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Uralkali top executives harm their company and Customs Union

November 22, 2013, 14:45 UTC+3 Zamyatina Tamara
© ITAR-TASS/Artyom Korotayev

MOSCOW, November 22. /ITAR-TASS/. The Belarusian authorities’ extradition of Russian citizen Vladislav Baumgertner to Moscow on Thursday is an intermediate stage in resolving a huge row on the world fertiliser market. “There is more to come,” experts said.

The director-general of Russian potash producer Uralkali, Vladislav Baumgertner, was arrested in Minsk three months ago and was placed under house arrest on charges of abuse of power and of inflicting damage of $100 million to the Belarusian economy.

“Although in October Moscow’s Basmannyi court took Baumgertner into custody in absentia, I think that after his return to the homeland the court would additionally consider another measure of restraint,” Moscow’s human rights ombudsman Alexander Muzaykantsky told Itar-Tass.

“There will be no trial in earnest against Baumgertner,” the head of the Globalization Problems Institute, Mikhail Delyagin, told Itar-Tass. “He tried to take possession of other people’s plant in Belarus. This is a row of economic facilities, but not a criminal article. The trial against the chief executive officer of Uralkali will last long to appease the Belarusian president. Most probably, Baumgertner will remain under house arrest for some time, but then this criminal case will be soft-pedalled and quietly forgotten.”

Players on the fertilizer market seek to know what prospects Uralkali has ahead. However, Russian presidential aide Yuri Ushakov refused journalists’ request to comment on possible acquisition of a 21.75 percent stake in Uralkali from the Suleyman Kerimov Foundation by Russian billionaire Mikhail Prokhorov’s investment group Onexim. This issue is widely discussed in Russian newspapers. The stake in the world’s largest potash producer is estimated at $3.5 billion proceeding from the company’s current market capitalisation.

Aside from Baumgertner, the Belarusian side also accuses Russian senator and Uralkali shareholder Suleyman Kerimov.

“Irrespective of how Uralkali’s activity will develop, the company’s reputation, including that on the global market, has been seriously harmed,” the deputy head of the Federation Council international affairs committee, Andrei Klimov, told Itar-Tass. “Let’s imagine that a top executive of a large international bank is taken into prison. Would partners and clients trust this bank?”

“Uralkali’s reputation was enormously hurt,” Delyagin said. “Only for one day of a row that sparked over detention of Baumgertner in Minsk the company lost $20 billion of its capitalisation. Therefore Suleyman Kerimov had to sell its stake in the company.”

The world fertiliser market registers a downward trend - potash output increases, while its consumption does not grow, Delyagin said, adding that “if not for this row, Uralkali could have yielded revenues within the upcoming three years.”

“Of course, the scandal relating to the arrest of Baumgertner caused damage to Russian-Belarusian relations,” senator Klimov said. “Fortunately, the sides did not stir up the fire and no serious political and economic consequences emerged. They put the fire out in time, although bitter taste remained. But fundamental grounds of bilateral relations stayed afloat.”

“After a trade war that had tentatively been taking shape, Russia took a well-balanced position to settle the conflict over Uralkali with Belarus,” Delyagin said. “Nevertheless, over thoughtless actions of the company’s chiefs the time to turn the Customs Union into a full-fledged Eurasian Economic Union has been wasted. This is huge damage to the interests of all players on the Eurasian economic space.