The initial sum is relatively modest but it gradually grows as the tax service uncovers more and more alleged arrears. That is what happened to Yukos, landing its chairman Mikhail Khodorkovskii on trial and burying his company under $27 billion of tax debt.
Now, TNK-BP, a Russian-British joint venture that is currently Russia’s No. 2 oil producer is being hit with similar claims. For now, the tax bill is much lower than it was for Yukos -- but the sums being demanded have been growing exponentially in recent weeks, raising concerns among investors.
TNK-BP initially received a revised tax bill for 2001 amounting to 4 billion rubles ($144 million). This week, the company announced the tax authorities are now demanding an extra 22 billion rubles ($791 million), bringing the firm’s total tax liability to nearly $1 billion. And that is just for the year 2001. Russia’s Federal Tax Service says it cannot exclude the possibility that arrears for the following years will also be found.
All this happened just days after Russian President Vladimir Putin flew to Hannover, Germany, where he tried to boost foreign investor confidence. Putin reiterated on 10 April that his government will limit prosecutors’ ability to review privatizations and that the Kremlin does not intend to interfere with business.
"Any allegations that Russia is preparing to revise the privatization results are groundless. On the contrary, we are currently considering reducing the statute of limitations on privatization deals from 10 to three years to stabilize ownership relations and not to allow any possibility of redistribution [of property]," Putin said.
How should investors interpret this apparent mixed message? Dmitrii Loukashov, an oil analyst at Aton Capital, a Moscow-based brokerage house, believes there is no cause to worry at this time that another Yukos-style affair is in the making. Not all recent tax claims in Russia, he notes, have ended in victory for the tax authorities.
"[People] probably forgot that there have been other outcomes in modern Russia -- different outcomes than in the Yukos case. As an example, everyone should remember the Vimpelcom charges, which amounted to $1 billion as well and were reduced to meaningless figures," Loukashov said.
Indeed, to back Loukashov’s point, there was news today that a subsidiary of Japan Tobacco in Russia has won a court victory against the tax authorities for an arrears bill amounting to $79 million.
But on the other hand, many foreign business leaders say the timing of the claims against TNK-BP is too coincidental for comfort.
John Bamford heads the International Business Management and Computer Consultancy, which matches British investors with investment opportunities in Russia. He notes that the announcement about the TNK-BP tax claims came in the middle of the Russian Business Forum in London. The forum is the leading annual gathering of politicians and entrepreneurs from both countries.
Bamford told RFE/RL many participants at the forum could not help but think politics -- as in the Yukos affair -- may be playing a role. “It’s quite extraordinary that this particular thing should come up exactly to make the headlines in the newspapers for discussion at the forum," he said. "Somebody’s trying to make a point, I think, and I don’t necessarily think it’s the tax collectors. I think that the timing is probably a little more than just a nice innocent tax collector saying, ‘We’ve found this gap.’”
Bamford also says the fact that the tax authorities are looking into arrears from the year 2001 also contradicts Putin’s statement on 10 April that a three-year statute of limitations would be imposed on such investigations:
"There was supposedly this line drawn under past taxes, which has been brought back from 10 years to three years, and one wasn’t expecting this one -- which is to 2001, which is rather more than three years," Bamford said.
It all adds up to some worried investors. Back in 2003, when the TNK-BP merger took place, the deal was one of the largest by a Western company in postcommunist Russia and seen as proof of the forward momentum of economic reforms. If the company is now under attack, investors fear the business climate in Russia could turn sour.
Back in Moscow, Dmitrii Loukashov says the worst-case scenario, which remains impossible to verify, is that members of President Putin’s own administration are trying to undermine him -- using the tax service. The implications, he says, are too grim to contemplate -- especially if one sees Putin as a guarantor of economic stability.
"What I’m afraid of is that these charges were not authorized by the president and the president’s office, which could mean that the president is losing his grip," Loukashov said.
For his part, the British head of TNK-BP, Robert Dudley, said yesterday that he does not believe his company will find itself in a “Yukos situation.” But he added that state authorities in Russia were gradually reasserting their influence over the economy -- something he said should be a cause for concern.