Insight: UK court reveals fear and mistrust at TNK-BP

Tue Dec 4, 2012 1:54pm EST
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By Andrew Callus

LONDON (Reuters) - A former TNK-BP employee may have confessed to fraud out of fear during a meeting in the office of German Khan, the head of the oil company and one of Russia's most prominent businessmen, according to a British High Court judge.

In the first judicial account of encounters earlier this year between Khan and his former subordinate Igor Lazurenko, testimonies from the two men paint a picture of fear and mistrust at TNK-BP, one of the country's largest private companies which is half-owned by Britain's BP.

The actions and methods of Khan and other oligarchs who grew rich from the privatizations of the 1990s are a sensitive issue in Russia, where President Vladimir Putin is trying to increase state control and crack down on profiteering without scaring off investment. The case opens a window on a world where courts, police and imprisonment are seen by many Russians as tools of the wealthy.

Khan, BP and TNK-BP's other shareholders are trying to fold their business into state oil company Rosneft. Closing the deal, one of the biggest energy takeovers in history, would net them billions of dollars in cash and could make them shareholders in the state company.

BP has secured government approval to acquire Rosneft shares from the state and expects to complete its part of the sale by mid-2013, but Khan's side of the deal is only partly formed and has no approvals yet. The whole deal is worth $55 billion.

"Whilst it is clearly not possible at this stage to make any definitive findings... Mr. Khan's own evidence provides some support for Mr. Lazurenko's evidence that he was coerced into making this confession," said Andrew Sutcliffe QC, sitting as judge of London's High Court, in a November 20 decision.

This week, TNK-BP decided not to appeal the judgment, and on Tuesday, Lazurenko's lawyers were seeking a total of 1.6 million pounds ($2.6 million) in costs from the company.

In his 88-page ruling, Sutcliffe dismissed TNK-BP's attempts to bring fraud charges against Lazurenko, a one-time Russian army officer who was in charge of organizing oil transport contracts. Sutcliffe called TNK-BP's potential for a case "very weak", described some claims as "false and misleading" and was critical about its lack of evidence against Lazurenko.   Continued...

A BP logo is seen in front of an apartment block near a petrol station in Moscow October 22, 2012. REUTERS/Maxim Shemetov