/ 22 December 2007

Oil firm denies Putin has stake in its ownership

The secretive oil company Gunvor on Friday broke its silence over its alleged links with Vladimir Putin, denying that the Russian President was the company’s ”beneficiary” owner but admitting that he was a friend of its founder.

In a statement, Gunvor’s CEO, Torbjorn Tornqvist, said it was ”plain wrong” to suggest the company had benefited from its alleged close connections with the Kremlin.

The company said Putin ”was not a beneficiary” of its activities. ”None of the shares of this organisation are held by President Putin or anyone allied by him,” Tornqvist wrote in a letter published in Saturday’s Guardian newspaper in the United Kingdom.

The letter is the first time that Gunvor, which is based in Geneva, has contested persistent claims in the media that Putin ”effectively” owns much of the firm.

In the Guardian on Friday, Stansilav Belkovsky, a Russian political scientist, claimed that Putin controlled ”at least 75%” of Gunvor, through a ”non-transparent network of offshore companies”.

He told the Guardian: ”Putin’s name doesn’t appear on any shareholders’ register, of course. There is a non-transparent scheme of successive ownership of offshore companies and funds. The final point is in Zug [Switzerland] and Liechtenstein. Vladimir Putin should be the beneficiary owner.”

Additionally, the president controls 37% of the shares of Surgutneftegaz, an oil-exploration firm and Russia’s third-biggest oil producer, and 4,5% of Gazprom, Belkovsky alleged. Putin’s personal fortune was $40-billion, he added.

The claims, which have appeared in several publications over the past month, appear to have leaked from the Kremlin as rival factions battle for supremacy ahead of Putin’s departure in May.

In the letter, Tornqvist confirmed for the first time that Putin is friends with the company’s co-founder, Gennady Timchenko, a publicity-shy Russian businessman who lives in Switzerland. The size of his fortune is not known.

”[Timchenko] did indeed know President Putin in the days before the latter became famous,” Tornqvist wrote. ”However, suggestions that they share a KGB heritage or have been in business together are completely wide of the mark.”

Gunvor declined to say how Timchenko and Putin met. The firm said Timchenko denies having ever worked for the KGB or its foreign intelligence service — an allegation made repeatedly by the Russian media over the past eight years. The two met via KGB circles, it was reported.

Founded 10 years ago, Gunvor is now the world’s third-biggest oil trader and handles 30% of Russia’s seaborne oil exports. The company’s competitors say it has used its political contacts to cut favourable deals with Russia’s state-owned energy companies, including Rosneft, which is chaired by Putin’s Deputy Chief of Staff, Igor Sechin.

In his letter, Tornqvist claimed that Gunvor’s profits have been exaggerated. They amount to ”hundreds of millions” of dollars rather than the billions previously suggested, he said. The firm refused to give a figure for its 2007 profits but confirmed turnover was $43-billion.

”This is the norm for a business of our scale operating in our sector … It is simply wrong to suggest that we benefit from favours granted over trading contracts in Russia and leading to multibillion profits,” Tornqvist wrote.

Discussion of Putin’s wealth has previously been taboo. But the claims of his fortune have leaked out against the backdrop of the vicious fight inside the Kremlin between a group led by Sechin and a ”liberal” clan that includes Dmitry Medvedev.

The Sechin group is made up of siloviki, Kremlin officials with security/military backgrounds. It is said to include Nikolai Patrushev, the head of the federal security service (FSB), Russia’s KGB successor agency; his deputy, Alexander Bortnikov; and Putin’s aide Viktor Ivanov.

Those associated with the ”liberal” camp include Roman Abramovich, the Russian oligarch who is close to Putin and the Yeltsin family; Viktor Cherkesov, head of the federal drug-control service; and Alisher Usmanov, the Uzbek-born billionaire.

Insiders say the struggle has little to do with ideology but is a war between business rivals. Putin’s decision to endorse as president Medvedev, who has no links with the secret services, dealt a blow to the hard-line Sechin clan, they add.

Friday’s Vedomosti newspaper, meanwhile, suggested that Putin could become chairperson of Gazprom, in effect swapping jobs with Medvedev. — Guardian Unlimited Â