fraud, conspiracy, and breach of contract.

[Shakespear]

Re: BP Losing Power Struggle in Russia?

Glad you brought this up again. If someone thinks it is easy to do business there better go shark fishing with a fishing rod.

[touchring]

Re: BP Losing Power Struggle in Russia?

Glad you brought this up again. If someone thinks it is easy to do business there better go shark fishing with a fishing rod.

I think this is a blessing in disguise. Better end it now than wait for it to happen with WWIII.

lol