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#34 - JRL 2008-64 - JRL Home
Moscow Times
March 28, 2008
Editorial
High Price For Attack On TNK-BP

TNK-BP's recent run-ins with the law show what happens when an entity crosses federal authorities or state-controlled companies. First, plainclothes Interior Ministry officers searched TNK-BP's offices on March 19 during an investigation into suspected tax evasion by a company that the 50-50 venture acquired years ago. The next day, the Federal Security Services announced that it had charged a U.S.-Russian employee and his brother with industrial espionage. Then, the Natural Resources Ministry said it would inspect TNK-BP's largest oil field for environmental violations. After that, the Interior Ministry said the firm had violated the immigration law by obtaining business visas instead of work visas for dozens of foreign employees.

TNK-BP has taken a cooperative if not conciliatory stance, saying that "it is a commercial organization engaged in normal legitimate commercial activity" and that "it is cooperating with authorities." When told that employees assigned to the company by BP had the wrong visas, TNK-BP announced that it was suspending all 148 workers.

But it is unlikely that TNK-BP's troubles will end despite the firm's willingness to cooperate with authorities and correct whatever shortcomings they find rather than go to court. This is because several government agencies are finding faults in what appears to be a orchestrated campaign to coerce TNK-BP into giving up whatever the government or state-controlled companies want.

It is unclear whether the ultimate goal might be to force TNK-BP to sell its Kovykta gas field to Gazprom at a lower price or to decrease BP's share from 50 percent. But there is no question that the pressure tactics resemble those faced by Shell and its Japanese partners in the Shell-led Sakhalin-2 oil and gas project in 2006. Shell's troubles with environmental inspectors only disappeared after it agreed to sell control of the project to Gazprom.

The fact that TNK-BP is grappling with spy charges -- in contrast with Shell facing accusations of environmental violations -- suggests that it is becoming more difficult for the authorities to get what they want while pretending that politics have nothing to do with the redistribution of business assets.

The people who are using selective justice to mastermind this attack on TNK-BP will probably prevail. But their victory would be a defeat for Dmitry Medvedev, who has crusaded for supremacy of law and its indiscriminate application, as well as for investors who have hoped that the president-elect would have the power to implement this vision.