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Yukos: The Theft that Keeps on Giving and Giving

Hats off in congratulations to the bureaucrats sitting atop Rosneft, which just reported strong quarterly sales results of $10.8 billion – up from $8.6 billion from the same period in 2006, thanks to the company’s “managerial excellence” (Or, as Vidya Ram of Forbes writes: “The success was largely thanks to the company’s acquisition of refineries formerly owned by Yukos. Rosneft was the main beneficiary from the break up of the former Russian oil giant, which was declared bankrupt, while its former chief executive Mikhail Khodorkovsky was thrown in jail for tax evasion and fraud.“). Rosneft President Sergey Bogdanchikov boasted to Reuters that these results don’t even fully account for “recently acquired assets while their integration is still ongoing.” The Bogdanchikov family must have a lot to celebrate – not only is Rosneft funneling in the profits from what international courts have found was an unlawful seizure of Yukos assets, but Sergey’s son Alexei Bogdanchikov gets to head up Rosneft’s investor relations department. But nepotism also has it costs, as demonstrated by the recent open letter on the spy wars from Viktor Chersekov, which prompted one expert to ominously warn thatThey stood together as long as they were robbing others of their assets. But after dividing the spoils, they realized that they can only expand their wealth by robbing one another.” The biggest question is whether or not the rest of the powerful members of Putin’s elite inner circle are willing to lose it all in order to cover up the crimes of just a handful of people. From today’s RFE/RL report “Inside The Corporation: Russia’s Power Elite.”

Such a concentration of commercial and political might has led to conflicts, despite the group’s ideological homogeneity. This has been most visible recently in Cherkesov’s long-standing and bitter feud with Patrushev and Sechin, which went public in early October. Cherkesov has long coveted Patrushev’s post as FSB chief. Patrushev and Sechin are wary of Cherkesov’s rising clout and Sechin and Sergei Ivanov are also fierce rivals for Putin’s ear and influence in the Kremlin. Sechin’s interests as Rosneft chairman have also clashed with those of Medvedev’s at Gazprom. A proposed merger between the two state-controlled behemoths was abandoned in 2005 due to rivalries between the two men’s power bases in the Kremlin. The two sides also clashed over the division of the bankrupted Yukos oil company’s production assets — the majority of which were eventually acquired by Rosneft. Sechin’s interests also clash with Yakunin’s at Russian Railways — mainly over whether oil will be transported by pipeline or rail. “They have problems among themselves,” says Vladimir Pribylovsky, head of the Moscow-based Panorama think tank. “They are afraid of each other. They are seeking somebody they can trust with the throne. Everybody trusts Putin. They don’t know what will happen with his successor,” Pribylovsky adds.

So how long will Sechin and Bogdanchikov be able to hold off the likes of Yakunin, Chersekov, Medvedev, and others?