Occam’s Rosneft

Italy’s Intesa Sanpaolo bank has not approved the loan to Glencore and Qatar, NewsRu reported yesterday.

“Against this backdrop, there were suggestions that almost the entire amount received by the State from the transaction, was de facto financed by the printing press of the Central Bank.”

There has been no evidence of any movement on the currency exchange market, the article continues, which likely means it did not happen.

The FT reported earlier that Intesa was still exploring the possibility of participating in the privatization of Rosneft. But that they are constrained by the fact that the US and EU are looking to see if Intesa’s participation would violate the sanctions against Russia. Intesa was recently fined $235 million by the New York regulator for breaking the sanctions regime against Iran, and likely does not want to get involved in breaking another one.

So far, Intesa has only said that they are advising Rosneftegaz – the holding company that controls Rosneft on behalf of the State.

“Of the total transaction amount – 10.5 billion euros – the buyers [Glencore and QIA] have agreed to pay 2.7 billion from their own resources. The balance was to be provided by a pool of banks headed by Intesa…”

But the Russians have already claimed that the money from the transaction has reached the budget. How is that possible?

“…it can be assumed that part of the transaction in euros was financed by Russian banks,” Tom Levinson, a currency strategist at Sberbank CIB, said.

According to NewsRu, the money in the budget was provided by Gazprombank, but came from a deposit of $29 billion placed by Rosneftegaz in October.

“The delay in the inflow of currency into Russia for the privatization of Rosneft has already caused its deficit in the market,” says Levinson.

The situation, he said, is exacerbated by the fact that Rosneft must pay $3.8 billion for the purchase of the refinery in India in December. In addition, [Russian] companies need to pay off $3.8 billion in external debt.

So, the article reaches the same conclusion that many experts in Russia have already written: that the Central Bank printed money to pay for the scheme.

This is not actually an uncommon practice, the article points out. In the last week alone, the Bank of Russia printed money “…and poured into the banking system in the form of loans 650 billion rubles.”

But why go through such a complex set of steps?

The Central Bank could have printed rubles to bail out the government and fill the holes in the budget. But that would have been highly inflationary. And that is the one thing the Regime cannot and will not do. Because it is the one thing that will drive people out into the street en masse. So they had to come up with some other way to fill the hole in the budget, and they settled on their privatization scheme scam instead.

But “sanctions” prevented them from going abroad to borrow more money from foreign banks. The commodities traders don’t have a lot of money because everyone is in the same boat and still trying to recover from the collapse of the commodities market. Apparently an offer was made to Trafigura to do a similar deal to what Rosneft has with China: advance payments in exchange for steady supplies. But Trafigura was not interested in buying more supplies from Rosneft.

Everybody knows Russia and Rosneft are bad bets. Actually getting anybody normal to take the shares was going to be a problem. They could have gone to the “oligarchs” boyars to take the deal, but frankly, they’re feeling the sting of the bad market too. Plus, the people in the Regime are all about control, and they don’t trust anybody who is not in their group (and not even then). And what sane person is going to pay good money for a stake in a badly run company that they have no control over?

In the end, the only option the Regime had was to buy the shares themselves. But again, inflation. The deal had to be done in such a way that would not impact the market / ruble negatively. And that is why they had to come up with this seemingly complex scheme. The Central Bank printed money. They then “loaned” the money to the Russian banks. The Russian banks turned around and loaned the money to Rosneft in exchange for ten-year bonds.

Glencore apparently got a good contract from Rosneft for playing their part and providing at least some of the funding. It is still unclear what Qatar gets out of the deal. And the Italians? Well, that is unclear too, but it appears to be where the whole story about outside funding falls apart.

As Alfred Kokh wrote on Facebook:

Occam’s razor cuts off all of the superfluity.

Rosneft Quick Sale

Albert Bikbov offers an alternative version of what happened with the Rosneft privatization deal.

Bikbov first reminds his readers that in late 2014 Rosneft got a “loan” from the government of 625 billion rubles. That money was used to purchase foreign currency. But in doing so, the currency market was hit, and the Central Bank had to increase the key interest rate to 17%.

He connects that to the bond placement that Rosneft did last week for nearly the same amount: 600 billion rubles.

“…market participants are convinced that the deal was non-market in character, i.e. it was financed by one or two state banks (presumably “Gazprombank”). In the market it is impossible to quickly raise 0.6 trillion rubles [the placement lasted only 30 minutes -ed]: because the base of Russian investors is limited, the short-term liquidity of Russian banks, and the sanctions [Rosneft cannot borrow from foreign entities under the sanctions].”

What likely happened is that the State provided the money to Gazprombank in a one-time injection of cash, which was then transferred to Rosneft using the bond placement, Bikbov alleges.

But why did Rosneft need that money? Bikbov thinks that the money was a back-up plan in case the deal with Glencore and Qatar did not work out by the 12 December deadline set by the Russian government. The money would then be used as a stopgap until Rosneft could get a deal with another [foreign] purchaser early next year.

But instead “a miracle happened”, and Rosneft was able to announce its deal with Glencore and Qatar at the last minute.

Ignoring the history and morals of Glencore which everyone already knows, he continues, “the main thing is what will happen to the market” as a result of the transactions.

There were two simultaneous deals: the deal with Glencore and Qatar, and the bond placement.

So now Rosneft has an extra 600 billion rubles that it doesn’t really “need”. And the Russian budget has 10.2 billion euros. But the budget doesn’t need euros, it needs rubles “to plug the holes in the budget”. So the government needs to sell the euros and buy rubles (it should get about 688.5 billion rubles for the transaction). But in doing so they would be in a similar situation to what happened two years ago with Rosneft’s purchase of foreign currency, and the market would be destabilized. So instead Rosneft will “buy” the government’s euros with its rubles.

“The most important point: the transaction would have no impact on the market, because it will take place “outside of the market”, which, in turn, means there won’t be any acute fluctuation of the ruble…”

He cites Putin’s meeting with Sechin where this was discussed. He also quotes Alfa Bank’s Natalia Orlova who said:

“I think these deals are not linked. Rubles were purchased for Rosneft’s future liabilities, and Glencore and Qatar Investment Authority’s currency is designed to pay the budget that needs rubles. This is why probably Rosneft will give the rubles, which were borrowed on the domestic market, to the budget and use the currency [euros] to pay its external debt. For this reason, in general, I think that the negative effect for the currency market can be equal to zero. Even if the currency will directly go the budget, anyway, it won’t affect [anything]. If the borrowing through ruble bonds for Rosneft were a backstop deal, it is probable that such bonds can be paid off in advance because bond holders will receive interest.”

And all of that is fine, Bikbov says, but… and it is a big but, now Rosneft has an extra 10.2 billion euros that it doesn’t really need.

“To tell the truth, Rosneft doesn’t need the currency. By the beginning of October, it accumulated $20,2 billion on its accounts. Moreover, Bashneft has about $350 million. In October, Rosneft sold its shares in Vankorneft and Taas-Yuryakh Neftegazodobycha for $4 billion [to an Indian consortium – ed.] and is going to get $1,1 billion for Verkhnechonskneftegaz‘s 20% from Beijing Gas Group. Rosneft needs to pay its external debts equal to at least $4 billion in the 4th quarter. In 2017, Rosneft will have to pay off $12.9 billion in debt. As you can see, the company has currency in surplus even if we don’t consider export transactions in 2017.”

See here for more on Rosneft’s debt.

So what is Rosneft supposed to do with an extra 10.2 billion euros? Just sit on it? Save it for a rainy day? They could buy foreign assets, but that’s a risk because of the sanctions, Bikbov asserts.

Rosneft doesn’t seem to have such qualms, and is buying stakes in foreign projects. See for example, the recent $12-13 billion deal with Essar in India, and the purchase of a 30% stake in Eni’s project in Egypt, among others.

However, Bikbov suggests that Rosneft’s next acquisition may be Tatneft (Russia’s sixth largest oil company).

“…Tatneft is quite attractive as a company, the oil price is still low, and the Russian stock market is very far from world levels.”

He points out that the nearly 20% stake in Rosneft went for $11 billion, which means that Rosneft is worth only $56 billion, according to the market.

“And this is despite the fact that just a few years ago, Rosneft bought TNK-BP for about the same amount of money. And for Bashneft they paid about $5 billion. That is, not including Rosneft, about $60 billion was paid for Bashneft and TNK-BP which is more than all of yesterday’s assessment of Rosneft.”

Nevertheless, he says, the point is that Rosneft has extra cash and what do they plan to do with it?

“Putin has warned Rosneft about a converting “rubles from bonds in the budget currency”. But what about the reverse conversion (Rosneft’s euros into rubles) he said nothing, leaving everything to the discretion of Rosneft. So we can only pray and hope that Rosneft will not collapse the currency market…. Hope for the prudence of Igor Sechin, although 2 years ago Rosneft caused the collapse of the ruble roughly in the same amounts, absolutely regardless of the consequences for the market.”

And meanwhile Tatneft is looking quite attractive.

“In the past month the stock price has increased by 26%, which strongly hints about the interest in it. It would be appropriate to think about this. It would be good if it is not Rosneft…”

Triumph for Two

Sergei Shelin writes about the “deal” Rosneft made with Glencore and Qatar.

“…this has been presented as a personal triumph for Vladimir Putin, as unprecedented material gain for Russia, as well as a sort of grand initiative – an example of a breakthrough of Western sanctions and blockades, after which, of course, will follow all other foreign investors.”

Starting with the last point, Shelin says, the sanctions have nothing to do with it. Investors are just not interested in what Russia is selling. And they see no long-term gain from working with Russia. This deal with Glencore and Qatar “…will not change the atmosphere.”

“Glencore is a company that has long specialized in a particular kind of business, and cannot serve as an example for conventional investors.”

And the Qataris are “…prone to international adventurism”.

As for the claim that this deal will make Russia’s business environment more robust, Shelin shoots that down by noting that this deal “…does not give them [the “purchasers”] any control over Rosneft.” Everything will remain the same. Rosneft wanted to maintain control, and was not interested in sharing with others, which is why China dropped out of the running, he asserts.

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President Putin meeting with Rosneft’s Igor Sechin (kremlin.ru)

Russia is also bragging about the profit made from this deal, but Shelin notes that while 10.5 billion euros is “impressive”, it is not “a revolution in the state of material affairs…”

“This amount is equal to twelve days of exports of Russian goods. Or, say, the routine three-week fluctuations in the value of Russia’s international reserves (from $395.7 billion to 385.7 billion between the 4th and 21st of November), caused by such a prosaic reason as the weakening in the exchange rate in that period of the non-dollar currency exchange rates and the resulting revaluation of the non-dollar portion of the reserves.”

So, if this was in fact the triumph that everybody is claiming, Shelin says, it was not a victory for Russia, but for two people: Putin and Sechin. And this was clear from the TV coverage of Sechin meeting Putin to report on the transaction. When in reality it should have been an official “in charge of the sale of state property, not the corporation’s top manager…” Instead Sechin was portrayed as some kind of hero, and Shelin concludes, this “says a lot about who is who in…” Russia’s elite.

 

Rosneft Scam

It is now pretty clear that some kind of scam is being perpetuated with the Rosneft “privatization” in order to avoid Western sanctions.

Dmitry Gudkov writes on Facebook:

It seems that Igor Ivanovich Sechin is not telling us something. The triumphant sale of Rosneft shares to Glencore and Qatar’s sovereign fund no longer appears so triumphal. The trader claims that rather than billions, it’s contribution will be limited to a modest 300 million euros.

And as for Intesa, the head, Antonio Fallico “…is openly called “Putin’s man” in Italy.”

In an interview in late 2014 with RT, Fallico openly stated that the “EU sanctions against Russia are suicide”.

Intesa was also the organizer of the sale of Rosneft’s shares.

Gudkov sites an article in Finanz.ru:

A source told Finanz.ru that “Glencore and the Qatar Fund appear to be a ‘cover’ in the deal.” The scheme may work as follows: Rosneft issues bonds and invests cash in a certain fund, which then buys its shares and gets a commission, similar to the mechanisms used for privatization in Russia in the 1990s.

That is Rosneft took the approximately $9.42 billion that they made off the bond auction last week, and that money was then used to buy Rosneft’s own shares. But it was done in such a way so as to avoid any problems with the sanctions regime.

Alfred Kokh replied to Gudkov’s post, suggesting that it may have been something along the lines of a managerial buyout. Usually, in such cases the managers have no ready capital, and so have to take loans from banks to make their purchase. But Kokh noted that in the 1990s Lukoil and others made no secret of what they were doing. So why, he asks, is Sechin hiding something?

Meanwhile, Vladimir Milov, who has written about Rosneft quite a bit recently, wrote in Forbes Russia: “…that it was possible that Rosneft is turning over some of its shares in payment of its bonds placed for 600 billion rubles. Rosneft received pre-payments from Glencore in 2013-2015 of up to $5 billion for future deliveries, he noted. Therefore, the sale of the bonds would cover Rosneft’s debts to Glencore but would be sent to the Russian budget as if “new money.” Milov also noted that Qatar owns 9% of Glencore.”

What likely happened is that Rosneft either couldn’t or wouldn’t spend their own money to buy the shares, so some way was needed to get more capital. But because of the sanctions that was problematic. I have written before about the company’s money woes. In addition, numerous analysts have stated concern about the effect Rosneft’s purchase of its own shares would have had on the ruble. So this was the best way they could come up with to skirt the sanctions and get capital.

Rosneft Privatization

Contrary to rumors, Rosneft has not bought its own 19.5% stake in the company from Rosneftegaz. Instead the privilege has gone to commodities trader Glencore and Qatar’s sovereign wealth fund. Each will own half of the stake, according to Rosneft CEO Igor Sechin.

The discussions were kept very quiet. There was no hint in the media at all that Glencore was even interested. I personally still have questions about the legality of the transaction, since Rosneft is (technically anyway) under sanctions. But I doubt that Glencore would have gone through with the deal if there had not been guarantees that they would not be taken to court or fined for participating. They have managed to keep to the letter of the sanctions, but not the spirit. But we are talking about Glencore, after all, as many Russians were quick to point out on Twitter.

So the deal has gone through, Sergei Aleksashenko writes on his blog, and the Reserve Fund can “sit untouched for another couple of months.”

There are four main takeaways from the deal, he says.

First, Igor Sechin came out the winner in this round. It is clear that Prime Minister Medvedev and his government knew nothing and had no involvement in the transaction. As a result, “we need to expect some external manifestation of this.” That is, Rosneft may win in other conflicts as well. For example the ongoing legal battle to access of Gazprom’s Sakhalin-2 pipeline.

That being said, it does appear that Sechin did lose on at least one of his preconditions for the sale to “outsiders”: that new shareholders would have to wait to get seats on Rosneft’s board of directors. But, Aleksashenko writes, “…judging by the words of the president… this condition has been removed, and, to some extent, Igor Sechin will be forced to live by the rules and not by concepts.”

“Third, we won’t know the whole truth about this deal for a long time. At least as long as it [Rosneft] is headed by Igor Sechin. And the main thing here is the unknown question: did the new shareholders receive any other benefits as part of this transaction or not? With Glencore it is easier. The company could be satisfied with the long-term contract with Rosneft to sell a substantial portion of its oil [220,000 barrels per day – ed.], perhaps even at about market conditions – as one of the world’s largest traders, Glencore can earn on sales of oil, and its purpose is to hold the maximum share of the market.”

But with the Qataris it is more difficult to say, Aleksashenko continues, “…they don’t need oil”, but they’re businessmen and don’t want to take a loss on their purchase.

“And, judging by how all the other transactions of Arab funds in Russia are structured, we can assume that Rosneft (or Rosneftegaz) issued the sovereign fund a protective option in case of falling prices, pledging in this case to buy back the shares.”

And finally, but not the least important, Aleksashenko concludes: “the privatization of Rosneft has not happened.” The State (in the form of Igor Sechin) is still calling the shots, with nobody to check it, “and will continue to do so.”

Ulyukaev Affair

Rosbalt held a round-table earlier this week on the so-called “Ulyukaev Affair”. Former Economic Development Minister Ulyukaev remains under house arrest for allegedly taking a $2 million bribe for his decision on the Rosneft takeover of Bashneft.

The round-table included the Director of the “Political Experts Group” Konstantin Kalachev, and Nikolai Mironov of the Centre for Economic and Political Reform.

Kalachev told the group that he thought that what happened to Ulyukaev was a signal to Prime Minister Dmitry Medvedev that his future prospects were not bright. And that Medvedev had no hope of being President again.

Kalachev also did not rule out more arrests:

“The genie is out of the bottle, and none of the elite can feel completely safe. The temptation to turn this story into the start of the presidential campaign – in response to a request for justice in society – is there. The popularity of officials is not high, as you know, and the old theme of “Good Tsar, bad boyars”… just might be implemented through high-profile arrests.”

Nikolai Mironov thought (as I do) that the case against Ulyukaev was to show people that the Kremlin was doing something to fight corruption.

“At the same time… data from the latest opinion polls shows that Russians’ belief in anti-corruption policies remains low even after the detention of a member of the government.”

Mironov recalled that after former Defense Minister Anatoly Serdyukov was let off easy for his role in the Oboronservis fraud case it became clear that there was one set of rules for the elite and another for everybody else. And Russians have not forgotten this.

Mironov also suggested that the rules of the game had changed, and that nobody could be considered safe. But, he pointed out, Russia still has a clan system that relies on “backroom agreements”.

Kalachev agreed, saying that “…the Ulyukaev affair continues to demonstrate “the Byzantine nature of our politics”.”

Meanwhile Reuters reported earlier this week that Ulyukaev had been discussing diluting the state’s share in Rosneft further than currently planned, though not right away. Rosneft’s sale is supposed to go through next month, with 19.5% of the state’s holding in the company up on the auction block. The state will then own 50% of the company, “a blocking stake”. The government is anxious to offload the shares before the end of the year in order to get the cash that it desperately needs.

State Fire Sale

Vedomosti reports today that the Federal Property Management Agency is debating new ways to dispose of its assets in order to get the best deal.

According to the law on privatization, the state’s shares in companies must first be put up for auction. And if that process doesn’t work, then they move to a public auction where there is a minimum set price, and anyone can bid above that. This year, 90% of the auctions did not take place, and they moved to public auction. Meaning that the State did not get the market value or even as much as they had anticipated for the stakes they sold. For example, the sale of a stake in the state diamond corporation, Alrosa.

As a result, the Federal Property Management Agency is discussing options to rectify this.

One option, Vedomosti reports, would be an auction without naming a minimum price. But this is complicated by the fact that you would need some minimum set of people or companies bidding, otherwise you could potentially have issues with collusion, as happened with the loans-for-shares auctions in the 1990s. Yukos, for example, bid against itself by creating shell companies that appeared to have no connection with Khodorkovsky’s bank. Thus guaranteeing that they would be the only ones bidding on the assets, and keeping the price low.

But this option is slow and cumbersome because what happens is that you have to keep going to auction if you don’t have enough companies to meet the requirements.

So officials recognize that it is necessary to simplify and speed up the process. One idea that is being considered is “declaratory privatization – when the asset is sold at the request of the investor”.

How would this work? “…any organization, without waiting for ads [by the Agency], can apply for privatization; an investor can pay for an audit and evaluation [of the company].” The Agency would then have to “…notify the public about the application, [and] wait, for example, three months…” If there are no opposing applications, the asset would go to the initiator.

“Experts have suggested this method for a wide range of assets.” But the Agency wants to tread carefully because they think this is really only appropriate for smaller assets, and not larger ones.

“According to the Federal Property Management Agency, in the first half of 2016, the State was a shareholder or had the right to participate in the management of 1627 joint-stock companies.”

But “state-owned companies are active in the acquisition market” (see, for example Rosneft’s purchase of the Bashneft shares and its plans to purchase a stake in itself next month).

640 JSCs are under the control of the State, and of those, 83% are up for sale, according to the Agency.

“Since the 2000s, the government has contributed to the charter capital of some state-owned companies [e.g. Rosnano, Rostec, etc.], but the law forbids the 100% ownership of the company… therefore the State wasn’t given 100%, but 100% minus one share. And these are the shares now hanging in the balance. Another 19% of companies are in the process of bankruptcy.”

Meanwhile, the Agency is attempting to improve its marketing strategy, in order to widen the pool of buyers. They have begun “posting information on websites, and in news agencies, buying advertising in the mass media and billboards, and print booklets.

It is unclear what President Putin actually thinks about all of this, Vedomosti concludes.

“On the one hand, large-scale privatization has shown that it is very difficult for the authorities to part with state property…” an official told Vedomosti. They would prefer to keep going round and round until they get the best price. At the same time, Putin said this week that there are other considerations besides money.

In other words, the Regime is anxious to get these assets off their hands, and collect what cash they can, rather than wait to get the best price. This is even more necessary now as the 2017-2019 draft budget anticipates draining both of the Finance Ministry’s reserve funds.

Clan War

Everybody is making much of what has happened with Ulyukaev, and calling it “a decisive turn in the fight against corruption…” former MP and KGB man Gennady Gudkov wrote on Facebook. But this is all just the “wishful thinking” of “naive fools”.

He says that a week ago he had a conversation with a friend who, he implies, is well-connected. According to Gudkov, the friend said,

“”You… cannot even imagine what terrible bickering has started at the very top! Soon there will begin a war between the clans the likes of which we have not seen before!” And he named some very famous surnames in Russia, warring with each other for live and death, including in the government and in the Kremlin.”

He continues:

“All that we see today, is not a fight against corruption (it is inseparable from the “vertical”…) but a fierce… struggle for influence, financial flows, and positions.”

And every method will be used in this clan conflict. From blackmail to corporate raids to physical violence. Gudkov also implies that more assassinations are likely.

Ulyukaev, he says, “was never part of the inner circle of “untouchables””.

“But not everybody has understood that the situation has changed dramatically… the rules have changed…”

Gudkov concludes:

“Describing the tensions in the highest levels [of power], my informed source said: “It will soon come to the point that Putin’s entourage will begin to blame each other for the most deadly sins on live TV… so that the opposition can sit back and relax: the snake will start eating its own tail.””

Anti-Corruption Sideshow

Alexei Ulyukaev appeared in court last night and was placed under house arrest until the middle of January. Prosecutors said he posed a flight risk. At about the same time, it was reported that President Putin had sacked the Minister for “loss of confidence”.

This is reportedly the highest ranking arrest since Beria was ousted.

Most of the opinions in Russian circles are still based on speculation. Most people seem to think that Ulyukaev is not even guilty of the crime he has been accused of, that of taking a $2 million bribe to make a decision that likely wasn’t even his to make.

Political analyst Gleb Kuznetsov told Rosbalt:

“This is a demonstration of the determination of the state in the fight against corruption. It demonstrated that we have no untouchable class. That not only a provincial governor of a region can be detained, but also one of the most influential government ministers. He can be prosecuted in the same way as any other person.”

Rosbalt also talked to the director of the Institute for Contemporary State Development, Dmitry Solonnikov:

“It is a hallmark of our time. The heads of regions, and security officials with the rank up to General, are not simply dismissed, but publicly and openly sent into custody. So in that sense, the detention of Ulyukaev seems logical and is not surprising.”

Solonnikov added that it was clear that Ulyukaev was not the only one who was being monitored. “…the control of policymakers is not a secret.”

His speculation was likely correct as the Russian media reported today that four other high-ranking officials were being monitored. They were named as Deputy Prime Minister Arkady Dvorkovich, Presidential Aide Andrei Belousov, another official at the Ministry of Economic Development, Oksana Tarasenko, and Marina Romanova, who is an aide to First Deputy Prime Minister, Igor Shuvalov.

Others saw this as a continuation of the fight over an ever-shrinking pie of assets.

Political analyst Yevgeny Negrov told Rosbalt that he thought the fight was not over ideology but rather that “the ultimate beneficiary was some kind of “financial-industrial group”.

The President of the “Center for Political Technologies” Igor Bunin thought the conflict was of a more personal nature between Ulyukaev and Rosneft chief Igor Sechin.

But, as I said yesterday, this seems to be mostly about the continuation of the Kremlin’s faux anti-corruption campaign that they have co-opted from Alexei Navalny.

People are fed up with the corruption they see around them. And performing show trials for TV is an effective way to show people that the authorities are doing something, even though nothing will change.

Anti-Corruption Campaign

Russians woke this morning to the news that the Investigative Committee [known as SledKom, in Russian] had detained the Minister of Economic Development, Alexei Ulyukaev.

A statement was released at three o’clock this morning, but it appears to have been taken down at the time I am writing this.

As usual, most of what is happening and what happened are mere conjecture and speculation based on rumors. But according to Bloomberg, the charges relate to Rosneft’s recent purchase of a controlling stake in Bashneft. Allegedly, Ulyukaev took a “$2 million bribe related to his ministry’s approval of the sale of a 50 percent stake in Bashneft…”

“Ulyukaev was caught red-handed while taking a bribe. We are talking about extortion, the dual threats against representatives of Rosneft,” a SledKom representative told Interfax.

Rosneft paid $5 billion for the stake (which was over-priced, as I pointed out at the time).

As usual, there was some hysteria among Western analysts, but Chatham House’s Ilya Zaslavskyi had a more level-headed opinion:

According to Gazeta.ru, Ulyukaev wrote a resignation letter in October, and approval was expected after budget discussions in the Duma. The reason for his resignation was due to his poor forecasts of the macroeconomic situation in Russia.

Meduza reminded its readers:

“His [Ulyukaev’s] ministry was not afraid to give tough forecasts – in particular, the Ministry of Economic Development in October suggested that in the next 20 years the country’s economy expects stagnation, GDP growth would be below average. Ulyukaev said that the country’s economy as a whole needed to adapt to the new foreign policy conditions, including sanctions.”

The first Deputy Chairman of Russia’s Central Bank, Sergei Shvetsov, told reporters:

“I have great respect for Alexei Valentinovich [Ulyukaev]. He is the last person anybody would suspect of anything like that…. What is written in the press seems absurd. Right now nothing is clear.”

Or as the President of Russian Union of Industrialists and Entrepreneurs said:

What I think is happening here, however, is a little more mundane that it first appears. Yes, a Minister has been detained, and accused of corruption. But this goes back to the Sergei Ivanov interview I highlighted a few weeks ago. At the time, Ivanov said that the government would continue its anti-corruption efforts. What he meant, of course, was not that there would be an actual effort to crack down on corruption, but that they would make a show of it for the general population. And I think that is why we are seeing this drama played out in the media.