Deripaska Back-Taxes Case Raises Eyebrows

The country's tax authorities are seeking 100 million rubles ($4 million) in back taxes from Oleg Deripaska's Basic Element holding, a claim some analysts fear may carry political overtones.

In July, the Federal Tax Service informed BasEl that the conglomerate had underpaid taxes relating to 2003 and 2004. BasEl subsequently appealed the claims in the Moscow Arbitration Court, and the court is expected to rule on the case Wednesday, Kommersant reported Tuesday.

Aelita Baichurina, a spokeswoman for the Federal Tax Service, confirmed that the case was being heard, but declined to give further details.

BasEl refused to comment on the substance of the claims, although a source close to the company insisted that it had paid its taxes in the proper fashion. The source added that the case was "not a big issue."

According to court documents, the tax authorities say BasEl used a complex promissory-note scheme with the aid of fly-by-night companies to understate its profit, Kommersant reported. The authorities also claim that BasEl made suspicious payments for staff-training events to similar vehicles.

BasEl is the latest in a line of companies to be facing back tax charges. Russneft, the beleaguered oil company formerly owned by Mikhail Gutseriyev, was slammed with an $800 million tax bill this week.

Sergei Markov, a Kremlin-connected political analyst and United Russia State Duma deputy, said the BasEl back-tax bill was negligible and that the case had been blown out of proportion. "One hundred million rubles is a small figure for BasEl. ... I'm surprised not by the demands -- that is normal practice -- but by the fact it's on the front page."

But others were less sure.

"No [Russian] tax case is purely a tax case -- there is always a political background," said Yevgeny Volk, the Moscow-based head of the Heritage Foundation, adding that he was not familiar with the details of the BasEl case.

Deripaska is one of Russia's richest men, overseeing a vast business empire built up around United Company RusAl, the world's largest aluminum producer, which is in the process of buying a blocking stake in Norilsk Nickel.

While he boasts impressive pro-government credentials, analysts say the businessman has been bruised by bitter power struggles with Igor Sechin, the influential Kremlin deputy chief of staff who is also chairman of state-controlled Rosneft.

Stanislav Belkovsky, another political analyst with Kremlin connections, said Deripaska and Sechin went head to head in a bid to control Russneft. Toward the end of last year, the deal seemed all but closed in Deripaska's favor, but the Federal Anti-Monopoly Service has since dragged its feet on approving his bid for the oil firm.

Deripaska's ties with U.S. lobbyists and politicians came under renewed scrutiny last week as The Washington Post reported that Deripaska had met twice with Republican presidential candidate Senator John McCain, a staunch critic of Russia, with the help of a U.S. lobbyist who now works as an aide to McCain. Washington pulled Deripaska's U.S. visa in 2006 over concerns with his possible links to organized crime, the Wall Street Journal reported.

"For some time, there have certainly been signs that [Deripaska] has fallen out with the team favored by the Kremlin," Volk said. "There have been [government] changes ... and his wealth is not as important for the Kremlin as it used to be." The back tax demand was "certainly not a plus for him in the current [climate]," Volk added.