Stability in Russia: one of highest in the world – deputy PM
Igor Sechin, 50, is also Chairman of Rosneft oil company. Though not often seen speaking publically, he is believed to be one of the country’s political heavyweights and is referred to as Russia’s “energy tsar” in the Western media.
The main focus of Sechin’s 90-minute interview with the American business daily was the investment climate in Russia, the energy business and its perspectives. However, political issues, and what has become a tradition now, the high-profile case of former Yukos CEO Mikhail Khodorkovsky were also touched upon.
In his comment to WSJ’s question on Russia’s current investment climate and the “various winds” that foreign investors felt in different years, Sechin said that everything had changed in the country over the past 25 years.
“We are a different country! This is the main answer to your question. After the collapse of the USSR, we used the infrastructure of the Soviet period, there was instability, but there are no such problems now. We have political stability, and it's one of the highest in the world, I think,” he said.
“[Former Egyptian president Hosni] Mubarak probably said the same thing,” the WSJ’s Gregory White noted.The Russian energy chief said he had not heard the ousted Egyptian leader saying anything like that, but added that if that topic was interesting, he could have prepared for the discussion. “You did not say it for no reason,” he said in response to White’s remark that he “was just asking”.
“In this case, we need to more closely examine what has happened in Egypt. See, well, what senior managers of Google have been doing in Egypt, what kind of manipulations of the energy of the people took place there,” Sechin added before returning to the main topic – Russia.
According to the politician, the entire old Soviet infrastructure has been replaced in recent years, new gas pipelines were built and a modern banking system was created.
“I believe that investors are quite satisfied with the proposals that exist on the market,” he added.
William Browder is “a happy man”
Sechin recalled William Browder – the founder of a British investment fund specializing in Russian markets, Hermitage Capital Management (HCM) – whose name is often mentioned in the media for any possible reason “but not the economic outcomes of his work”.
Founded in 1996, by 2005 HCM had become one of the largest foreign portfolio investors in Russia.According to Russian investigators, in the late 1990s the company established front companies to illegally trade shares in energy giant, Gazprom. At the same time, Browder was largely involved through his fund in campaigning against corruption in some Russian companies. As of late 2005, Browder was reportedly denied entry into Russia and in 2007 the Moscow Tax Crimes Department launched a criminal case against Hermitage Capital on tax evasion charges, which sparked a lot of criticism in the West.
“I think in terms of profit from cooperation with the Russian assets, he is a happy man. The effectiveness is just the highest—thousands of percent return on invested capital,” Igor Sechin said.
As for his entry into the country problems, the deputy premier said he did not know what kind of visa problems Browder had. “I admit that there are some other reasons for the ban on his entry, but certainly it is not the economy. And certainly it is not his economic interests,” he added.
Economic outcome – that is what important an investor. “Browder is a man of genius. He had believed and invested in Russia. And he didn't miscalculate. Economic efficiency of his investments surpasses all imagination,” Sechin stated. It is also important for the investors to have their property rights secured.
“Has anything ever been expropriated from Browder? Nothing has been expropriated. Such a thought has never ever crossed anyone's mind. He makes a purchase—very well, then. He collects his dividends, and he earns. What is important for an investor? It's important to have clear rules of the game. And they do exist. No one can say that they unexpectedly change, that one day we have one rules, and the next day we suddenly have other,” Sechin said.
He noted that he personally has “a very good feeling for Browder”, who is adapted to Russia, married to a Russian woman. “And of course, his desire to come to Russia is understandable,” Sechin noted.
As for the case of HCM lawyer Sergey Magnitsky, who died from heart failure in a Moscow detention center while awaiting trial for alleged tax crimes on November 16, 2009, Sechin said that it is a tragedy just as a death of any human being is.
“In such cases, one should always act according to law. A criminal case was opened upon the death, the investigation is under way, and I am confident that the court will clear up everything,” he said.
Yukos has blood on its hands
Sechin also commented on the Mikhail Khodorkovsky case. In December, the ex-Yukos CEO and his business partner, former Menatep head, Platon Lebedev were sentenced to 13.5 years in prison each in a second case against them. The businessmen were found guilty of assembling a criminal organization in the oil business, embezzling 218 million tons of oil from Yukos’ subsidiary companies and money laundering.
The sentence has not yet gone into effect and lawyers representing the defendants have appealed the court’s verdict.
The Deputy Prime Minister believes that in order for the things to clear up, “we should calmly separate true facts from politics and gossip”. He recalled that tax claims were filed not only against Yukos, but other companies as well. While some firms settled the disputes by making appropriate tax payments into the budget, others preferred to go to court.
“Let me remind you that all the decisions of the tax bodies were ratified in courts. There were no expropriations. To add more, even the bankruptcy of Yukos was initiated by a group of foreign investors, headed by the French bank Société Générale,” Sechin said.
Everybody was treated equally, but one mustn't violate the tax law and, all the more, the Penal Code. “Yukos leaves a trail of not just simple violations, but of very grave criminal offenses, including murders, torture and extortion,” Sechin said.
All these crimes were investigated, the motives of the murders were proven, and weapons were produced. Those guilty were punished by court.
Sechin recalled that Yukos security chief, Aleksey Pichugin – whose “hands were blood-stained” - was sentenced to life. “Many today prefer to forget about it. But how can we erase the victims of these crimes from memory?” Sechin said.
Among those murdered was the Mayor of Nefteyagansk, Vladimir Petukhiv, who was shot dead on his way to work on Khodorkovsky’s birthday. A businesswoman, Valentina Korneeva was gunned down right before her husband’s eyes near their flat door. “Bank Menatep, where the offices of Khodorkovsky, Nevzlin and Lebedev were located at that time, had fancied her shop "Tea" on Moscow’s Pokrovka Street,” Sechin said. He added that the bank was seeking to expand its office and needed the building of Korneeva’s shop. After negotiation with her brought no result, she was killed. And that is not the end of the list of those who suffered trying to find a compromise with Yukos.
“Is it possible that Yukos leadership was not related to what its security service was doing?” Sechin wondered. “And you are reproaching us for denying an entry visa to Browder.”
In conclusion, the deputy premier said that it is necessary to fight crime and lawlessness. “Those who commit crimes have a ‘different” kind of psychology. Their first crime is followed by another crime, and at the same time they are working out the third one,” Sechin said.