By Rowena Mason
The counter-allegations – strongly denied by the Russians – show how fiercely BP is privately fighting over the Rosneft deal. The billionaire investors in TNK-BP – Mikhail Fridman, Len Blavatnik, German Khan and Viktor Vekselberg – are trying to halt the share-swap.
The fight-back also reveals that the depth of distrust between BP and its four Russian billionaire partners runs deeper than publicly disclosed. The billionaires, known as Alfa Access Renova (AAR), co-own BP's existing Russian operations TNK-BP. They claim the new Rosneft deal breaches an earlier shareholder agreement.
While the Russians have spoken out in the media against the deal, BP has claimed in public that everything is still "friendly" between the partners in
TNK-BP.
Bob Dudley, the chief executive, has said it is simply a commercial dispute that will "resolve itself" via a United Nations arbitration under Swedish law.
However, BP is privately claiming that the billionaires' efforts to derail the deal have "tactical" elements – such as deliberately scheduling an injunction hearing for the day of the oil giant's financial results. The billionaires strongly deny this, saying the court date was the first available one.
In another alleged example of "game playing", BP claims the billionaires proposed a "special dividend" from TNK-BP some weeks ago and then threatened publicly to block the $1.8bn (£1.1bn) payment.
The billionaires strongly dispute any suggestion that they are simply attempting to work the situation to their advantage and win money out of BP. They accuse BP of using excessive language.
Sources say AAR would reject a financial settlement and simply wants to make sure that TNK-BP’s commercial position is not eroded by the Rosneft deal.
It is understood that Mr Dudley was aware he was taking a calculated risk when arranging the deal with Rosneft and suspected that BP’s existing Russian partners would try to leverage their position.
He is thought to have believed that letting AAR know of its proposals at the 11th hour would lessen their chances of blocking the agreement. BP maintains that the deal does not breach the existing shareholder agreement that states all potential opportunities in Russia should be taken to the chief executive of TNK-BP.
However, the dispute has already threatened the stability of board relations within TNK-BP, the joint venture giving access to 8.5bn barrels of proven oil reserves.
The Russian shareholders have also threatened legal action against David Peattie, one of the BP-nominated board members, claiming he breached his fiduciary duties by supporting the deal.
Insiders say the fight has become increasingly bitter and that BP and their Russian partners have no trust in each other. However, they also claim that “being friends” is not necessary for TNK-BP to continue as a partnership, because the venture has been so lucrative. It generated $3.3bn in dividends in 2009.
Nutshell:
Fiduciary duty is a legal responsibility to act in the best interest of an individual, group, company, etc. You are a staff of BP sitting on the board of TNK-BP in Russia. As a board member of TNK-BP, you must inform the board of any actions that BP may take which will not be in the best interest of TNK-BP (which is a seperate and unique corporate entity in itself). As a staff of BP, you also must take actions to yeild maximum advantage for your employer. You find out BP is about to enter into a multi billion dollar deal with Rosneft- also in Russia; with the potential to relegate TNK-BP or Alfa Access Renova (AAR)- your TNK-BP co-owners to a somewhat irrelevant position in its target market. What do you do? Are you really in breach of fiduciary duty?
How difficult is this?
ReplyDeleteThe "ollies" either have the right to object or they don't?
BP should've taken this into account when they entered into the deal with Rosneft?
BP should've looked a bit deeper into setting up TNK-BP.
But then after the gulf incident you have to pause for thought over BP's competence?