Tuesday 24 October 2017

Irish company caught up in legal row over Russian oil

Three Russian businesmen have been sparring in court.
Three Russian businesmen have been sparring in court.
John Mulligan

John Mulligan

Irish oil company Coral Petroleum is playing a central role in an international legal bust-up between Russian oligarch Leonid Lebedev and two of his former associates.

The trio have been sparring in courts in London and New York over a 1997 acquisition of Russian oil firm TNK and a subsequent merger and sale of the business.

The initial 1997 deal involved all three men.

A dispute has erupted over whether there was subsequently an investment agreement struck between them in 2001.

Four Russian businessmen owned a controlling stake in TNK through a consortium called AAR.


In 2003, they agreed to merge the TNK assets with BP, creating TNK-BP.

Mr Leonid, who is also a Russian senator, claims he's owed at least $2bn (€1.5bn) from the later sale of TNK-BP for $27.7bn (€20.5bn) to state-controlled Russian oil giant Rosneft.

Mr Leonid is pursing two of the AAR members, Leonard Blavatnik and Viktor Vekselberg.

The courtroom battle is being waged amid a backdrop of uncertainty for Russian's top businessmen.

They fear that President Vladimir Putin's policies in Ukraine will lead to more severe sanctions that could cripple their international activities.

Prior to the joint venture between TNK and BP being inked, Mr Blavatnik and Mr Vekselberg contend that a company controlled by them, British Virgin Islands-based Rochester Resources, entered into an acquisition agreement with Irish firm Coral Petroleum.

The two men contend that Coral Petroleum is owned by Mr Lebedev. But Mr Lebedev has denied that Coral Petroleum acted as his agent in the deal Mr Blavatnik and Mr Vekselberg claimed was agreed.

The two men have rebutted Mr Lebedev's claim to a share of the proceeds from the sale to Rosneft, saying the acquisition agreement signed between Coral and Rochester is a "complete knock-out" in answer to the billionaire's claims for a share of the spoils.

The legal battle has been fought in London and New York.

Earlier this month, technical arguments were heard in London related to the admission of particular documents by Mr Blavatnik and Mr Vekselberg. Mr Lebedev wanted those documents excluded from evidence and the court agreed.

Mr Vekselberg and Mr Blavatnik have also been trying to prevent Mr Lebedev from pursuing legal action against them in New York.

Mr Lebedev's main firm, Russia-based Sintez, is estimated to have generated revenue of $1bn in 2012 and is one of the country's top 200 companies.

"It's hard for any business in our country. I'm absolutely aware of that from my own experience," he told 'Forbes' magazine last year.


While Mr Lebedev made his fortune from the oil business, he has also pursued investments in movies.

Mr Lebedev and his daughter cooperate with a small US film company called Code Red Productions.

Mr Lebedev's most recent involvement in the industry is in a film called 'Honour', a UK thriller that examines so-called honour killings in Britain.

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