UPDATE: Sistema directors ask Putin to intervene in Rosneft suit

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MOSCOW, Jun 19 (PRIME) -- Independent directors of multi-industry holding Sistema asked Russian President Vladimir Putin to pay attention to a 170.6 billion ruble suit filed by oil major Rosneft against the company, Kommersant business daily reported on Monday quoting a copy of the letter sent to the Kremlin on June 15.

Rosneft filed the suit in May seeking to recover the loss stemming from Sistema and its unit Sistema-Invest’s alleged asset stripping of oil company Bashneft in 2009–2014, when they owned a controlling stake in it.

In the letter, Roger Munnings, former head of the Russian subsidiary of KPMG; former Luxembourg’s Economy and External Trade Minister Jeannot Krecke; former European Trade Commissioner Peter Mandelson; and Meade Hall & Associates’ founder Patrick Clanwilliam said that Sistema shares plunged 37% following the suit and the company’s capitalization fell 143 billion rubles.

The suit is groundless and irrational, as Rosneft demands compensation for usual corporate procedures done in compliance with law and calculates claims in foreign currency, basing the final claim on the ruble depreciation. The suit also hurts the Russian investment climate, as it increases risks and decreases predictability of the business environment in the country, the business daily reported.

But President Vladimir Putin’s spokesman Dmitry Peskov said that the Kremlin sees no danger for the Russian investment climate from the suit.

“Speaking about the dispute between Rosneft and Sistema, it is being implemented in the legal framework, and the president is in no way able to interfere in the process. It is being done purely in the legal system and it would be incorrect to speak about any kind of its influence on the investment climate,” Peskov said.

The letter also says that the suit shows the wish of some state companies to expand its influence on the economy and the business climate regardless of methods and consequences of the actions, hurting internal competition and investor trust. The directors asked Putin to help in settling the dispute and hoped for a fair trial at court.

Rosneft spokesman Mikhail Leontyev said that public position of the independent directors is vulnerable as Sistema “while only pretending that it is Bashneft’s owner bled it dry in the most cynical and shameless way.”

Russia’s Association of Professional Investors sent a similar letter to Putin on June 6. In it, Chairman of the Association’s Board of Directors Alexander Branis asked the president to study whether the government should looking into the situation and use mechanisms of working with state-controlled companies and the business community to support an out-of-court settlement.

Peskov said, “Only court will be able to issue a final verdict if no other solution is found. This is the world practice, including the business world, and it is absolutely normal,” he said.

(57.7408 rubles – U.S. $1)

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