Putin dismisses economic minister due to loss of confidence

SOCHI/MOSCOW/NEW YORK, Nov 16 (PRIME) -- Russian President Vladimir Putin has dismissed Alexei Ulyukayev from his post of the economic development minister due to the loss of confidence, presidential spokesman Dmitry Peskov told reporters late on Tuesday.

Earlier on Tuesday, Ulyukayev was detained, charged with extorting a U.S. $2 million bribe from state-owned oil major Rosneft, and put under house arrest until January 15. The Investigative Committee’s official representative Svetlana Petrenko said that he received the bribe for granting the ministry’s approval that allowed oil major Rosneft to buy the state’s 50.08% stake in Bashneft, and he was caught red-handed.

Ulyukayev’s attorney Timofei Gridnev said that his client thinks that it was a provocation, and he pleaded not guilty. He said that Ulyukayev plans to cooperate with the investigation fully.

Alexei Kudrin, a former finance minister and the current head of the Center for Strategic Research, said that he doubts that Ulyukayev wanted to extort money from Rosneft under the Bashneft privatization deal, and supposed that the law enforcement authorities may have made a mistake.

“We are waiting for further steps and clarification from the Investigative Committee. We would like the committee to be transparent and to inform us, because we do not see clearly what has happened and why it has happened on the territory of Rosneft. It is hard to believe that someone would like to argue with Rosneft,” he said.

He added that it was not Ulyukayev, but the government who made a final decision on privatization of Bashneft.

“I have doubts that Ulyukayev was able to block the decision or influence it. I have very many questions on why he would want the bribe,” he said.

He said he sees no political background in the arrest of the minister.

Alexander Afanasyev, head of the Moscow Exchange, said that the market reaction was restrained, but fluctuations may intensify if new details of the investigation emerge. “Bashneft increased slightly, but nothing special happened to Rosneft. Still, we understand that we do not know a lot of detail and results of the investigation,” he said.

But the impact on foreign investors is unclear. “It is obvious that the news is unfavorable for the investment climate. But the real strength of the impact is another question,” he said.

Denis Lazarev, advisor to the head of the Federal State Property Management Agency, said that Ulyukayev still remains chairman of the supervisory board of the country’s second largest bank VTB, but the board will have no problems in operation as there are 10 other members.

A representative of a foreign investment company told PRIME on condition of anonymity that Ulyukayev’s arrest happened at a very unfortunate moment, when relation of international investors towards Russia softened due to election of Donald Trump as the next president of the U.S., but market will track the situation as future results of the fight in the Russian government are unclear.

Alexei Devyatov, chief economist at the Center for Economic and Financial Research, told PRIME that Russia’s economic policy will not change significantly after the dismission of Ulyukayev as “the ministry’s powers are not major or are not very important. The economy is influenced by the monetary policy and the tax and budget policy. The Economic Development Ministry has only secondary leverage points,” he said.

But business daily Kommersant reported on Wednesday that the minister’s defense in court insists on the fact that Ulyukayev did not have direct contact with the money. A source close to the Federal Security Service told the business daily that Ulyukayev did not touch the money, but only touched the case with the cash, the handle of which was doused in a special composition.

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