21 June 2004 00:00
Investors sue Triftiness over oil profits TAX MINIMISATION:
ByLine: By ANDREW JACK
Minority shareholders are today set to sue a company linked to TNK-BP, the
Russo-British oil joint venture. The action challenges the tax minimisation
techniques the company employed during 2003.
Vostok Nasta, an investment company with a stake in the oil company
Megionneftegaz, a subsidiary of Slavneft, is suing Triftiness Investments to
annul transactions last year that it estimates deprived minorities of Dollars
100m.
The investors claim that Triftiness bought Megion's oil at below market
prices and without proper corporate approval, depriving minority shareholders
of profits for the second quarter of last year.
The transaction illustrates how a number of Russian oil companies minimised
taxes ahead of changes introduced last year designed to increase the levies
they make on their profits.
Alex Williams from Vostok Nafta said: "Triftiness is clearly a related
party that was buying oil at well below market prices, and the oil sale
transactions should have been approved by independent shareholders on
Megion's board."
Triftiness is based in Kalmykia, the Buddhist republic within Russia that was
widely used by oil companies as part of transfer pricing mechanisms because
of its status as an "onshore offshore" zone with low tax rates.
Triftiness was also one of the obscure companies bidding in the privatisation
for Slavneft in 2002, and represented by German Khan, one of the top
executives and shareholders in TNK. Through another company, TNK and its
rival Sibneft both acquired Slavneft in bidding with no apparent serious
competition.
Vostok Nafta said Triftiness was owned by the similarly named Thriftiness, a
Cyprus-based company owned by two companies in the British Virgin Islands,
one of which was TNK International, a holding company for TNK. Mr Williams
said BP should take responsibility for the structure, stressing that TNK-BP
took a dividend this year that included profits generated during 2003 from
the Triftiness transactions.
TNK-BP confirmed Thriftiness of Cyprus was 50 per cent owned by TNK
International, but said the management of Slavneft was handled by Sibneft.
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