Word: russianized
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...faint of heart. But think back, if you will, some five years to a time when the industry was nothing like it is today. In mid-2003, when a barrel of oil fetched about $30, BP made what was then the largest ever foreign investment in a Russian firm. The British company paid more than $6 billion for a 50% stake in TNK-BP, an oil outfit it set up with a consortium of four Russian billionaires. Vladimir Putin, Russia's President at the time, joined Tony Blair, then Britain's Prime Minister, in cheering the joint venture...
...both countries talking. But their tone has changed. When current U.K. Prime Minister Gordon Brown brought up TNK-BP with Dmitri Medvedev, Putin's successor, on the sidelines of the G-8 summit on July 7, the uneasy discussion was of a breakdown in relations between the British and Russian partners. Meanwhile, Dudley, the company's BP-appointed boss, is battling to keep his job. In Moscow that same day, AAR, the Russian consortium that controls 50% of TNK-BP, called for his dismissal, claiming that the business was floundering...
Publicly, AAR's list of grievances is long. It claims, among other things, that TNK-BP operates too much like a BP subsidiary, resisting expansion beyond Russia to avoid stepping on the British firm's toes. Instead, the Russians want an independent CEO, and a culling of BP staff seconded to the Russian venture. AAR, led by Mikhail Fridman, TNK-BP's chairman, has even threatened legal action after its calls for more influence came to nothing...
...their part, TNK-BP's British executives defend the company's performance and mutter darkly that their Russian partners are maneuvering to take control of the venture. This dispute isn't TNK-BP's only headache, either. In recent months, Russian security services have raided the firm's premises as part of an industrial espionage probe, detaining a low-level employee (though TNK-BP itself was not involved in the investigation); officers at Russia's Interior Ministry have questioned Dudley as a witness in connection with another probe into tax evasion at a firm later absorbed into...
Suspicions of a state raid on BP's Russian assets aren't surprising. Relations between the countries, already chilled by Britain's refusal to expel various critics of Russia's government, have been in a deep freeze since the murder of former Russian spy Alexander Litvinenko in London in 2006. Still, in the case of TNK-BP, it's hard to make out a government agenda. The squabble over work permits was at least partially resolved once it became public, and suspicions of tax evasion stem from the years prior to BP's involvement. Resolving the conflict, Medvedev has said...