September 19, 2013 / 12:08 PM / in 4 years

UPDATE 2-Belarus moots repatriation of Uralkali CEO to Russia, ownership change

* Uralkali chief held on Aug 26 after collapse of sales cartel

* Lukashenko says does not want potash row to harm ties with Russia

By Andrei Makhovsky

MINSK, Sept 19 (Reuters) - Belarus said on Thursday it was ready to repatriate the head of Russian potash producer Uralkali , arrested last month to protests from Moscow, but wanted a change of ownership in the firm that would restore strong commercial links with Belarus.

President Alexander Lukashenko, taking a conciliatory tack after weeks of tension following the July collapse of a lucrative sales cartel, said he wanted to prevent the potash row becoming a major stumbling block in his ties with Russia.

Vladislav Baumgertner, chief executive of the world’s top potash producer, was detained on Aug. 26 while visiting the Belarussian capital, about a month after Uralkali pulled out of the partnership, threatening a huge loss of revenue for Belarus and infuriating Lukashenko.

Belarus has accused the 41-year-old Baumgertner of abuse of power and has twice turned down appeals for him to be released provisionally pending investigation.

With the affair placing fresh strain on the close, but often tense, relations between the two ex-Soviet allies, speculation has mounted that billionaire Suleiman Kerimov, Uralkali’s main shareholder, may sell his $3.7 billion stake in a shake-up in its top management.

Some analysts have spoken of a possible re-marriage with state-owned Belaruskali.

“If Russian investigators are interested in the extradition of Russian citizen Baumgertner, arrested by us, I do not see any particular obstacles,” Lukashenko said on Thursday in comments reported by the Belarussian news agency BelTA.

But he made clear he wanted Kerimov out and a sale of Uralkali which which would restore renewed cooperation with Belarus within the potash industry.

“Change the leadership, bring in people who are interested in the production, above all, of potash fertiliser at Uralkali and we will be ready to work with them,” he declared. POTASH ALLIANCE

The former alliance between the two companies controlled 40 percent of the world potash market.

Exports of the fertiliser ingredient account for 12 percent of the ex-Soviet republic’s state revenue. The pull-out by Uralkali in July threatened to push potash prices down 25 percent - a real blow to Belarus’s fragile economy.

Russia and its much smaller ex-Soviet ally have had many ups-and-downs under Lukashenko who has ruled since 1994 with an iron fist, often in eccentric style, to the dismay of Western governments and the country’s political opposition and dissident community.

But though Belarus relies on Moscow for energy supplies and financial help, the country remains important to the Kremlin as a military and economic ally.

Lukashenko on Thursday said the potash row should not be allowed to drive the two countries apart or spoil his relations with Russian President Vladimir Putin.

“This potash scandal must in no way become a stumbling block in relations, not only between states but also between two presidents,” he said, an allusion to past rows over Russian energy deliveries to Belarus.

“Do you know how difficult it was to restore these ties, we can not afford for them to be spoiled again,” Lukashenko was quoted as saying.

His words clearly suggested that Baumgertner was seen as a bargaining chip in negotiations with Russia over the lucrative potash trade rather than as a genuine target for prosecution.

But he accused Uralkali’s owners of distorted accounting and manipulation of financial statements and said he was prepared to share the findings of Belarus’s investigations with the stock exchanges in London and Moscow.

In a statement, Uralkali denied the accusations and said its financial reporting had consistently been certified under international standards.

“We therefore conclude that the statements by the Belarusian authorities are inaccurate and part of an ongoing campaign of disinformation designed to harm Uralkali’s reputation and its business,” Paul Ostling, independent chairman of Uralkali’s audit committee, said in a statement.

Though Russia at first threatened to restrict oil exports to Minsk and close the door to Belarussian pork imports, Putin himself has taken a more neutral line saying an end to the dispute had to be worked out.

Since then, Igor Sechin, head of Russian oil giant Rosneft and a close ally of Putin, has said Russia is committed to maintaining strong business ties with Belarus, a lucrative market for Russian energy firms due to an export tax waiver.

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