LONDON Dec 4 A former TNK-BP employee may have
confessed to fraud out of fear during a meeting in the office of
German Khan, the head of the oil company and one of Russia's
most prominent businessmen, according to a British High Court
In the first judicial account of encounters earlier this
year between Khan and his former subordinate Igor Lazurenko,
testimonies from the two men paint a picture of fear and
mistrust at TNK-BP, one of the country's largest
private companies which is half-owned by Britain's BP.
The actions and methods of Khan and other oligarchs who grew
rich from the privatisations of the 1990s are a sensitive issue
in Russia, where President Vladimir Putin is trying to increase
state control and crack down on profiteering without scaring off
investment. The case opens a window on a world where courts,
police and imprisonment are seen by many Russians as tools of
Khan, BP and TNK-BP's other shareholders are trying to fold
their business into state oil company Rosneft. Closing
the deal, one of the biggest energy takeovers in history, would
net them billions of dollars in cash and could make them
shareholders in the state company.
BP has secured government approval to acquire Rosneft shares
from the state and expects to complete its part of the sale by
mid-2013, but Khan's side of the deal is only partly formed and
has no approvals yet. The whole deal is worth $55 billion.
"Whilst it is clearly not possible at this stage to make any
definitive findings... Mr Khan's own evidence provides some
support for Mr. Lazurenko's evidence that he was coerced into
making this confession," said Andrew Sutcliffe QC, sitting as
judge of London's High Court, in a Nov. 20 decision.
This week, TNK-BP decided not to appeal the judgement, and
on Tuesday, Lazurenko's lawyers were seeking a total of 1.6
million pounds ($2.6 million) in costs from the company.
In his 88-page ruling, Sutcliffe dismissed TNK-BP's attempts
to bring fraud charges against Lazurenko, a one-time Russian
army officer who was in charge of organising oil transport
contracts. Sutcliffe called TNK-BP's potential for a case "very
weak", described some claims as "false and misleading" and was
critical about its lack of evidence against Lazurenko.
TNK-BP has also abandoned its attempts to stop Lazurenko
from publishing certain documents in his possession. Lazurenko
has said they provide evidence of high-level corporate and
government corruption and implicate high ranking Russian
officials. He has not published them.
The claimant in the Nov. 20 ruling is OJSC TNK-BP Holding,
the main holding company of TNK-BP. The defendants are
Lazurenko, three other individuals, and a number of companies
with which he is connected.
TNK-BP alleged that Lazurenko, who worked for the company
from 2003 until he quit this year, took bribes and laundered the
money through businesses operating in Montenegro. In August,
TNK-BP obtained a UK court order that froze 39 million euros
($51 million) worth of the defendants' assets.
The judge's account in the Nov. 20 ruling reveals a detailed
picture of the encounters in Khan's office.
In one of them, Lazurenko's testimony says, Khan told him he
stood accused of accepting $8 million in bribes for oil
transport contracts and threatened "strong action" against him
and his family if he did not admit to doing so. Lazurenko denied
the allegations on that occasion.
As he arrived for a later meeting, Lazurenko says he saw a
man sitting outside "who looked to me like he was from the
Moscow police or Ministry of Internal Affairs. I find it hard to
explain in the English court how and why I formed this
impression," he said, "but I think it would be very obvious to a
Russian judge. It relates to the way this individual looked and
Inside, "Khan told me he had someone outside his office who
would arrest me unless I admitted that I had received this money
and agreed to repay it".
He said Khan also told him to remember the fate of Viktor
Paliy, a business associate of AAR, through which Khan holds his
stake in TNK-BP, who ended up in prison.
"I was scared and knew that I could not continue to deny his
allegations if I wanted to get out of his office and leave the
building. Therefore I admitted the allegation, even though I
knew it to be untrue," the court document cited Lazurenko
Khan, in his testimony, acknowledged that he referred to the
implications for Lazurenko's family, and that he mentioned the
fate of Paliy. He said his intention was to persuade Lazurenko
to admit to his crimes.
BETTER TO CONFESS
"I may well have said that if he did not make an admission
it would cause serious problems for him. I did not say that he
had to confess if he wanted to get out of my office freely and
leave the building," said Khan in his testimony.
Khan denied there had been a policeman outside the office,
but said "there may have been someone from internal security
service, many of whom are former law enforcement officers."
He went on to say Lazurenko had "a reputation as a very
cold, detached individual", and that any suggestion he was
frightened was "wholly ridiculous."
However, Sutcliffe used more of Khan's own testimony to back
up his judicial view that Lazurenko might have been right to be
"I told Mr. Lazurenko on at least one occasion that he
should think about his family," the judge quoted Khan as saying.
"This was not a threat to harm either Mr. Lazurenko or any
members of his family ... It is a well-known fact that persons
accused of economic crimes can spend years in prison even before
being tried, and risk having their assets frozen by the state
pending trial... I was offering Mr. Lazurenko a sensible
alternative. Pay back the money he stole from TNK-BP and thus
avoid the risk of prison."
The judge also noted Khan's response to Lazurenko's
description of him as "extremely ruthless".
"As is well known," Khan said, "Doing business in Russia is
not for the faint hearted."
Asked for a response to the judgement and the judge's
remarks, TNK-BP said in an emailed statement it was "confident
in our position and will continue pursuing Mr. Lazurenko in all
It added: "Before fleeing Russia Mr. Lazurenko admitted his
wrongdoing against the company... Mr. Lazurenko did not make any
reports to the Russian or English police about any coercion."
A spokesman for Lazurenko said: "The two damning judgements
against TNK-BP... bring to an end a seven month campaign
instigated by TNK-BP in an attempt to gag Mr Lazurenko and
guarantee his silence.
"Despite its vast resources and lengthy investigations,
TNK-BP has been unable to produce any evidence to support its
allegations against Mr Lazurenko," he said in an email.
BP and AAR, a consortium holding 50 percent of TNK-BP, both
declined to comment on the contents of the court document.
The separate UK gagging order keeping Lazurenko's documents
secret was lifted on Oct. 16. The judge who lifted it revealed
that Transneft, the Russian pipelines monopoly, was
named in the corruption allegations. Transneft has declined to
comment on the subject. TNK-BP had plans to appeal against the
lifting of the injunction, but has since dropped that action
The Khan-Lazurenko dispute dates back to March when Khan
made Lazurenko the subject of an internal inquiry. In April,
Lazurenko resigned and left Russia.
TNK-BP is a 50-50 venture between BP and AAR. AAR is a
consortium owned by Khan and fellow tycoons Mikhail Fridman,
Viktor Vekselberg and Len Blavatnik.
BP has been at odds with the AAR shareholders on and off for
years. Problems came to a head in 2010 when BP wanted to do
business with increasingly powerful Rosneft, and the tycoons
resisted. The sale to Rosneft is set to bring the saga to an
BP last month won Russian government approval to acquire
Rosneft shares from the state holding company Rosneftegaz, a
step on the way to securing $12.3 billion of cash and an 18.5
percent stake in Rosneft that will raise its holding to 19.75
percent. AAR's side of the deal is less complete, but Rosneft
has said it hopes to agree it in December.
After the acquisition, Rosneft, headed by Putin ally Igor
Sechin, will be pumping 4.6 million barrels of oil equivalent,
more than U.S.-based Exxon Mobil.
Lazurenko was represented by solicitors Mischon de Reya and
TNK-BP by Bryan Cave.