March 21, 2008	Friday	Rabi-ul-Awwal 12, 1429

MOSCOW, March 20: Russia’s security service said on Thursday it had arrested an employee of British Petroleum’s Russian joint venture for spying, deepening investor fears of a politically inspired campaign against the oil company.

The day after its agents raided the Moscow offices of TNK-BP, carrying away documents and computer information, the Federal Security Service (FSB) said it had arrested two brothers with the surname Zaslavsky, one of whom worked for TNK-BP.

It said the other detainee was connected to the British government’s cultural arm, which has already been the target of Russian action. Both had Russian and U.S. passports.

“According to FSB information, the people mentioned were illegally collecting classified commercial information for a number of foreign oil and gas companies to gain advantages over Russian competitors,” the FSB said in a statement.

The FSB agents swooped without warning on TNK-BP and on BP’s separate Moscow offices on Wednesday, carrying away documents and computers and questioning senior staff.

Conflicting reasons were given for the raids by the authorities.

The BP’s London head office declined to comment. A TNK-BP staff directory from last year lists an Ilya Zaslavsky as working in the company’s gas section as a commercial consultant.

The British Council’s Alumni Club, which groups Russian alumni of British educational programmes, includes an Ilya Zaslavsky and his brother Alexander, a club member said.

“This is about the two Zaslavsky brothers. They are not and have never been employed by the British Council,” a London-based spokeswoman for the British Council said.

FOREIGN INVESTORS: Confidence is low in Russia’s ability to protect foreign investors in the oil and gas sector following high-pressure official campaigns in the past years which have forced Shell and BP to sell key assets to Kremlin-controlled players.

British companies are particularly vulnerable to political pressure because of current very poor relations between London and Moscow.

A row over Russia’s refusal to extradite an ex-KGB agent suspected of murdering a vocal Kremlin critic in London has led to diplomats being expelled from both countries and two regional British Council offices in Russia being shut down.

The TNK-BP is Britain’s biggest foreign investment in Russia and made net profits of $6.6 billion in 2006, potentially making it a large and very lucrative target for Kremlin hardliners.

A presidential spokesman declined comment on the action against TNK-BP, saying it was a police matter. “We should not politicise the work of law enforcement bodies,” he added.

TNK-BP managers had long feared Kremlin pressure on the company after widespread market talk that the Russian oligarch co-owners had rejected initial government offers to sell out.

Wednesday’s raid by agents from the FSB, the main successor to the Soviet KGB, and the interior ministry, recalled similar actions against the YUKOS oil company in 2003, the start of a campaign which ultimately led to its destruction.

Managers told foreign BP employees not to come in to work on Thursday because further visits from the security services and police were expected.

Some TNK-BP employees were sitting in a cafe near the company’s central Moscow headquarters at lunchtime awaiting word on when they could resume work because their office network was down following the raids.

Most Russian newspapers saw a political motive in the action against the company, half of which is controlled by a group of Russian oligarchs who have resisted for some time official pressure to sell their lucrative stakes to the Kremlin.

The oligarchs, including Viktor Vekselberg, Mikhail Friedman and Len Blavatnik, issued a rare joint statement on Feb 6 saying they did not want to sell. Vekselberg is also head of TNK-BP’s gas division where Ilya Zaslavsky worked.

“The hardliners have come for the Russian half of TNK-BP,” commented Vremya Novostei daily.

“It looks like an attempt to start the process of passing the asset to one of the state holding companies before the presidential inauguration of Dmitry Medvedev.”

Medvedev, formerly a first deputy prime minister and the chairman of state gas giant Gazprom, is due to take over from President Vladimir Putin in May.

The FSB is controlled by Nikolai Patrushev, a key member of a hardline faction of top Russian officials which also includes Igor Sechin, the Kremlin deputy chief of staff and chairman of state oil giant Rosneft.

—Reuters