Grigory Pasko: Who’s Lining Up for the YUKOS Assets?

Who’s Lining Up for the YUKOS Assets? By Grigory Pasko, journalist When Russian president Vladimir Putin was in Munich at a conference on security, his last meeting was a meeting with the president of Allianz AG, Michael Dieckmann. Officially, this was reported as follows: “As concerns Putin’s meeting with the president of the company Allianz, the talk at it will be about the business-partnership of Russia and Germany”.


Michael Dieckmann

Let us note: it is not with any old president and with any old company that the Russian president meets and has a private discussion. What is it about Germany’s Allianz that is so attractive to the Russian side? It is known that the Allianz corporation is an international financial company that works in the spheres of insurance, banking activity, and asset management. (Altogether, the company has over 60 million customers in 70 countries of the world). In the year 2005, 85% of Allianz’s employees worked in European countries, while the company’s operating profits in Europe comprised approximately 5.5 billion euros. Based on the results of the first 9 months of 2006, the company’s net profit comprised 1.59 billion euros. Allianz considers the Russian market to be one of the most promising and high-priority. In 1991, the company Ost-West Allianz became one of the first foreign insurers to enter the Russian market and obtain licenses to engage in insurance activity. It was recently reported in the press that business isn’t going all that well at Allianz: the “ball and chain” dragging the company down is Dresdner Bank, which Allianz picked up three years ago for $20 billion. The decision to buy the bank had been made by the previous president of Allianz Group, but to clean up the mess was left to today’s president, Dieckmann, a veteran of the insurance market who took the helm at Allianz on 29 April 2003. Dresdner Bank (or, more precisely, one of its units, the investment bank «Dresdner Kleinwort Wasserstein») is known in Russia because of its participation in the appraisal of the assets of the company «Yuganskneftegas». In December 2004, «Baikalfinansgrupp», a company nobody had ever heard of before, with a charter capital of 300 US dollars, won «Yuganskneftegas» with an uncontested bid of 9.35 billion US dollars. At that time, «Yuganskneftegas» had been appraised by the «Dresdner Kleinwort Wasserstein» bank at a sum of from 14.7 to 17.3 billion US dollars. Later it became known that the state company «Rosneft» had bought a 100-percent block of shares from the unknown shareholders of «Baikalfinansgrupp», becoming, in such a manner, the owner of the main production enterprise of «YUKOS». On the eve of that transaction, Mikhail Khodorkovsky too had his say, in a letter from his lawyer Robert Amsterdam addressed to Dresdner Bank. “I call on you to observe ethical standards in economics and not take part in this” wrote Amsterdam to bank head Herbert Walter, Dresdner Kleinwort chief Stefan Jentsch, and Allianz boss Michael Dieckmann.


Matthias Warnig

What else does the public know about the German bank and its role in the Russian economy? The head coordinator at “Dresdner Bank” for Russia, Matthias Warnig, obtained a leading position in the large-scale project to build a German-Russian gas pipeline under the Baltic Sea. This became a new demonstration of the close relations between this bank and the Russian state gas giant OAO “Gazprom”. Analysts asserted that Warnig would most likely keep his official post at “Dresdner Bank”, but would be devoting the greater part of his time to the North European Gas Pipeline. “Gazprom”, as is known, owns 51 percent of the equity in the pipeline project, while the rest is divided among the companies E.On AG and BASF AG. The first phase of construction is supposed to be completed in 2010. It is also known that “Dresdner Bank” has maintained close relations with “Gazprom” since the 1990s. («Gazprom», as certain mass media outlets have written, is also a realistic participant in the upcoming sale of YUKOS assets). Newspapers have also written that Warnig has maintained personal relations with Russian president Vladimir Putin. The Wall Street Journal has reported that, in the words of former colleagues, Warnig and Putin first made each other’s acquaintance at the end of the 1980s in Dresden, when Warnig was an officer in the East German secret police, the “Stasi”, and Putin was an officer of the Soviet KGB in Germany on assignment. In such a manner, we see that there was plenty of reason for Putin’s Munich meeting with the managers of Germany’s «Allianz». We can even presume that one way or another, they spoke of the possible participation of «Allianz» through «Dresdner Bank» in the purchase of YUKOS assets. The Financial Times wrote about the role of certain Western banks in the Russian economy in 2004: “Western banks are taking direct part in an obvious attempt at the renationalisation of the Russian oil industry by means of ‘Gazprom’. The bank ‘Dresdner Kleinwort Wasserstein’ was used for appraising the market capitalisation of ‘Yuganskneftegas’ before its placement at auction and together with ‘Deutsche Bank’ and other banks is ensuring the granting to ‘Gazprom’ for financing its bid a syndicated loan in a size of 10 bln. Euros. From its side, ‘Deutsche Bank’ likewise recommended to ‘Gasprom’ that it acquire ‘Yuganskneftegas’.” The newspaper, I seem to recall, asked the following question: “Does ‘Deutsche Bank’ realize sufficiently what a risk this could entail for its reputation?” You can probably talk about reputation with respectable people and structures. The upcoming sell-off of YUKOS assets will show just who is respectable, and who has their own notion of reputation. In Russia, for example, everybody who was involved in some way in the ruination of YUKOS has in one way or another been promoted. Recently, the former head of the Federal Tax Service, Anatoly Serdyukov, was made Minister of Defense. His most famous achievement became the “YUKOS case”: under Serdyukov, the tax agency had filed record claims against YUKOS. We know of another incident. In 2005, Serdyukov reported to Putin that in the first half of 2005, the tax agency had collected taxes in an overall sum of 1 trillion, 317 billion rubles, 22% more than planned. Seryukov was honest in naming the two main reasons for overfulfilling his plan: 50% was due to the effect of rising oil prices, and 50% due to some kind of uniquely Russian phenomenon that Seryukov called “the YUKOS effect”. “After the audit of ‘YUKOS’, practically all the oil companies defined their numbers for the payment of taxes more precisely and started to pay sufficiently larger sums”, Serdyukov elucidated then. It can now be seen that the elucidation from two years ago was most convincing indeed. From a history of oil company sales in Russia 1997. Sale of 40% of the equity in the Tyumen Oil Company. According to the conditions of the tender, the purchaser of the paper was supposed to pay 88 million dollars on top if he did not possess a certain 16 patents. These belonged to «Alfa-grupp», which subsequently became the winner. 2002. Sale of 74.95% of the equity in «Slavneft». 7 companies were allowed to take part in the auction; 6 of these were associated with TNK-BP or «Sibneft». And it was they who ended up buying «Slavneft» on a parity basis. 2004. Sale of 7.59% of the equity in «Lukoil». 3 claimants were allowed to bid. A certain «Springs Holdings» offered 54 million dollars right from the start (against the 6 million of one of the competitors), and the bidding was stopped. Then it turned out that «Springs Holdings» was affiliated with the American ConocoPhillips – earlier, president Putin had said that he knows of plans by Americans to invest in Russia and welcomes these plans. It is not difficult to guess that YUKOS’s assets (and this is approximately 22 billion dollars) will be sold along similar lines: with dummy companies, unknown parties, and strange conditions… Really, can something that is initially dishonest result in something honest? That was a rhetorical question.