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Russian economy minister detained over alleged $2 mln bribe linked to Bashneft deal

November 15, 2016, 9:46 updated at: November 15, 2016, 14:55 UTC+3
Investigators have brought official charges against Alexey Ulyukayev, report Rosneft officials had complained to law enforcement agencies over the minister's illegal actions
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Economic Development Minister Alexey Ulyukayev

Economic Development Minister Alexey Ulyukayev

© Mikhail Metzel/TASS

MOSCOW, November 15. /TASS/. Russia’s Investigative Committee has said that Economic Development Minister Alexey Ulyukayev was detained on suspicion of taking a $2 mln bribe, that allowed Rosneft to complete the deal on purchasing the government's 50% stake in Bashneft. 

Deputy Minister of Economic Development Alexei Vedev will temporarily perform the duties of the minister while Alexei Ulyukayev is under investigation, two sources in the ministry told TASS.

According to the sources, appointment of Vedev happened in accordance with the internal regulations of the ministry. Meanwhile, it is currently unknown who will represent the ministry at the summit of the Asia-Pacific Economic Cooperation (APEC) in Peru.

Ulyukayev’s aide calls minister’s detention strange

 Yelena Lashkina, a spokeswoman for Russia’s ministry of economic development and aide to the minister, said on Tuesday Ulyukayev’s detention is a strange story which needs a thorough investigation.

"It is a strange and shocking news for us, and the serious accusations need thorough investigations," she told journalists.

Gross bribe-taking, extortion

Investigators have brought official charges against Ulyukayev, Investigative Committee spokeswoman Svetlana Petrenko has told TASS.

"He is accused of gross bribe-taking and extortion," she said.

"The accused voiced threats he would use his official powers to create hindrances to the company’s operation in the future," Petrenko said.

Rosneft officials had complained to law enforcement agencies over Ulyukayev's illegal actions, she added. 

"Rosneft representatives timely contacted the law enforcement authorities. On November 14 Ulyukayev was detained at the moment he was receiving a bribe of $2 million," she said.

"The information of some allegedly informed mass media outlets about the way how Alexey Ulyukayev received the bribe is nothing more than unfounded phantasy and speculation," Petrenko went on. 

She reiterated that "Ulyukayev was caught red-handed - that means at the moment when he received the bribe."

No checks of Bashneft deal in 2016

 The Accounts Chamber of the Russian Federation does not plan to checks the transaction on privatization of Bashneft this year, the audit plan for 2017 has not been approved yet, a spokesperson with the Chamber told TASS.

"The audit plan which is approved until the end does not envisage such an activity (to verify transaction on Bashneft - TASS). The plan of inspections for 2017 has not been approved yet," he said adding that the plan for 2017 will be approved in December.

No restrictive measure selected yet 

A source has said that restrictive measures against Ulyukayev will be selected after he has been questioned in the capacity of a suspect.

"No investigative actions involving Ulyukayev were carried out last night. At the moment investigators are questioning him as a suspect. A restrictive measure will be selected afterwards," the source said.

Rosneft sees no risks for Bashneft deal

The Russian oil giant Rosneft spokesman told TASS the company sees "no risks for the deal, the deal was absolutely correct."

"The stake in Bashneft was purchased in accordance with Russian legislature on the basis of best commercial offer made to the operator bank," a representative of Rosneft said.

The IC spokesperson confirmed that "Rosneft's purchase of stake in Bashneft was completed on legal grounds."

Rosneft’s spokesman Mikhail Leontiev told TASS the minister's detention will not have an impact on Rosneft’s fulfilment of obligations on the offer to minority shareholders of Bashneft.

"The company operates within the legal framework in accordance with the obligations it took, and the current situation won’t affect it, including the implementation of the offer to minority shareholders of Bashneft," he said.

Kudrin urges objective probe

Aleksey Kudrin, the chief of the Center for Strategic Research and Russia’s former finance minister, said on Tuesday that an objective probe into Russian Economic Development Minister Aleksey Ulyukayev’s case is needed.

"There are too many questions concerning the Rosneft-Ulyukayev case. An objective investigation is needed," he wrote on his Twitter account.

State Duma speaker: no one is above the law

State Duma Speaker Vyacheslav Volodin said on Tuesday the detention of Ulyukayev shows that there are "no untouchables" in Russia.

"Everyone is equal under the law," the speaker of Russia’s lower house of parliament said.

Russian PM urges thorough investigation

Russian Prime Minister Dmitry Medvedev is aware of the detention, the cabinet press service said, adding that the prime minister had discussed the matter with president Vladimir Putin and spoken out in favor of a thorough investigation.

"The prime minister is aware of Ulyukayev’s detention," the press service said. "The prime minister has discussed what happened with the Russian president."

"The prime minister believes a thorough investigation of this case needs to be conducted," the press service stressed.

Kremlin's reaction

Kremlin spokesman Dmitry Peskov said on Tuesday that charges against Ulyukayev are very serious. 

"These are very serious charges that require very serious evidence," Peskov said. "In any case, only the court can decide anything. It is known that the court does not always agree with investigators, and vice versa," he reminded.

Peskov refused to comment if the Bashneft deal could be reviewed.

"I don’t know this," Peskov told reporters.

 Putin has been provided with all the information, the spokesman added.

"Certainly, a report (on Ulyukayev’s detention) has been given to the president, he is aware of it. He was given a report when the investigative activities began, he has been receiving all the information," Peskov stressed.

Ulyukayev is only suspect

A source told TASS on Tuesday that Alexey Ulyukayev is the only suspect now.

"There are no other suspects in the case. But the possible involvement of other persons will be investigated," the source said.

Shares down

Ordinary shares of Bashneft in early trading on the Moscow Exchange decreased by 1.06% to 3,443 rubles ($52.5) per share. Preferred shares of the company are rising by 1.34% and traded at 1403.5 rubles ($21.4) per share. Shares of Rosneft declined in early trading by 0.3% to 336.7 rubles per share.

In early trading ordinary shares of Bashneft decreased by 2.56% to 3,390.5 rubles ($51.7) per share, and preferred shares declined by 0.4%, to 1,380 rubles ($21). Shares of Rosneft at the opening of today's trading fell by 0.47% to 336.1 rubles ($5.1), but then slowed down the decline.

Bashneft deal

IC spokesperson Svetlana Petrenko told TASS on Tuesday that "the circumstances of the crime are connected with Alexey Ulyukayev who holds a government post in the Russian Federation receiving $2 million on November 14 for the positive assessment provided by the Economic Development Ministry that allowed Rosneft to complete the deal on purchasing the government's 50% stake in Bashneft." 

A criminal case was opened based on Part 6 of Article 290 of the Russian Criminal Code (bribe-taking). Investigators plan to indict Ulyukayev soon and petition the measure of restraint.

Ulyukayev previously opposed the state companies’ participation in privatization deals calling for Bashneft’s stake sale on a competitive basis. Bashneft’s privatization was suspended after the governor of Bashkiria, Urals, sent a letter to the president. Rustem Khamitov suggested the postponement of privatization amid uncertainty over its social commitments to the republic, which holds 25% plus one share of the company.

In late September, the privatization process was resumed based on the assessment carried out by the Ernst & Young (EY) consulting company although other potential applicants considered it to be overestimated. So, Rosneft was the only contender to buy Bashneft’s stake.

The Russian government’s decree on selling Bashneft’s stake was signed on October 10. Two days later Rosneft closed the deal buying 50.08% of Bashneft from the state for 329.7 bln rubles ($5.2 bln). Bashkiria now holds 25% plus 1 share in Bashneft.

Rosneft’s participation in the privatization caused much debate. Deputy Prime Minister Arkady Dvorkovich said in late July that Rosneft cannot participate in privatization of oil producer Bashneft because it is indirectly controlled by the government through Rosneftegaz company. Kremlin spokesman Dmitry Peskov said Rosneft was not formally a state company.

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