Robert Amsterdam

From the Moscow Times:

Khodorkovsky to View Chevron Data

Bloomberg

Mikhail Khodorkovsky, the jailed former Yukos CEO, won a U.S. court ruling for access to Chevron research on Yukos as he prepares to defend himself against new charges in Russia.

A U.S. district court judge in northern California on Friday accepted that Chevron may have "valuable evidence" that could help Khodorkovsky refute charges of embezzlement and money laundering, lawyers for Khodorkovsky said on their client's web site.

"This is just the beginning of a global evidence-gathering process that is necessary because the procuracy of the Russian Federation is not a fact-gatherer but rather an enforcement arm of a Kremlin bent on consolidating the state theft of Yukos," lawyer Robert Amsterdam said in a statement.

Amsterdam did not say exactly what kind of information Chevron had that may be useful.

Khodorkovsky, once the country's richest man, is serving eight years in a Siberian penal colony for tax evasion and fraud, charges he has repeatedly denied.

Today in Australia Robert Amsterdam was featured as the keynote speaker at the Sydney Summit on Russia. Below is the coverage from the Australian daily newspaper The Age:

Voters oppose uranium sale to Russia

More than half of voters are against the federal government's plan to sell uranium to Russia, a survey has found.

Prime Minister John Howard and Russian President Vladimir Putin are expected to sign a deal during this week's APEC summit which would see Australian uranium sold to Russia for domestic use.

Released at the Sydney Summit on Russia on Tuesday, the survey showed 66 per cent of Australians would vote against the deal if a referendum were held on the issue.

The survey of 1,200 voters undertaken by Research International found 41 per cent of people were concerned the uranium may end up in the hands of terrorists or rogue states, while 20 per cent feared Russia would use the uranium for nuclear weapons.

Summit keynote speaker and international human rights lawyer Robert Amsterdam said Australians were right to be concerned about the deal.

"If the Australian uranium is only going to be used for civilian purposes, then what you're doing is you're freeing up the Russian uranium to be used, to be sold on, to Iran," he told reporters in Sydney.

"Mr Putin stands shoulder-to-shoulder with Iran.

"If Mr Howard wishes to do business with Mr Putin, he needs to understand the kind of company he's keeping."

Mr Amsterdam said without the rule of law there was no accountability.

"There is no one that will check Mr Putin's people when it comes to that part of the uranium that isn't being monitored by the international nuclear organisation," he said.

"The additional point to all this is the dramatic challenge to Australia that Russia represents.

"Russia is restructuring its economy in a very dramatic way, it is moving to creating massive corporations, particularly in the mineral sector, and they will be competing with Australia on many different levels.

"There's a lot of geo-political thinking that needs to go on and my question to the Howard government is whether due diligence has been done both in respect to the rule of law issue, but also even further with respect to the whole geo-political question of competition for Australian companies."

Australian Greens energy spokeswoman Christine Milne told the summit Australia could make the uranium sale conditional on clauses covering human rights, democracy and the rule of law.

"The prime minister and foreign minister talk about global security but when they actually do have an opportunity to leverage, on the basis of a sale, some outcomes in terms of higher standards and verification of human rights and the rule of law, they have abandoned it in favour of maximising profits," Ms Milne said.

"The concern I have is that all these free marketeers say that by allowing business with these countries like China and Russia, we will draw them into international mores in terms of the rule of law.

"However, that will only be the case if countries with whom they do business have a respect for the rule of law and if the countries like Australia actually require compliance and enforcement.

"And they don't, Australia turns a blind eye to human rights abuses in China every day and it will turn the same blind eye to what's going on in Russia."

Russian journalist Grigory Pasko, who has spent 25 years working in his homeland, said Russia should not be blindly trusted.

"I don't believe for a moment that the Australian uranium is going to be used exclusively for peaceful purposes," he said.

"The Russian authorities have already so often deceived both the Russian people and the foreign community.

"I honestly think it's not a good idea to blindly trust them over something so serious.

"I feel that Australia can and should be selling its uranium but before doing so, you should ask yourself, to who."

[Today, before his speech at the Syndey Summit on Russia, Grigory Pasko published the attached op/ed article in the Sydney Morning Herald]

Dining on yellowcake with the devil

Grigory Pasko

Russian nuclear power stations account for 16 per cent of the country's electricity production. Last year the Russian President, Vladimir Putin, demanded the proportion be increased to 25 per cent by 2030. These ambitious plans have already raised a storm of indignation from environmentalists in Russia. First and foremost because Russia is doing practically nothing to develop alternative power sources, following a path of least resistance and imperial desire to develop an industry that will be useful for military purposes as well.

Meanwhile, the press has already reported that economically viable reserves of uranium in Russia are enough to last only until 2015. To fulfil exports and to supply its own nuclear plants, Russia has to buy uranium from other countries.

The founders of Atomenergoprom, the state atomic holding company, do not rule out partnerships with Western investors to develop uranium deposits in Russia. In their opinion it is possible that companies such as Japan's Mitsubishi, Canada's Cameco, and Australia's BHP Billiton and Rio Tinto may eventually become minority shareholders.

Vladimir Smirnov, the head of the nuclear import-export company that forms a part of Atomenergoprom, has already reported to the media on negotiations with the Australians, confirming meetings were held during a visit to Australia on October 13 to October 20 last year. Smirnov underscored that there was great interest by Australian companies in working with Russia.

A working group has been created in Australia under the leadership of the Prime Minister, John Howard, to conduct an analysis and prepare a report on the prospects of developing nuclear energy in Australia. The Russians have proposed Australia take part in the work of the International Centre for the Enrichment of Uranium in the Siberian city of Angarsk. The first participant, with Russia, is Kazakhstan.

So Australian intends to sell uranium for the Russian nuclear power industry. In the words of the Australian Foreign Affairs Minister, Alexander Downer, the countries have achieved "substantial progress" in negotiating the agreement. In fact Howard and Putin are expected to sign the deal this Friday.

How should we react to such agreements? If we look at them strictly from a business aspect, then our reaction should be positive. After all, Australia possesses one of the richest deposits of radioactive minerals in the world, but does not have its own nuclear power plants.

But we cannot allow ourselves to forget that Australia is dealing with not just any country, but with Putinite Russia. Those politicians and businessmen who want to have dealings with today's Russia need to always remember they are working with a country where human rights are trampled on and the principles of democracy are violated. If this does not faze the Australian gentlemen, then I suppose they have the right to do business with anyone they please, even with the devil himself.

One argument heard in favour of a possible deal is that Russia has split up its military and civilian nuclear programs, and has placed its peaceful nuclear facilities under international monitoring. Downer says this has become decisive in influencing Australia's decision to conduct new negotiations with Moscow.

Who will verify this separation between military and civilian programs on the ground and how? Australian law bans the sale of uranium if it can be used for military purposes. Is Australia absolutely sure that Russia will not use Australian uranium in its weapons programs?

I have grave doubts about Angarsk being "totally civilian". At any rate, journalists are not allowed there, just like before. I tried to arrange a visit to this "open" enterprise, but got nothing beyond promises. Even when I actually travelled to Angarsk, I was not allowed beyond a "prohibited" sign on the road well before the entry gate to the plant. As for nuclear waste, how exactly is it going to be processed and disposed of?

Russia can also export the uranium it buys. Where is the guarantee it will not sell uranium to Iran? Nowhere. Instead we have a statement by the deputy head of the Federal Atomic Energy Agency, Nikolai Spassky, about how Iran "has the right to enrich uranium for peaceful purposes". He said: "Any country, according to the nuclear non-proliferation treaty, can develop potential in the realm of the peaceful atom. Iran, after settling its problems with the [International Atomic Energy Agency] and answering all questions, also has this right".

After all this, are Australian politicians and officials still not concerned about the imminent deal with Russia?

Grigory Pasko is a Moscow journalist and environmentalist. He was named an Amnesty International prisoner of conscience after being jailed for treason in 1997. He will address the Sydney Summit on Russia today.

During his visit to Australia, Robert Amsterdam and Grigory Pasko stopped by for an interview with Australia's number one news broadcaster, Alan Jones of 2GB (Macquarie National News), to talk about Australia's trade relations with Russia and the uranium issue. The audio recording of the interview can be heard here, and a few excerpts are below.

AUDIO: Russia is not a state to sell uranium to: Pasko, Amsterdam

Australia is being urged not to sell uranium to Russia, because there are no safeguards in place.

Russian president Vladimir Putin will be attending the APEC Summit in Sydney this week, amid claims his country is riddled with inequity and corruption.

Human rights lawyer Robert Amsterdam has told Alan Jones, Mr Putin is a law unto himself and the international community is turning a blind eye.

“The complicity of Western governments and their silence up until now has presented a false image of Mr Putin,” he said.

“People inside Russia understand the loss of freedom that has occurred and the absolute lawlessness within the country. There is simply no one accountable.”

“Without the rule of law you simply can’t trust, what is presented as a government, to protect its citizens - let alone the people of the world - from the kind of nuclear risks that will ensue with this uranium.”

RFE/RL journalist Roman Kupchinsky, who also testified before the Helsinki Commission on Russian energy imperialism earlier this summer, has an interesting article today giving a short history of how Gazprom became a "state within a state" - the underpinnings of their consistent reputation problems.

RFE/RL:

Gazprom's image problems date back to Viktor Chernomyrdin's leadership of the company following the collapse of the Soviet Union.

His close relationship with President Boris Yeltsin was instrumental in getting the company special status with generous tax benefits, and set the groundwork for making Gazprom a "state within a state."

Under Chernomyrdin's leadership a corporate culture that rewarded opaqueness set in, spawning Gazprom's reputation as a company that operated outside the law.

After Chernomyrdin was succeeded by Rem Viakherev, Gazprom was implicated in a number of corruption schemes. In one, the gas giant was accused of involving its fully-owned insurance company, Sogaz, in insurance scams that served to enrich Gazprom's top management. Western reinsurance companies largely bore the financial losses from these schemes.

Gazprom's most controversial era began in 2001, with the arrival of Aleksei Miller as Russian President Vladimir Putin's hand-picked CEO of the company. A colleague of Putin's in the St. Petersburg governor's office during Yeltsin's presidency, Miller was in good standing with the future president and with other city officials who would soon reach high positions in the Kremlin. Among them was Valery Golubev, a former KGB agent who recently became the deputy head of Gazprom's management committee.

Following Miller's appointment, Gazprom executives conceived a new scheme to transport Turkmen gas to Ukraine.

With Miller's and Putin's approval, they created a Budapest-based company named Eural Trans Gas, which began acting as the middleman for Turkmen gas exports to Ukraine. The opaque company soon became the subject of a number of investigative reports in the Western media.

The negative publicity Eural Trans Gas generated forced Putin and then-Ukrainian President Leonid Kuchma to dissolve Eural in July 2004 and replace it with a similar company called RosUkrEnergo headquartered in Switzerland.

Gazprom later came under severe criticism for its handling of a gas-pricing dispute with Ukraine in January 2006 when, with great fanfare, Gazprom briefly shut down the pipeline carrying supplies to Ukraine -- and inadvertently to Europe. Many in the West saw Gazprom acting at the behest of the Kremlin, which, many claimed, was taking its revenge on the newly elected, pro-Western Ukrainian President Viktor Yushchenko and his Orange Coalition.

During the Ukrainian election campaign of 2005 Putin had lobbied vigorously in support of pro-Moscow Viktor Yanukovych's bid for the presidency. This raised suspicions that by pressuring Yushchenko on gas prices in January 2006, Putin was underscoring the vital impact Russia has on Ukraine's economy. Many in Kyiv saw Gazprom and Putin's actions as blackmail.

Western observers became alarmed when Gazprom insisted that Ukraine give up its sovereign right to buy gas directly from Turkmenistan and do so only through the services of the mysterious RosUkrEnergo, controlled by Gazprom.

However, the worst publicity for Gazprom was generated by a series of questionable deals presided over by the Kremlin -- the apparent goal of which was to bring under its direct control most of the country's oil and gas industry.

Beginning with the questionable license revisions for Western oil companies developing the Sakhalin 1 project and followed by the ouster of BP/TNK from the Kovykta gas field, Gazprom benefited enormously.

[In our ongoing effort to become your one-stop shop for what's going on in Russia, we are going to begin a daily posting of a digest linking to all (or at least most of) the top stories across the web.]

Russian President Vladimir Putin spent the day bowling at the Vilyuchinsk submarine base (Reuters)

The Moscow City Court has sustained legality of the absentee arrest of former Russneft chief Mikhail Gutseriev. According to former colleagues of Anna Politkovskaya, the lead investigator into her murder has been replaced, in what is thought to be political interference by the siloviki. Elsewhere it was reported that Politkovskaya’s case has been taken under the personal control of head of the Prosecutor General's Office special investigative unit Sergey Ivanov, the same department which investigated the case against Mikhail Khodorkovsky. Deutsche Bank has sold a new synthetic collateralized debt obligation bundling credit derivatives traded on Russian companies, proving investors still have appetite for such risky complex debt instruments despite recent credit turmoil.

Meanwhile the United States has urged Russia to join the missile defence race, and a Ukrainian news source says that Gazprom will drive up gas prices on supplies to the CIS. Elsewhere, Gazprom mounted pressure on ExxonMobil to drop gas exports to China, saying it needs gas from Sakhalin-1 for domestic use; and a project off Sakhalin island by BP and Rosneft has prompted the companies to call on Russia to ease the tax regime for offshore projects. VTB Group’s finance costs on $5 billion in loans will rise by 1 percentage point due to the credit crunch; and VTB’s 13% share price drop will postpone the bank’s merger with Promstroibank. Garry Kasparov has accused his Russian publishers of axing publication of his new book due his opposition of Vladimir Putin; and in other news, Putin has lashed out at Economic Development Minister German Gref and ex-Prime Minister Mikhail Kasyanov. Oleg Deripaska’s investment vehicle Basic Element has finally submitted an official request to the Federal Anti-Monopoly Service to buy Russneft - the most recent private oil company to be stolen by the Kremlin. Sedmoi Kontinent, the supermarket chain owned by Vladimir Gruzdev and Alexander Zanadvorov, has signed an accord to be bought by US buyout firm TPG. A bureaucratic glitch is being blamed for the delay in publication of a presidential decree, causing the late start of the Duma election campaign. In the Duma’s last session, Duma Speaker Boris Gryzlov vowed to resist populist principles, warning deputies against submitting bills that would increase social spending.

Meanwhile the Duma has ratified Russia’s border treaty with Latvia, and has passed a new law on Stastistical Accounts, requiring businesses to provide Rosstat with any information it deems required. The Russian Standard Bank has lost 6 billion rubles in profit due to orders from the Prosecutor General's Office not to collect supplemental commissions for consumer credit. Gennadi Kryuchkov, a religious leader of the Soviet Union, has died. Australia will sign a multi-billion-dollar deal with Russia on Friday to supply uranium for civilian uses.

The Australian:

Uranium 'not safe with Putin'

Cameron Stewart

THE Howard Government will announce a multi-billion-dollar deal on Friday to sell uranium to Russia at a time when Moscow is seeking to restore its military might across the globe.

But Foreign Minister Alexander Downer has strongly rejected claims there are insufficient safeguards to prevent Australian uranium being diverted to military use or on-sold to rogue nations.

The deal will be signed by John Howard and Russian President Vladimir Putin on Friday, and Mr Downer yesterday rejected claims by a prominent Russian journalist, human rights groups and the Australian Greens that Russia could act like a rogue nation with Australian uranium.

"Russia would have absolutely no interest in breaching a safeguards agreement and creating a massive diplomatic confrontation, not just with Australia but with most of the Western world, over something like that," he said.

"Russia wouldn't contemplate it. To think that they would is just to demonstrate complete ignorance about diplomacy, and about Russia."

Russia and Australia have been negotiating a nuclear safeguards agreement to allow the sale of Australian uranium for domestic use in Russia. Mr Downer said the deal was looking likely but would not give further details until it was formally announced.

Russia would be able to use the uranium for its civilian nuclear power program but not for military purposes, nor to on-sell it to third countries such as Iran.

The deal comes only a month after the federal Government's controversial decision to allow uranium sales to India, despite it not being a signatory to the Nuclear Non-Proliferation Treaty.

According to government figures, Australia exported about $630 million worth of uranium in 2006-07. That is expected to rise to $814 million this financial year.

Speakers at a conference in Sydney yesterday issued strong warnings against the deal, saying Russia under Mr Putin had becoming increasingly maverick and anti-democratic and that it could not be trusted to stick to the terms of the agreement.

International human rights lawyer Robert Amsterdam said there was no way for Australia to keep Mr Putin accountable on the deal, given the President's growing disregard for the rule of law in his own country. He said there was a genuine danger the uranium would be on-sold to countries such as Iran, which is building a nuclear weapons capability.

"Mr Putin stands shoulder to shoulder with Iran," he said.

"If (John) Howard wishes to do business with Mr Putin, he needs to understand the kind of company he is keeping."

Russian journalist Grigory Pasko, once jailed for revealing that Russia was illegally dumping radioactive waste into the Sea of Japan, said Australia could not accept Russia's guarantees, despite it having signed the NPT.

"I don't believe for a moment that Australian uranium will be used for totally peaceful purposes," he said yesterday.

Greens spokeswoman Christine Milne said the agreement was "purely an export dollar deal for some of the very large companies in Australia".

But Mr Downer said such arguments were "just a cover for the basic argument that these people are making, which is we don't want to export uranium".

"If you don't want to export uranium, people should say so. That's their position. My view is you can put in place a good safeguards arrangement with Russia," he said.

During a session at the Economic Forum in Krynica the Polish Minister of Economy warned that future energy supply disruptions from Gazprom were likely given the political control over the company. A representative from the Czech government also warned of problems as Gazprom enters a "showdown" with Belarus, and the issue of declining production.

"It will be interesting to see if Russia can keep up production levels given the fact they opened only one major field in the past 20 years," - Vaclav Bartuska, special envoy of the Czech Foreign Ministry

From article: Poland expects future problems with gas supplies due to political influence on Russia's Gazprom

"If we had guarantees that Gazprom is playing only by market rules, things wouldn't be a problem," Wozniak said during the Economic Forum in Krynica. "But Gazprom realizes the policy of the Russian government. The nation's strategy by 2030 says clearly that the fuel and gas sector are tools that support the Russian foreign policy.

"This is why we must be anxious and aware of obstacles in cooperation with Gazprom, since the company has to act on political orders," Wozniak said.

Price disputes between transit countries Belarus and Ukraine have over the past few years led to temporary reductions in supplies of natural gas to Western Europe. Experts in the region believe such situations are likely to be repeated in the near future because of price disagreements and Gazprom's plans of taking over transport infrastructure in transit countries.

"Gas has started to be a pressure tool on companies and governments in order to take over transit infrastructure and control of transit routes," said Tomasz Chmal, expert at the Warsaw-based think tank Sobieski Institute.

"I'm pretty sure we'll soon see a showdown with Belarus," added Vaclav Bartuska, special envoy of the Czech Foreign Ministry.

Bartuska also said Russia may begin to cut gas exports in the future years because of the probable decline in production levels.

"Unless Russia opens a new major field, it's difficult to see production levels maintained at current levels," Bartuska said. "In the medium term, it will be interesting to see if Russia can keep up production levels given the fact they opened only one major field in the past 20 years."

A Chechen woman stands at the window of her flat which was ruined during more than a decade of separatist fighting in Chechnya, in Grozny, Russia, Wednesday, Sept. 5, 2007. (Photo: AP)

Russia’s Supreme Court has overruled a decision from a lower court that found the investigation against Mikhail Khodorkovsky was being illegally conducted in Siberia. MI5 has told the UK Government that among the foreign intelligence services operating to some degree against British interests, Russia, alongside China, is of greatest concern, and today’s big story in the UK is that British fighter jets scrambled to intercept eight Russian Bear reconnaissance aircraft in the second such incident in recent weeks. Vladimir Putin says he has resumed the cold war practice of sending bombers on long-range flights in response to security threats by other military powers. Meanwhile the Russian president has signed a major arms deal in Jakarta, agreeing a £500m credit arrangement designed to reduce Indonesia’s “dependency on the United States”. As an enticing bonus to the arrangement, Kremlin loyalist Oleg Deripaska's company Rusal will develop a mining complex in a joint venture with Indonesian company Antam. Russia and the US will hold missile shield talks in Paris, and Russia and Iran have agreed on fixing a timetable for nuclear fuel delivery.

Russia’s Economic Development and Trade Ministry’s chief forecaster has warned that the global liquidity crunch could hit consumer lending and the real estate sector, although Russia’s GDP growth is due to accelerate this year. Magnitogorsk Iron & Steel Works will invest over $1 billion in a US plant to supply to the automotive sector. Siemens’ desire to acquire 30.4 percent of Power Machines doesn’t mean it will emerge as the principal owner, as sources say Siemens will resell the stocks to Deripaska's Basic Element, a company which appears to have the green light to take over Russneft’s seized stocks. Meanwhile Russneft’s former chief and current politically persecuted fugitive, Mikhail Gutseriyev, is supposedly now living in London. The Times published a hostile feature Mr. Deripaska today, while officials from Germany are reportedly trying to “link Deripaska to the Russian mafia.” This correlates with a new US survey, carried out by nonpartisan institution the German Marshall Fund, which reveals that Europeans and Americans have concerns about a resurgent Russia, with Germany at the forefront in doubting Russia’s intentions. The Duma’s election campaign has begun amidst reports of poor organization, and the United Russia party is off to a bad start after having missed an internal deadline to select candidates for its party list. Russian police searched the Moscow headquarters of Alfa Bank, the country's biggest private lender, and seized documents for a probe into Sodbiznesbank. Foreign oil and mining companies operating in Russia have seriously overstated reserves. Political influence over Gazprom is being blamed by Poland as it foresees problems with future gas supplies from Russia, and in other news, Gazprom is still thinking about letting more foreign companies help out on the Shtokman Field project.

New in Russia: Starbucks; HSBC; and a possible new Russian version of the FBI. A Siberian Mayor has banned his bureaucrats from using the phrase "I Don’t Know."

Washington Profile has published an extensive interesting interview with Nicholas Eberstadt of the American Enterprise Institute about Russia's demographic crisis. For more info about these troubling birth rate and mortality trends, we also have a 45-minute documentary film on the subject.

Excerpt from Washington Profile:

Washington Profile: What is the alternative? If there is no public outcry and if business continues as usual, to what extent could demographics have an impact on the economic and social development of Russia in the next 15-20 years?

Eberstadt: Russia’s current survival schedule is about the same as India’s. Overall life expectancy in Russia and in India are similar today—in fact, India’s may now be higher than Russia’s. The Putin government promotes the goal of long term Russian growth to reach Portugal’s income levels, i.e. western European levels, but you can’t generate Irish levels of productivity on Indian levels of health. In the modern world, health and wealth are very closely connected. This fact is being disguised in the Russian case to some degree by the oil and energy boom, the bubble that is favorably affecting public finances and GDP numbers right now.

In the long run, for any modern economy, wealth lies in human beings, not in the ground. If the human capital of Russia is becoming increasingly debilitated, and if human numbers are steadily decreasing, Russia’s economic power cannot be steadily increasing. Russia risks prolonged relative economic decline, in a world where many of its neighbors are growing very rapidly: of course I am thinking of China and India, but there are others as well. What would it mean for the Russian population to be shrinking steadily through severe excess mortality in a world of more or less steadily improving health standards? From a Russian standpoint I’d think that would look pretty grim and pretty dangerous.

Here is a short BBC news clip about Russia's decision to lend the government $1 billion for the purchase of major weapons systems in a move that is widely interpreted as an extension of the Kremlin's political clout in Southeast Asia. According to Juwono Sudarsono, the deal was preferable over buying weapons from the West because they tend to attach many conditions related to human rights. No such inconveniences with this deal!

Today the Financial Times is reporting that the American entities who purchased stolen Yukos assets in August actually approached former management in an attempt to clear the titles. If this isn't the most clear demonstration of complicity to a crime, than I don't know what is. More comments on this story to come...

Investors made backdoor Yukos approach

By Catherine Belton in Moscow

A group of western investors that bought the final set of Yukos assets, which included Dutch unit Yukos Finance BV, approached the oil group’s former management to obtain assurances about the assets just days before the bankruptcy auction, former Yukos management said.

“We’ve made it clear for the past several weeks that this auction is totally illegal,” said Bruce Misamore, Yukos’s former chief financial officer and former director of Yukos Finance BV.

“It is a strange situation when someone wins an illegal auction and comes to you in advance and tries to grease the skids.”

US real estate company Monte Valle bought the last lot of Yukos assets on August 15 for $305m via a former unit of Rosneft, the Russian oil group.

Mr Misamore and two other Yukos executives, David Godfrey and Daniel Feldman, told the Financial Times that the group of investors behind the Monte Valle bid included a representative of Moscow investment bank Renaissance Capital and another from US hedge fund VR Capital.

They claimed that two members of the group, Renaissance Capital vice-president Bob Foresman and VR Capital president Richard Deitz, had called to ask them to unwind the legal attachments protecting the assets from the bankruptcy sale, saying that in return, state-run Rosneft would drop its creditors’ claims on the Dutch holding.

Mr Feldman said Mr Foresman had called him two days before the sale, “to know if there was a way to make a deal that would provide them with comfort”.

“He called the day before the auction and said you have to understand if we can work out a compromise you can come back and work in Russia.” Mr Feldman left Russia in February, fearing arrest.

The claims could not be fully verified: Mr Foresman declined to comment. Mr Deitz said he did not recall all the details of his conversation with Mr Godfrey.

Mr Deitz said he had “never in his life” met with Rosneft, while Monte Valle owner Stephen Lynch also said he had no talks with Rosneft or the authorities prior to the sale. The allegations are the latest twist in a bankruptcy process marred from the outset by claims it has been rigged in favour of Rosneft.

The oil group snapped up most of Yukos’s remaining production units and refineries at a knockdown price after rivals bowed out just minutes into the sales.

The Dutch subsidiary, which holds $1.5bn in cash proceeds from the sale of Yukos’s stake in a Lithuanian refinery and a 49 per cent stake in Slovak pipeline operator Transpetrol, is still at the centre of a complex legal wrangle for control between the Yukos Finance BV former directors, Yukos’s liquidator and Rosneft.

Yukos Finance BV’s former management claim that while court proceedings are in train the buyers of the Rosneft unit have no title to the Dutch assets.

Greetings from the land down under. As I come to the end of my visit to Australia, I thought I would take a moment to put down some thoughts for my blog readers.

It has been a very interesting week here, both for the perceptive and talented people I have had the opportunity to meet, as well as the important developments currently unfolding in Australian-Russian relations. As the APEC Summit in Sydney approaches, political tensions are high. Perhaps more than any other time over the past year, the world's attention is focused on Australia and its regional leadership role as both President George Bush and President Vladimir Putin both make state visits.

Amid this atmosphere of heightened interest, the highlight of my visit was the Sydney Summit on Russia held on Tuesday, where I gave the keynote address along with my colleague Grigory Pasko. Among the talented academics I was able to speak with were Professor Graeme Gill of the University of Sydney, the author Stephen Fortescue (whose excellent book is a must read for Russia observers), the analyst Dr. Alexey D. Muraviev, and many others. I had the opportunity to present a short new paper entitled “The Foreign Policy of the Siloviki,” which generated some interesting discussions and vigorous debate – though most of the proceedings were overshadowed by questions about Australia’s upcoming deal to send uranium to Russia.

As many of you have already gathered from the media coverage of the event, both Pasko and I took the logical but surprisingly “controversial” position that the extraordinary lack of rule of law in today’s Russia poses significant risks to global security, as whatever safeguards over the uranium trade offered by Kremlin cannot be taken at face value. Personally I was very surprised by the strong reaction from some sectors – illustrating a growing gap between public opinion and political support for the deal. Almost immediately following our comments, a rebuttal came from Foreign Minister Alexander Downer, later followed by the same sentiment expressed by U.S. Secretary of State Condoleezza Rice. Finally the embattled Prime Minister John Howard chimed in to state his trust and confidence in the Putin government.

So why, if a clear majority of Australian voters oppose selling uranium to Russia, would the Howard government back the deal? The answer is no doubt complicated, but it is in part due to the enormous business opportunities Howard’s supporters are envisioning – even at the cost to Australian sovereignty. While Russian investment in Australia is only about $6 billion and growing, exports from Australia to Russia more than doubled over the past year and a half – and the Kremlin is practically begging for more investment.

What some fail to understand is that the uranium deal is part and parcel of a much larger investment agreement: Sergei Novikov, a spokesman for the Russian Atomic Energy Agency, said that the agreement is “a political document … It just opens the possibilities for our companies to buy and to sell products and services, to exchange technologies, to work in the science sphere together.”

But For Russia, the uranium deal is key; a core component of their strategy to further project their power and influence globally through energy relations – the goal is the generation of energy dependence leading back to an ever-shrinking group of decision makers not accountable to a voting public. Russia is currently in discussions to build and run nuclear power plants in China, India, Egypt, Morocco, Namibia, and Vietnam – not to mention their ongoing work at the Bushehr plant in Iran. Combined with gas and oil exports snaking through their pipelines to Europe, and soon to come LNG tankers supplying global markets, the extension of a nuclear power system across various nations will provide Russia with even further clout.

A Russian technician works inside the nuclear power plant in Bushehr, south of Tehran, April 3, 2007. (Photo: Reuters)

In order to meet its stated goals on nuclear energy both at home and abroad, Russia badly needs help from Australia. In determining the Kremlin’s intentions, it is illustrative to examine the strategies used by Gazprom in Europe to co-opt at the source. Just as Gazprom wasn’t content to just sell gas, but rather own midstream and downstream distribution assets, the Russians are looking to vigorously invest at all levels of minerals, mining, and processing, and eventually buy Australia out (just look at Victor Raznikov actions with FMG, or the takeover of LionOre Mining International Ltd by Norilsk Nickel – and of course don’t forget about Rusal, who is also getting in on the action down under).

Yet despite this geopolitical encroachment on Australia, and the rapid rise of Russia's militarization of the region - most recently capped off by the $1 billion arms giveaway from the Kremlin to Indonesia (which must have made Downer a little embarrassed to have been defending Russia's peaceful motives only 24 hours earlier), the "regional titan" is looking quite complacent and hesitant to act. One news story even carried the headline "The Russians are coming, but Australia isn't worried."

There’s a huge new game in Asia, and it is very fluid. With 60% of the world's economy meeting in Sydney and a clear demonstration that Russia is intent on building its presence, this is not the time for Australia to miscalculate who their friends are. I do believe that the government understands that in the end, Russia is becoming a major competitor, a country that wants to take on the role as the price setter for the minerals and energy trade. But is the Howard strategy of engagement the right one? Is realism in this case politically possible? I can't purport to know all the answers, but as an outside observer, I think it says a lot when a president, who should be coasting on very high approval ratings following a successful APEC Summit, is instead losing points to an opposition that is mired in a humiliating strip-club fiasco. Now that says a lot about what Australian voters want.

Maria Sharapova of Russia reacts during her match against Casey Dellacqua of Australia at the U.S. Open tennis tournament in Flushing Meadows, New York, August 30, 2007. (Photo: Reuters)

After Australian Prime Minister John Howard made it clear that he would be cautious regarding any sale of uranium to Moscow, it has been revealed that Australia will indeed be supplying uranium to Russia for processing and for use in the country’s nuclear reactors. Vladimir Putin said that there was no question of the uranium being put to military use, and that such an idea was "intentionally injected [...] to prevent cooperation." According to Putin, Russia intends to continue its talks with the United States regarding the ongoing dispute about US plans to deploy missile defense elements in Central Europe, and US President George Bush has called on Russia to engage with attempts to encourage Myanmar to take “concrete steps toward democracy.” India has suspended the payments on its $150m contract with Russia’s Rosoboronexport, saying that the new Sea Dragon systems installed into five II-38 patrol aircraft “failed to correspond to the technical design assignment.” UK newspapers are continuing to discuss yesterday’s RAF interception of eight Russian bombers, noting the cost of the exercise (estimated at over £160,000) and calling it “the biggest aerial confrontation between the two countries since the end of the Cold War.” The Times says that the exercise is “the latest example of Mr Putin’s ability to irritate the West with bold strokes that cost the Kremlin little and delight many ordinary Russians, who enjoy seeing Nato discomfited.” The BBC meanwhile is helping to promote Russia’s Lake Baikal as a tourist destination, running a story on “the Pearl of Siberia”.

The fiasco behind the rigged auctions of stolen Yukos assets took a few more turns for the worse, as former management have told the FT that they were approached by the American buyers Bob Foresman, vice-chairman of Renaissance Capital and Richard Deitz, president of US hedge fund VR Capital a few days before the sale and were offered a deal to drop their attachments to the assets. David Godfrey, a co-director of Yukos Finance BV, said that Mr. Deitz "sought my assurance that, if he did buy these assets, that we would participate and hand over the keys to him to all the underlying subsidiaries. ... He pressed me to articulate what it was we would accept [in exchange for dropping the lawsuits]. I declined to enter into that debate. ... He kept saying wouldn't you rather be dealing with us rather than Rosneft."

As the main political parties in the country compose their federal and regional party lists, speculation is mounting that Putin himself could head the list for the United Russia party. A political analyst said that "Putin's appointment at the head of the list would create two centers of power: The Kremlin and the State Duma," with the Moscow Times referring to the Duma a “redundant body”. In business news, Russia’s metal giant Severstal is buying up the country’s gold-bearing deposits, winning the tender for the Uryakhskoe deposit, outbidding competitors after increasing the starting price by over five times. Russia is to spend $5.15bn closing several of its old nuclear reactors in the hope that it will spark “a change of perception from Western companies, and Gazprom has announced that it will set up OOO Gaznadzor, its own environmental inspectorate, to coordinate with Russian agencies, after meeting with a flurry of ecological complaints regarding its involvement in the Sakhalin-2 project.

Following some brief talks at the APEC Summit in Sydney, Presidents George Bush and Vladimir Putin gave a short press conference, saying they discussed "important issues" and that the conversations have been "constructive" and "positive." In other words they said nothing at all.

However, in response to a little quip from Bush that during the Kennebunkport visit, Putin was the only one of the two to catch fish, the Russian president extended the following invitation:

PRESIDENT PUTIN: And we also agreed that we will go fishing not only in the United States but also in a Siberian river at some point.

Uh oh, George! You know what that means! Macho time with the Russian Marlboro man!

(Reuters)

George better start working out - It seems that thanks to Putin, "fishing trip" has a whole new meaning. Perhaps Vladimir was feeling charitable toward his embattled colleague, who spent most of the summit making a colossal fool of himself.

I have to confess that there is a certain admirable elegance to the criminal adventures of the Russian government - not only the strategies through which they drag other foreign corporations and politicians into their sticky webs of corruption and ill-gained profit, but also the style with which they do it. Take for example Gazprom at Sakhalin. One would be hard pressed to find another company with such atrocious grades on corporate governance, transparency, and social responsibility - yet when they decided to carry out a partial expropriation of the joint venture to secure the controlling stake, they sent in Oleg Mitvol, the state's environmental watchdog. What an exquisite irony! Here we have the "socially responsible" Russian government valiantly flying the Green flag, storming in on the big evil foreign investors to cripple them with regulatory attacks while claiming to be protecting their citizens from environmental damage. You gotta give to the Russians - unlike Hugo Chavez or the Algerians, when they steal, they also send a message.

A new article in Ethical Corporation today addresses the mysterious "disappearance" of environmental problems at Russian energy projects the moment that a state company takes control. The victims are not just shareholders and investors in these cases - there are real and legitimate environmental concerns that must be addressed - and I don't know about you, but I would feel more optimistic that corporate social responsibility could be achieved when you are dealing with a firm that actually listens to its shareholders...

Extract from Ethical Corporation:

Gazprom – Moscow’s tightening grip on energy supply

Russian regulators are conducting environmental inspections at the now Gazprom-run Sakhalin pipeline project. But the Kremlin’s commitment to green standards remains in doubt
At the end of last year, Shell was forced to cede control of the Sakhalin oil project to Russia’s Gazprom. The move was prompted by the suspension by the Russian authorities of a key environmental certificate. Although real environmental concerns did exist, Shell’s forced demotion was widely seen as a political move by the Kremlin to reassert its control over vital resource assets.

Certainly, this political explanation seems to have been borne out by subsequent events – the environmental objections to the project seem largely to have evaporated since Sakhalin II entered Gazprom hands. This has left campaigners frustrated. “I cannot say that anything is OK. Everything is probably worse than it was before,” says Dmitry Lisitsyn, the head of Sakhalin Environment Watch, an environmental group based on the island.
...
It would seem unwise therefore to assume that developments in Sakhalin mean either that the Kremlin has decided to take environmental issues seriously, or that Gazprom is being disciplined in the same way as international companies. A more likely explanation lies in the fact that Shell is still involved in construction at Sakhalin II, and it, not Gazprom, is being blamed for the alleged construction violations. These events seem therefore to demonstrate not a change in Putin’s policy but, rather, more of the same from Moscow’s hard-man.

The following column by Robert Amsterdam was published in today's Charlotte Observer, among other McClatchy publications.

From the Charlotte Observer:

Investors should know their venture rests on the whims of Putin

ROBERT R. AMSTERDAM

McClatchy-Tribune News Service

LONDON -- Foreign investors are increasingly wondering whether investing in Russia is worth the risks. As recently as 2003, Russia was a promising emerging market. Yet in the last four years, alarm bells have been ringing so often and so loudly that the most likely response of most foreign investors will be to seek opportunities elsewhere.

On one hand there are the success stories -- investors who have made a fast buck on the ballooning Russian stock markets and companies that have staked out a solid market share in an increasingly affluent Russia.

Yet on the other hand, there are illegal expropriations, the imprisonment or deportation of entrepreneurs, show trials and contract killings.

In Russia, law has become an instrument of the increasingly hubristic and corrupt political elite. Today's Kremlin disregards laws with impunity, while simultaneously using legal pretexts such as tax or environmental regulations to obtain what it wants. Russia is the most thoroughly corrupt among major powers in the world today.

Imposing tax liability is one of the Kremlin's favored means of pressuring businesses to do its bidding. The law is irrelevant.

To this day, the Kremlin stands behind the tax bills imposed on the Yukos Oil Co., including the 2004 tax assessment that drove the company into bankruptcy.

To break up and repossess Yukos Oil and to justify jailing CEO Mikhail Khodorkovsky, the company was charged $8 of tax per $1 of revenue in 2004. The company collapsed and billions of dollars of shareholder value evaporated as a result of the Kremlin's desire to retake control of the oil industry.

The Kremlin also tears up business deals at will -- even huge investment agreements with foreign companies that have poured billions of dollars into Russia. These companies are put in a chokehold until they surrender whatever it is that the Kremlin is after. Their CEOs will put on a brave face and tell shareholders that they have rescued a few billion dollars worth of assets, despite a state-sanctioned theft of billions more. No one is above the extortion tactics of the Kremlin.

With government and the justice system in severe disrepute, the market and the rule of law have lost out to a free-for-all. The Kremlin does not seem to care enough about the reputational costs of the manner in which it treats investors, and it should not be surprised to find that foreign investors no longer want to take risks in Russia.

In such a climate, Russia's own people have been betrayed by their leadership. Both entrepreneurs and the rest of the populace have been and will continue to be the first victims of foreign investors' decisions to seek better investment conditions elsewhere.

Whether or not Russia's leadership will wake up to the country's true market potential is an open question. There is still hope for that potential to be unlocked, not by thievery but by real economic fundamentals. For the time being, however, the Russian leadership has a long way to go to win the confidence of foreign investors.

Robert R. Amsterdam is founding partner of the law firm Amsterdam & Peroff. He is international defense counsel for jailed Yukos CEO Mikhail B. Khodorkovsky.

The New York Times has a rather amusing article today about the Russian version of the American sitcom "Married with Children" - which, along with many other examples of cultural exports, has been a runaway hit among Russians. Does the popularity of U.S.-style sitcoms and other entertainment illustrate a gap between the Kremlin's fiercely anti-American mentality and everyday reality in Russia?

(Photo: _dorothy_ on Flickr)

New York Times:

A drumbeat of anti-Americanism may be coming from the Kremlin these days, but across Russia people are embracing that quintessentially American genre, the television sitcom, not to mention one of its brassiest examples. And curiously enough, it is the Russian government that has effectively brought “Married With Children” to this land, which somehow made it through the latter half of the 20th century without the benefit of the laugh track.

The show’s success says something not only about changing tastes here but also about Russia’s standing. Sitcoms are typically grounded in middle-class life and poke fun at it. The popularity of Russian versions of “Married With Children” and other adaptations of American sitcoms suggests that Russia has gained enough stability and wealth in recent years that these jokes resonate with viewers.

“ ‘Married With Children,’ with its satire on the American middle class, fits the style of our channel well,” said Dmitri Troitsky, a senior executive at the Russian channel TNT, a Gazprom-owned network whose programming bent is roughly similar to that of the Fox network in the United States. “It seemed interesting and topical for us to do a parody on the Russian middle class.”

Full article here.

Robert Amsterdam is in Chile this week to debrief politicians and journalists on the Mikhail Khodorkovsky case. Below is a profile article from their leading newspaper, El Mercurio. Translation is forthcoming. Also, we are preparing to launch a Spanish language blog so that those interested can obtain more information related to these issues.

El Mercurio:

Abogado del ex dueño de Yukos está en Chile y dice temer por vida de su cliente

Robert Amsterdam dice que detrás de todo está la KGB, que ha vuelto a gobernar Rusia

Germán Maldonado

"Es uno de los mayores robos de la historia", afirma el defensor de Mijaíl Jodorkovsky, cuya empresa petrolera estaba valorada en torno a los US$ 100 mil millones. Está preso desde hace 8 años en Siberia acusado de fraude al fisco.

Ha siso arrestado, amenazado y muchos de sus amigos y colegas en Rusia han perdido sus trabajos e incluso tiene a dos en la cárcel, uno de ellos en Siberia.

Robert Amsterdam, abogado del ex dueño de Yukos, el multimillonario Mijaíl Jodorkovsky se encuentra en Chile para sensibilizar a la opinión pública y denunciar las condiciones en las cuales se encuentra su cliente, privado desde hace ocho años de la libertad y enfrentando acusaciones de lavado de dinero.

Asimismo, para acusar la situación de Rusia, país donde, dice, la KGB gobierna y donde el 70% de los puestos claves son ocupados por integrantes de esta policía secreta.

No tiene pelos en la lengua para afirmar que las acusaciones contra su cliente ocultan tras de sí uno de los robos más grandes de la historia ya que le sustrajeron entre US$ 80 a 100 mil millones, algo que se hizo, dice "mediante remates falsos de activos que se fueron a una empresa donde el número dos de Putín, Igor Sechin, es el presidente".

Amsterdam dice que su cliente está preso en Siberia, "ha sido acuchillado, mantenido en un campo de Uranio, confinado a prisiones de aislamiento y en octubre debiese poder tener una salida. Sin embargo, ahora se le está acusando de lavado de dinero. Todo para mantenerlo en prisión".

Para Amsterdam detrás del desmantelamiento de Yukos está la pelea entre el libre mercado y los que quieren volver al antiguo régimen. "Jodorkovsky creía en el libre mercado", dice precisando que los actuales gobiernantes son precisamente los ex y actuales KGB. Señala que todo los días la vida de su cliente corre peligro y que si está vivo es porque sería muy difícil para el Kremlin negar su responsabilidad porque está dentro de una de sus cárceles y porque la KGB está muy encima del caso.

El hombre que fue símbolo de Rusia

Jodorkovsky con apenas 26 años, en 1989 creó el primer banco comercial de la extinta Unión Soviética. Su banco, el Menatep, adquirió los activos de la petrolera Yukos en 1995 y una tras otra compró las otras empresas del sector hasta formar un gran imperio que rozaba los US$ 100 mil millones. Pero su estrella se apagó cuando Jodorkovsky entró a la política y se hizo público que financiaba a opositores a Putin. En 2003, fue acusado de fraude y evasión tributaria.

There is a very interesting article by Fred Weir over at Christian Science Monitor about Mikhail Gutseriyev and the Russian government's attack and subsequent seizure via Basic Element of his oil company Russneft. As could be expected, there are some misunderstood references to Mikhail Khodorkovsky. CSM also has a short audio interview with the journalist about the story.

President of the United Arab Emirates Sheikh Khalifa bin Zayed al-Nahayan (R) presents Russia's President Vladimir Putin with the country's highest award in the Mushrif Palace in Abu Dhabi September 10, 2007. (Photo: Reuters)

In response to last week’s British interception of Russian aircraft, NATO Secretary-General Jaap de Hoop Scheffer has said that the alliance wants "a solid, trustful" relationship with Russia, and that it was up to Moscow to clarify whether it wanted the same. The British Foreign Secretary, David Miliband, has called for a tougher EU line on Russia, with emphasis on “responsibility,” saying that the approach should be “firm but not macho”. This is perhaps a veiled allusion to recent photographs in which Putin appeared bare-chested on a fishing trip, which British journalists have not taken kindly to. The Times referred to Putin’s look as “less Cossack and more cowboy.” The Independent today has run a profile piece accusing Putin of orchestrating “the recent and audacious acts of Russian belligerence.”

The big story in the UK today is that Israeli police have uncovered a neo-Nazi ring of Russian immigrants responsible for carrying out attacks on Jews and foreign workers. The story made The Guardian’s front page. Other startling news today is that Gazprom was revealed to have held talks over mounting a rival $5bn-plus offer for Dow Jones.

A reported 4,000 activists from Yabloko and the Other Russia coalition, including Garry Kasparov, marched against a skyscraper in St. Petersburg planned by Gazprom. "This skyscraper is ugly. It is absolutely clear it is an absurd, shameless and a disgraceful idea," Grigory Yavlinsky said. UNESCO also recently voiced concern about the project. Kasparov’s Other Russia meanwhile continues to struggle to come up with a single opposition candidate to challenge an expected Kremlin-backed candidate in the March presidential vote. Reuters today has said that the next election “promises to be a carefully orchestrated succession to President Vladimir Putin next year”.

Putin has announced that Russia’s policy towards key partners in Asia will not change when he leaves office, congratulating Chinese President Hu Jintao at the APEC Summit that "You and I have achieved the highest level of Russian-Chinese relations." The Russian President has just arrived in the United Arab Emirates to discuss “the development of trade and economic investment cooperation.” He told journalists on arrival in UAE that he still hoped to reach a compromise with the United States over its plans to deploy a missile shield in Eastern Europe.

Russia’s Economic Development Ministry will submit a draft ruling this week to speed up the promulgation of new export duties on crude oil and petroleum in an attempt to prevent oil firms exploiting a loophole that currently saves millions for oil firms. The Duma has reportedly completed its energy reforms, and Russia’s Industry and Energy Ministry has approved an Eastern Gas Program to create a unified system for gas supply and production in Eastern Siberia and the Far East, although the deal still needs China’s approval to seal the program’s export component. Approval seems certain, however, given that LUKoil and China National Petroleum Corporation have just signed a cooperation agreement. LUKoil has also announced that it will invest $1bn in a new plastic and petrochemicals facility at Ukraine’s Karpatnaftokhim. In other business news, Severstal is expected to more than double first-half profits for the year, with results to be released tomorrow. Electricity and thermal power group OGK-2 plans to raise $1.1bn through a secondary listing on the London Stock Exchange. The company is owned by UES, of which Gazprom holds a 10% stake. Rusal has announced the signing of a Letter of Intent with the Venezuelan Guayana Corporation to jointly explore opportunities to develop raw material and aluminum projects in Venezuela. Russia’s Alfa Group is in talks to buy Turkish supermarket chain Migros, and Rosneft has announced that it paid $42m for a Cyprus-registered company that owns filling stations in the Moscow region. A senior central banker has said that Russia’s oil and metals firms hold the key to current liquidity problems in the banking system.

Anna Politkovskaya has been posthumously nominated for the European Union's top human rights award.