Russian court rules to nationalize Sistema’s stake in Bashneft

MOSCOW, Oct 30 (PRIME) -- A Moscow Arbitration Court has satisfied a claim of the Prosecutor General’s Office demanding to nationalize a 71% stake in oil company Bashneft owned by multi-industry holding AFK Sistema on Thursday.

Bashneft shares are under arrest and they will pass to Russia’s State Property Management Service, Judge Olga Alexandrova said.

The court decision will come in force in a month unless Sistema files an appeal to the Ninth Arbitration Court of Appeals.

“Under Russian legislation, AFK Sistema may file an appeal within a month after the court’s decision in writing is made. AFK Sistema disagrees with the court decision and is considering an appeal. If an appeal is filed, the court decision will come in force only after an appeals court has announced a decision,” Sistema said.

But Bashneft said it was against protracted legal proceedings which may hurt its operations.

“Bashneft is interested in the quickest settlement of the dispute, which can negatively influence our relations with partners,” it said.

The decision does not mean setting course for renationalization, Boris Titov, the country’s business ombudsman, told reporters.

“I think the government has the right to defend its interests, so if (Bashneft’s) privatization was done with violations, everyone should understand that the government will defend itself,” Titov said.

The General Prosecutor’s Office filed a claim on violations during privatization of the Bashkortostan Republic’s oil and gas assets now comprising Bashneft in 90s, demanding Bashneft’s return to the government, in September.

Titov also said he received no requests from Sistema’s owner Vladimir Yevtushenkov. “From the legislation’s point of view the court’s decision causes no doubt as it complies with the law.”

But Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs, asked whether the court meant nationalization or confiscation.

“The decision was expected…But what I would like to see and had not seen yet is a motivation, as nationalization to the federal treasury needs explanation due to the fact that Bashneft was owned by the Bashkortostan Republic’s government, and the court’s argumentation is unclear,” Shokhin said.

“If it is nationalization – it differs from confiscation by a compensation payment.”

On September 16, major Sistema’s shareholder Vladimir Yevushenkov was put under house arrest on accusations that he was involved in embezzlement during Bashneft privatization. According to earlier reports by the Investigative Committee, Sistema paid U.S. $500 million less than agreed with the government of the Bashkortostan republic, during privatization of assets which now are parts of Bashneft.

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