Putin to pardon jailed tycoon Khodorkovsky

Thu, Dec 19 17:14 PM EST PHOTO: Mikhail Khodorkovsky (L) meets former German FM Hans-Dietrich Genscher (R) at Schoenefeld airport in Berlin. Ex-oil tycoon has issued a statement saying that he asked President Putin for a pardon for “family reasons” and is glad “there has been a positive decision.” He added that now he is going to spend time with his parents, wife and children and is “waiting to meet them.” FULL STORY: http://on.rt.com/7pue4v (Photo from khodorkovsky.ru) By Alexei Anishchuk and Timothy Heritage MOSCOW (Reuters) - President Vladimir Putin is to pardon one of his best known opponents, oil tycoon Mikhail Khodorkovsky, after a decade in jail in what may be a gesture to critics of his human rights record before Russia hosts the Winter Olympics. Putin made the surprise announcement that he would soon free Khodorkovsky, once Russia's richest man, after a marathon news conference on Thursday in which he exuded confidence that he has reasserted his authority in the face of street protests. He said two members of the Pussy Riot protest group would also be freed, but it was the about-turn on Khodorkovsky, who was due for release next August, that grabbed most attention, lifting Moscow share prices on hopes it may mean investors have less cause to fear falling foul of Kremlin politics. Khodorkovsky, 50, fell out spectacularly with Putin a decade ago. His company, Yukos, was broken up and sold off, mainly into state hands, following his arrest at gunpoint on an airport runway in Siberia on fraud and tax evasion charges in 2003. He became a symbol of what investors say is the Kremlin's abuse of the courts for political ends. The Kremlin denies this but Putin has singled Khodorkovsky out for bitter personal attacks and ignored many calls for his release. On Thursday, however, he said: "He has been in jail already more than 10 years. This is a serious punishment." Saying Khodorkovsky's mother was ill and that he had asked for clemency, he added: "I decided that with these circumstances in mind ... a decree pardoning him will be signed." Russian shares rose over 1 percent on the news, though later settled back by the end of the day. A sustained rally would require "a consistent track record of implementation of market-friendly reforms - in particular, of steps to improve the judicial system, so that decisions are more predictable and property rights better protected," a Moscow-based economist at an investment bank said. Lawyers for Khodorkovsky initially said he had not sought clemency but his representatives later said they were trying to reach him in prison near the Arctic Circle to clarify matters. An early release had not been expected and there had even been speculation that new charges might be brought against him, as they were before his sentence was extended in 2010 after a second trial for theft and money-laundering. Khodorkovsky began dabbling in small business as a Moscow student Communist leader under Mikhail Gorbachev's perestroika reforms of the late 1980s. Still in his 30s, he emerged from the cut-throat chaos of the Soviet collapse as one of the wealthiest "oligarchs" under Putin's predecessor Boris Yeltsin. His fall from grace after criticizing Putin, a former KGB officer, has long been held up by foreign investors as evidence of the weakness of property rights and the rule of law in Russia. "A THIEF SHOULD SIT IN JAIL" Supporters say Khodorkovsky was sentenced in 2005 to curb a political challenge, bring his oil assets under state control and warn other oligarchs not to cross Putin. Amnesty International, which campaigned for dissidents in Soviet times, declared Khodorkovsky a "prisoner of conscience". In the eyes of critics at home and abroad, Khodorkovsky's jailing is a significant stain on the record of Putin, who was first elected president in 2000 and has not ruled out seeking another six-year term in 2018. In televised comments three years ago, Putin aggressively defended his imprisonment, spitting out a line uttered by a tough detective in a Soviet film: "A thief must be in jail". Noting the 150 years given to American fraudster Bernard Madoff, he quipped: "I think we are a lot more liberal." Putin also suggested Khodorkovsky had blood on his hands, referring to a murder conviction against a former senior Yukos employee and saying of alleged victims that "they found only their brains in a garage". Khodorkovsky is believed to have angered Putin by funding opposition parties, questioning state decisions on oil pipeline policy, raising corruption allegations and presenting himself as an embattled champion of good corporate governance. Khodorkovsky's mother, Marina, who will turn 80 next year and has had cancer, was unaware of any request for a pardon. But she told Reuters by telephone: "I want to believe he will pardon him ... I want to believe Putin is not totally lost." Putin's spokesman, Dmitry Peskov, said a plea for a pardon meant Khodorkovsky had admitted guilt. His lawyers say convicts seeking a presidential pardon are not automatically required to admit any wrongdoing. In comments published in the New York Times late last month, Khodorkovsky said his mother was facing cancer for a second time after many years of remission and that they might never see each other again outside of a prison. "Putin is Putin, war is war, but one's mother is dearer than anything," Dmitry Gololobov, a former Yukos legal head who lives in Britain, told Reuters by telephone. He said Khodorkovsky might have sought a pardon without telling his lawyers. Khodorkovsky's son, Pavel, called it "very happy news" and said he was waiting to talk to his father to hear more. Russian business leaders and foreign investors welcomed the pardon. "This is good news for investors," said German Gref, CEO of state-controlled Sberbank, Russia's biggest bank. Gref served as economy minister under Putin for many years. Business magnate Mikhail Prokhorov said: "Something has happened that should have happened several years ago." POLITICAL CHALLENGE? Analysts had said Putin would only allow Khodorkovsky to walk free if he no longer regarded him as a political threat. The former businessman has announced no political plans. Gololobov said Putin had nothing to lose by letting Khodorkovsky out a few months early and that the show of mercy would make it harder for Khodorkovsky to criticize Putin. "Will he walk up to a podium and say: 'Putin's a swine'?" Gololobov said. "Such direct battle would be awkward." Lawyers said Platon Lebedev, a business associate who was tried alongside Khodorkovsky and is due for release in May, would not ask Putin for a pardon. Freeing Khodorkovsky and the two women from Pussy Riot, jailed over a protest against Putin in a Russian Orthodox Church but now covered by a broader amnesty, could ease criticism of the president before the Olympics in February. Putin has staked a great deal of personal prestige on the Winter Games in Sochi, and is under fire abroad over a law banning the spread of "gay propaganda" among minors. A government source said the pardons would deprive Western critics of a cause: "I think the decision to free Pussy Riot and Khodorkovsky was taken just before the Olympic Games so that they will not be able to wield this banner against Putin." On a website supporting Khodorkovsky, a man named Igor commented: "It was simply beneficial for Putin to make a show of 'mercy' before the Olympics in order to avoid a huge world scandal." Boris Nemtsov, an opposition leader, said Putin's motives were unclear: "Maybe the Olympics," he said. "It doesn't matter. The important thing is that this is wonderful and absolutely unexpected news." Thirty people, mostly foreigners, jailed over a seaborne Greenpeace protest in September against Russian Arctic oil drilling are also expected to avoid trial under the amnesty approved by parliament this week, though Putin said the measure was not drawn up with Pussy Riot or Greenpeace in mind. (Additional reporting by Steve Gutterman, maria Tsvetkova, Katya Golubkova, Alissa de Carbonnel, Lidia Kelly, Vladimir Soldatkin and Maya Nikolaeva in Moscow; Writing by Timothy Heritage; Editing by Elizabeth Piper, Alastair Macdonald and Will Waterman)

BP, Rosneft set up $25 billion-plus TNK-BP deal

BP, Rosneft set up $25 billion-plus TNK-BP deal Mon, Oct 22 02:48 AM EDT By Andrew Callus and Alexei Anishchuk LONDON/MOSCOW (Reuters) - Rosneft and BP are preparing to announce a deal worth over $25 billion that could give the British oil company a stake of between 16 and 20 percent in the state-controlled Russian energy firm, sources familiar with the situation said. The agreement, which has yet to be finalised but which could be made public on Monday or Tuesday, folds BP's half of TNK-BP, Russia's third-largest oil company, into Rosneft, in exchange for cash and Rosneft stock. It allows BP to end a stormy relationship with its partners in the venture, AAR, and to pursue closer ties to a Russian government that exerts a much tighter hold on the oil industry than in it did in the 1990s when BP first invested there. TNK-BP is highly profitable and provides a quarter of BP's total production, but its fields are mature, and the Soviet-born business tycoons who own the other half through AAR were in the way of BP's search for growth in oil-rich Russia through closer ties with Rosneft and its powerful boss. Should the deal be finalised and survive a months-long Russian government approval process, BP's overall exposure to Russian barrels would be lower, but the holding could secure it seats on the Rosneft board and closer ties than any of its rivals to Igor Sechin, the chief executive of Rosneft, who has a significant say in energy policy. In a statement on Monday confirming the offer from Rosneft for the first time, BP said "no agreement has yet been reached." Rosneft is already the top producing company in Russia. If, as looks likely, it buys out AAR's half of TNK-BP as well, it will control approaching half the country's output and be pumping more oil and gas than Exxon Mobil, the world's top international oil company. The deal gives Rosneft extra output and cash flow to finance exploration of Russia's vast reserves to replace ageing and depleting fields. It keeps BP's expertise in Russia and provides the "quality" private shareholder President Vladimir Putin has been looking for to show his critics he is pursuing a privatization program. SOURCING THE STOCK The deal can be described as having two steps for a single transaction worth in excess of $25 billion, according to one source familiar with a proposal that was put to BP by Rosneft last week. Under step one, BP will receive a 13.4 percent holding of Rosneft's shares that belongs at present to Rosneft in the form of so-called "treasury stock", and which is nominally worth about $10 billion based on a tiny free-float of Rosneft shares that put the value of the company at around $73.5 billion. It will also receive an amount of cash. Under step two, BP will use some of that cash to buy more Rosneft stock, as it promised to do at a recent meeting between Sechin and BP's chief executive Bob Dudley. That would most likely to be sourced from the 75.2 percent holding of Rosneftegaz OAO, a state energy holding company which is also headed by Sechin. The price and amount of shares was still being hammered out, but based on a total deal value of $25 billion, a Rosneft stake of 16-20 percent would be worth about $12-$15 billion, leaving $10-$13 billion in cash, some of which shareholders hope will be returned to them. "There's still stuff going on so it's best not to get too specific," said the source, speaking at the weekend. Those shareholders have seen little capital growth in recent years while rivals have benefited from strong oil prices. This has been mainly due to the 2010 U.S. Gulf oil spill, but the increasingly bitter wrangles with AAR have played their part too. PUTIN'S PROGRESS Putin has been regaining state control of assets that passed cheaply to a small group of businessmen when privatised in a hurry in the 1990s. Rosneft's absorption of another oil firm, Yukos, and the imprisonment of its former owner Mikhail Khodorkovsky, in the mid-2000s was the biggest step in this process until now. That was also masterminded by Sechin, who was deputy chief of staff at the Kremlin - Putin's gatekeeper - at the time. Sechin was in London last week to help push through the deal with BP, whose CEO Dudley is himself a veteran of BP's Russian activities. If Sechin also buys out AAR tycoons Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik, his combined Rosneft-TNK-BP would produce well over 4 million barrels of oil and gas a day, although bankers said finding more than a total of 20 billion in cash could be a stretch for the group. On the financing side, about $15 billion could be met by a loan Rosneft has been negotiating with international banks. It could get another $3 billion from Russian banks. Sources have also said that the AAR side of the deal could involve deferred payments over a number of years, and the TNK-BP business itself could be leveraged up. It has strong cashflow and little debt, allowing the partners to rake off $4 billion a year in dividends in recent times. Bankers told ThomsonReutersLPC a total of 10 banks have already joined the deal and the loan could be concluded in three to four weeks. Rosneft has declined to comment. (Additional reporting by Douglas Busvine, Melissa Akin, and Vladimir Soldatkin in Moscow and Sophie Sassard in London, Editing by Rosalind Russell) ===================