The reports on German Khan, the billionaire founder of the Alfa Group consortium and one of BP’s partners in Russia, will raise questions about the British company’s Russian associates.
The relationship between BP and its Russian partners is analysed at length by US diplomats in documents obtained by The Daily Telegraph from the WikiLeaks website, with colourful descriptions of the main characters’ personalities and rivalries.
Mr Khan is currently an executive director of BP’s Russian joint venture, TNK-BP. The US government memos describe Mr Khan’s extraordinary way of life, with a description of a hunting trip at his lodge, “like a Four Seasons hotel in the middle of nowhere”.
According to the TNK-BP chief operating officer, Tim Summers, Mr Khan told him during the trip “that The Godfather was his favourite movie, that he watched it every few months, and that he considered it a ‘manual for life’.”
Mr Khan is married with three children, but he travelled to the hunting lodge with seven glamorous women. Mr Summers added that Mr Khan came “to dinner armed with a chrome-plated pistol”.
After the hunting trip, Mr Summers bought “a copy of The Godfather and said he watched it on a regular basis himself so as to better understand Khan and anticipate his [Mr Khan’s] tactics”.
One BP executive contended that Mr Khan might be “certifiably deranged”. BP’s complex business dealings in Russia attract close attention from US diplomats. TNK-BP was set up in 2003, with BP owning 50 per cent of the company.
The other half is owned by AAR — the Alfa-Access-Renova group — which is controlled by several Russian oligarchs, including Mr Khan, his university friend Mikhail Fridman and Leonard Blavatnik, who recently donated £75? million to Oxford University to set up the Blavatnik School of Government.
According to the US papers, Mr Khan became angry with Bob Dudley, a former chief executive of TNK-BP who is now the chief executive of BP, after Mr Dudley blocked Mr Khan from investing in rogue states such as Burma and Cuba.
It was alleged that Mr Khan instead used the company’s resources to analyse projects in the rogue states and, when the schemes were rejected by the BP board, “farmed out” the projects to his own separate company.
According to the papers, the 49-year-old Russian businessman systematically undermined attempts by BP to improve corporate governance.
Mr Khan, who is estimated to be worth £5.2?billion, would reportedly attempt and have BP’s western employees thrown out of Russia by having their work visas withdrawn.
Earlier this month, BP announced that it had struck a £6.3?billion share-swap deal with another Russian oil company – the state-controlled Rosneft – which infuriated its AAR partners.
A High Court battle between AAR and BP over the Rosneft deal begins today. Yesterday, the oligarchs indicated that they would seek to withhold money from BP shareholders.
The memos detail the long-running aggression between AAR and BP.
In 2008, Mr Summers said that the then BP chief executive, Tony Hayward, negotiated a “ceasefire” with the oligarchs, but compared it to “an Israeli-Palestinian ceasefire in which Khan would play the role of [the militant Islamic group] Hamas, ready with some provocation or incident that would restart hostilities.”
Mr Hayward was replaced as chief executive of BP by Mr Dudley after the Deepwater Horizon oil leak in the Gulf of Mexico last year.
The contrast between the managerial approach of BP officials and the practices of the Russian oligarchs is marked. Mr Khan is described as having an “aggressive but relatively simple business style” that was “typically Russian, where multi-million-dollar deals are made in smoke-filled rooms in a matter of a few hours”. The memo concludes that “only later are [the deals] turned over to the accountants to see if they make sense”.
In August 2008, Mr Dudley was suspended from his post at BP’s Russian arm after a court in the country found that he had broken labour codes. A BP lawyer told US officials that the court case was a “sham” and that the “entire proceeding has been a farce”.
He said that “even his Russian legal team is surprised and ashamed by the lack of any semblance of due process”. However, the deal with TNK has proved to be one of BP’s most lucrative ventures and is now responsible for almost a quarter of the company’s entire oil output.