BP-TNK Crisis: A Case Of Hypocrisy On All Sides Involved

July 29, 2008

BP-TNKI’m sorry, but I find all the drama surrounding the crisis, which is engulfing the British-Russian joint oil venture BP-TNK, to be smacking of serious hypocrisy; both on the part of Russia and the West.Let me explain. For more than six months now BP-TNK – a joint venture between British Petroleum and the Russian oil giant, Tyumen Oil Company – has been going through a crisis caused by the decision of the Russian owners of the group to attempt to change the composition of the board of directors and to review the initial agreement that stipulates how the firm operates. The Russian owners – four oligarchs – are especially keen on getting rid of the BP appointed chief executive of BP-TNK, Robert Dudley, who is now hiding – yes, you’ve heard me right – hiding somewhere in Central Europe to avoid further harassment by the Russians.

In the past several months the Russian authorities made life very difficult for BP-TNK: every government’s agency imaginable had a go at the poor Brits, investigating them for tax evasion, for breaking labour laws, for ignoring immigration procedures. At some point the Russian secret police, the FSB, even arrested one of the Russian employees of the group, charging him with industrial espionage, and conducted searches of the offices of BP-TNK. This month none of the foreign engineers of BP, who had been seconded to work for BP-TNK in Russia, managed to get their visas extended and as a result had to leave the country. The same thing happened to the above mentioned Mr Dudley, who has left Moscow like some fugitive, in a private plane, and is now in hiding. I repeat, in hiding.

Now, the Russian government has been stating all along that it had no involvement in the conflict. It’s been claiming that it was purely private matter between shareholders of a big company who fell out with each other. Some of the officials, including Prime Minister Vladimir Putin, have even been saying that it was a never a good idea to have a 50:50 split of ownership of the group. Someone always has to be in charge, they were saying. Otherwise conflicts are bound to arise.

Well, it’s all very nice, of course, for the Russian government to treat us all like total idiots. Because even someone, who has absolutely no idea of how things work in Russia, would quickly realise that if government agencies are knocking on BP-TNK’s doors practically every other day, it probably means that Big Brother is behind it all. So, it is extremely hypocritical of official Moscow to insist that the conflict inside BP-TNK is just a case of businessmen falling out with each other.

But then there is another side to this hypocrisy. I ask you this: when BP was signing a joint venture deal with TNK in 2003, didn’t it realise then what it was getting itself into? Didn’t it know what Russia was all about? Of course it did. So it should not be pretending now that it is surprised by the way it’s being treated by the Russians.

Also, we hear that Western governments are expressing their surprise at the way the crisis with BP-TNK is developing. The British Foreign Office, the EU and the US government are making their feelings known about all this. In case you are wondering why Washington is concerned with this matter, US companies own one third of BP-TNK.

But I have a question for them all: weren’t you unaware what was happening in Russia in the last eight and a half years? Don’t you know that former KGB thugs and ex Communist Party apparatchiks are occupying three quarters of all top official positions in the country and that Russian oligarchs are still enriching themselves and breaking every rule in the book along the way?

So why all the indignation now, why the surprised looks? You’ve had it coming for a long time. The West has been allowing the Kremlin to get away with breaking all the rules for many years now. And no one made any fuss when the current President Dmitry Medvedev was installed in the Kremlin without any proper elections. Without any elections at all, in fact. Because the farce that had been staged in March had nothing to do with an electoral process.

So why should anyone be surprised that the Russian government is now using unacceptable methods to take control of BP-TNK. Because the whole conflict is about control of the group. It has nothing to do with governance and the company’s future development. The Russian owners are obviously acting with the backing of the state to try and seize control of BP-TNK and then sell it to some state-owned giant like Gazprom or Rosneft.

So I say to the Western governments: please, don’t pretend that you’ve been caught off guard by the way BP-TNK is being treated at the moment. You should have thought about it when you allowed Putin & Co to settle in the Kremlin and gradually tighten their grip over the whole country.

And now it’s payback time.