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Russia: Basic Element re-applies for 100% of RussNeft shares

Basic Element has applied to the competition regulator for approval of a deal to buy a 100% stake in the oil company RussNeft, an industrial holding spokesperson said Tuesday.

RussNeft, one of Russia’s top 10 crude producers, with recoverable reserves of more than 630 million metric tons (4.6 billion barrels), faces substantial back-tax claims. “The application was made late last week,” the representative said. The spokesperson added that Basic Element, deemed to be on good terms with the Kremlin, had taken into consideration remarks that the Federal Anti-Monopoly Service made declining the holding’s first application in July, citing documentation irregularities.

In July, Moscow’s Arbitration Court upheld a claim by tax authorities against RussNeft for over 3.7 billion rubles ($145 million) in back taxes for 2003 and Q1 2004. The court is now examining a series of transactions involving RussNeft securities that the Federal Tax Service claims were illegal. RussNeft CEO billionaire Mikhail Gutseriyev resigned July 30 amid accusations of tax evasion and illegal business made by the interior ministry. A Moscow court issued a warrant for his arrest last Wednesday, but Gutseriyev is currently living abroad and an international search is underway.

According to the business daily Vedomosti, Gutseriyev’s problems stem from his conflict with the Kremlin and his reluctance to sell his company. He set himself on a collision course with the Kremlin by buying some of the embattled oil company Yukos’s assets shortly before it was declared bankrupt, the paper said. If charged and convicted, Gutseriyev faces up to six years in prison, in a case reminiscent of legal battles for the now bankrupt oil firm Yukos, widely seen in the West as punishment against company founder Mikhail Khodorkovsky, and as part of a Kremlin campaign to regain control of oil and gas assets.

Basic Element, one of Russia’s largest companies, is owned by Russian billionaire Oleg Deripaska. Basic Element boasts annual revenue of $18 billion and 240,000 employees. It has holdings in the metal, machines, auto and financial sectors. (rian.ru)