March 5, 2021

Police Raid BP Offices in Moscow

The timing of the raid, however, highlighted this peculiar type of Russian risk for another company — ExxonMobil, which just a day earlier agreed to take over the very Arctic exploration deal that fell through for BP.

BP is still involved in a dispute with its Russian partners over that oil-exploration deal; the police search was related to a lawsuit pending in a Siberian court.

Russia is as important for BP’s oil production as the United States, so even though the company has had such problems here for years, its share price often nudges up or down in response to police raids or the arrests of employees.

The police raids on Moscow’s glassy high-rises where foreign banks and oil companies have offices unnerve employees and disrupt business. They are called “masky shows” for the balaclavas often worn by the black-clad police.

In Wednesday’s raid on BP’s offices on the 17th and 18th floors of the Lotte Plaza, a glass-and-steel high rise on Moscow’s Garden Ring, police wore commando-style uniforms with yellow shoulder patches saying “Special Forces,” and carried assault rifles, but did not wear masks, according to BP employees.

They were escorting two investigators from the Russian federal bailiff service, who were not armed. The police ushered employees out, and began rifling papers.

“There was no great panic,” one BP employee said. “I was able to come up and get my keys” even after the armed men arrived, suggesting a softer version of the search.

The employee, who did not want to be quoted discussing the events, described the armed police as polite, and not overtly intimidating. “They were just a group of comrades with the badges of special forces, in black outfits, with assault rifles, nothing extraordinary.”

An arbitration court in the Siberian city of Tyumen, a type of Russian civil court, authorized the search, according to both BP and a group of minority shareholders in BP’s joint venture here who filed a lawsuit this year against BP.

The case spun out of the objections that BP’s private partners in the TNK-BP joint venture raised to BP’s agreement to form a separate partnership with the Russian state oil company, Rosneft, to explore for oil in the Arctic.

BP executives say they assumed that since the Russian government had endorsed the deal, and the state company signed it, it enjoyed Kremlin support, but that was not the case.

The partners, a group of Russian billionaires, successfully sued in the Stockholm Arbitration court to block the deal for violating an exclusivity clause in the TNK-BP shareholder agreement.

Separately, a group describing itself as representing minority shareholders in a subsidiary of TNK-BP that is publicly traded sued BP in the Siberian court for damages. The lawsuit was based on the allegation that BP executives serving on the board of directors of the TNK-BP subsidiary violated their fiduciary obligation.

The case says they voted in BP’s interest, rather than the common interest of all TNK-BP shareholders, in approving the Arctic deal.

A similar lawsuit, also filed in a remote Siberian court, in Omsk, crippled the Norwegian telecommunications company Telenor’s business in Russia for years, ending in a settlement last year.

Then, Telenor was in a dispute with Alfa Group, a Russian financial and industrial conglomerate that is also a partner in TNK-BP. Alfa group has maintained it has no ties to the minority shareholders.

BP had appealed a subpoena to hand over documents from the Tyumen court in the TNK-BP case in July, according to the company spokesman, Vladimir Buyanov.

While that was pending, the minority shareholders asked the court to authorize the search of BP’s Moscow office, which happened on Wednesday, Dmitri Chepurenko, a partner in the Liniya Prava legal firm, said in a statement sent to journalists.

Whatever the legal issues, foreign businessmen in Moscow have for years implored the government to refrain from conducting such jarring raids in white-collar cases.

BP has been subjected to several.

Sometimes, police wielding guns force stock analysts and economists onto the floors of their offices — puncturing any sense they may have had that the air conditioned, well-appointed offices in downtown Moscow offered insulation from heavy-handed Russian police tactics.

In February, masked, armed men raided Deutsche Bank’s main office in Moscow, looking for documents related to a commercial mortgage.

In November, police armed with automatic weapons raided a bank belonging to the billionaire Aleksander Y. Lebedev, of the national airline Aeroflot. Mr. Lebedev said he was sitting in his office when men in commando outfits wearing masks burst in, looking for documents.

Article source: http://www.nytimes.com/2011/09/01/business/global/bp-russia.html?partner=rss&emc=rss

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