UPDATE 2: Russian investigators detain economic minister on bribery charges

(Adds heading, details in paragraphs 7, 14, 17–18, 24–27)

MOSCOW, Nov 15 (PRIME) -- Russia’s Investigative Committee has detained Economic Development Minister Alexei Ulyukayev and launched a criminal case on charges of receiving a U.S. $2 million bribe for granting the ministry’s approval that allowed oil major Rosneft to buy the state’s 50.08% stake in Bashneft, the committee said in a statement on Tuesday.

Svetlana Petrenko, the acting head of the committee’s public relations department, told PRIME that Ulyukayev was caught on Monday night red-handed when receiving the bribe, and he was also involved in extorting money from Rosneft.

The purchase of Bashneft was legitimate, and the case does not investigate the deal’s legitimacy, Petrenko added.

A source in the law enforcement authorities told PRIME that Ulyukayev has been monitored by the Federal Security Service FSB for more than a year, and the investigation was launched on the basis of results of the monitoring report.

REACTION

Dmitry Peskov, spokesman for President Vladimir Putin, said the president knew about the detainment.

“Of course, it was reported to the president. He is aware of that. They reported to him since the very beginning of the operative cultivation. He received all the information,” Peskov said.

Ulyukayev is now in the building of the Investigative Committee and investigators are interrogating him, another source in the law enforcement authorities said.

A spokesperson for Prime Minister Dmitry Medvedev said the Medvedev was also aware of the detention of Ulyukayev and he discussed it with Putin.

“The head of the government believes that the most meticulous investigation of the case should be carried out,” the spokesperson said.

Peskov that the charges are very serious and have to be proven. “Anyway, it is only court that is able to decide here,” he said.

President of the Russian Union of Industrialists and Entrepreneurs Alexander Shokhin said he was shocked to hear the news as he has known Ulyukayev for about 30 years, who has been a key figure and policy maker in the Russian economy.

“I think that Alexei Valentinovich (Ulyukayev) is a very honorable and well-known man, they could have avoided the detention and chosen a house arrest or other ways of pre-trial restrictions, and not putting in prison a man who is so well-known that it is very unlikely that he would try to cross the border,” Shokhin said.

Russia’s second largest bank VTB, whose affiliate VTB Capital acted as an investment consultant during privatization of Bashneft, said in a statement that investigators introduced no charges against the banking group. “We also took no part in any investigative actions, and this night’s events became news for us just like for everyone else,” the statement read.

Business ombudsman Boris Titov said that Ulyukayev was not a figure that represented corruption. “Our view does not correlate with Ulyukayev being corrupted or a bribe-taker. His views were aimed at development of the economy, and our hopes were connected with that. Still, if the investigation and the court prove that he is guilty, these actions should not be tolerated,” he said.

Natalya Poklonskaya, a deputy in the parliament’s lower house State Duma and a former Prosecutor General of the Crimean Republic, said that the detention of Ulyukayev proves that there are no untouchable state officials in Russia. “Everyone who plans to make a criminal step should understand that anything that is kept secret will come to light sooner or later,” she said on her Facebook page.

But no assumptions should be made prematurely. “If there is any proof that confirms guilt of the minister, the case will be submitted to court. And only time will show how the court will study the case,” she said.

Alexander Ivlev, country managing partner for Russia at international consulting firm EY that acted as an independent appraiser of the government’s stake in Bashneft, said that EY declined to comment.

“From the point of view of professional ethics of an audit consultant, we have no right to comment on events connected with activity of our clients,” Ivlev said.

POSSIBLE IMPACT

Mikhail Leontyev, an official representative of Rosneft, said that he sees no risks for the Bashneft deal. “This is absurd. What are you talking about? The deal was brilliant and superbly correct. This event will have an absolute zero of impact on the deal. Listen to the Investigative Committee. They have clearly and explicitly stated that there are no and may be no claims against Rosneft,” he said.

Sergei Shatirov, a deputy chairman of the economic policy committee of the parliament’s upper house Federation Council, told PRIME that the detention will not affect consideration and approval of the 2017–2019 budget by parliament. “The approval of the federal budget is an established state process, it does not depend on individuals,” he said.

All aspects and stages of preparation and passage of the budget through parliament are defined by law. “We will study the budget in a usual schedule,” he said.

Anna Nesterova, member of the presidium of the general council of Business Russia, said that the event will not hurt Russia’s investment climate as there are too many significant external factors impacting it. “I know that it is too early to make any conclusions. I think it will not have a direct impact on the investment climate,” she said.

“There are so many factors, both internal and external, starting with the victory of Donald Trump in the U.S. elections, and ending with us understanding that we will have negative growth dynamics. I am absolutely sure that this situation will not affect the internal investment climate,” Nesterova said.

Alexander Kalinin, president of small and medium business support organization Opora Rossii, also said that the country’s investment climate will not be hurt by the event.

“The investment climate is created by many people in regions. The system (of investment activity standards) has been recently approved, and it will be implemented, so this event will not be of importance for the investment climate,” he said, adding that the climate will improve fast.

Philippe Pegorier, chairman of the Association of European Businesses (AEB), speaks of both positive and negative tendencies for the Russian business climate. “A negative factor is that they may prove that this could happen even at the minister level. His position is very important, he has connections not only to Russian colleagues, but to foreign ones. This is an unfavorable event for the country’s image,” he said.

“A positive factor is that fighting against corruption is going on after all, even despite the level.”

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