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. Last Updated: 07/27/2016

The Influential Players Behind the Purneftegaz Deal

While the IEC was clearly a key player in the bid to take away control of Purneftegaz, it was unlikely to have acted alone.

One source close to PAKK-Invest hinted to The Moscow Times that the four firms were acting as buyers on behalf of a larger, more influential investor. This is not surprising, especially since nearly every hypothesis that has surfaced in the Russian press as to who was behind the secretive purchase of Purneftegaz includes at least one major player.

Many fingers point to LUKoil. LUKoil denies any relation to the deal. In an interview with Nezavisimaya Gazeta in October, President Vagit Alekperov denied the company's involvement in the affair. He said this would be in breach of an agreement with Gazprom and Shell to bid together for the whole company.

IEC has fallen on hard times in the past year, and has racked up tens of millions of dollars of debt since the rules on exporting crude were changed in 1997. A large part of this debt is owed to LUKoil, IEC said.

"We are currently in negotiations to have this debt restructured," an IEC spokesman said.

Many sources close to the affair, including Chizhov, are convinced that the Purneftegaz deal could not have been pulled off without help from within the company itself.

Former Rosneft president Alexander Putilov, the man whom IEC has reportedly asked to help manage Purneftegaz, is known to be a close ally of LUKoil President Vagit Alekperov. Putilov was general director of Uraineftegaz, the "U" in LUKoil, while Alekperov headed operations at Kogalymneft, the "K," and the two still reportedly maintain close relations.

Also, MAPO-Bank helped LUKoil acquire a 51 percent stake in Arkhangelskgeoldobycha, an oil exploration company in the northern Timan-Pechora region. The fact that it was MAPO-Bank's loan that triggered the share seizure, and not any of Rosneft's other numerous creditors, has also been used as a basis for the LUKoil-Purneftegaz connection.

Thus, according to this theory, IEC's Kirillov, seeing an opportunity to purchase Purneftegaz for virtually nothing, approached LUKoil with a proposal to buy Purneftegaz from IEC's four front companies at an unspecified date in the future. In this manner IEC could cancel its debt to the oil company.

Other signs point to a link between IEC and powerful figures in the Kremlin. This would explain what Chizhov said was tremendous pressure "to do nothing" following the Sept. 11 sale. As Chizhov said, "When I began to show resistance to this deal, I ran into problems with law-enforcement agencies." Chizhov said these agencies had seemingly adopted a passive, "wait-and-see" approach to the scandal, although later they played a more active role.

Chizhov also said that he was reprimanded for having the shares frozen on the accounts of the four buyers, although he did not say by whom.

The Moscow Times was shown a document on the case purportedly written by police investigators that said that Kirillov may have acted with either tacit or open support of Pavel Borodin, chief of the Kremlin's household affairs and one of the most powerful men in Russia.

As one of Yeltsin's most trusted advisors, Borodin manages all the government-owned hospitals, dachas, airplanes, automobiles and other state property, including offshore property. He has tens of thousands of employees, and he himself estimated in a recent interview with Izvestiya that the assets he manages are worth some $600 million.

Borodin does not hide the fact that a large part of his business is to earn a profit, and that when necessary, he turns to private bankers for help. In the past Borodin has been known to procure special privileges for certain businessmen.

Another key player is Kremlin insider, financier and CIS secretary Boris Berezovsky, who earlier had effective control of Rosneft through former company president Bespalov. In fact, Berezovsky controls Purneftegaz since Grigory Napolov, Bespalov's right-hand man, is still chairman of the board.

It is widely believed that Berezovsky wants Purneftegaz returned to Rosneft, and one insider said that it was he who was behind the president's Oct. 14 order.

- Gary Peach