Shareholder alleges 4 bln dlr fraud at Russian oil monopoly

17th November 2010, Comments 0 comments

A minority shareholder known for blowing the whistle on corrupt business has caused a new furore by alleging a four billion dollar fraud at Russia's oil transport monopoly, media said Wednesday.

Alexei Navalny, a minority shareholder in several state companies, published what he claims is a Transneft internal report to the state auditor on the ESPO pipeline project, listing expenses and cost overruns on the project.

The 156 page long scan of the report, made in July 2008, lists all contractor expenses, project design flaws, and overbudgeting. The initial estimate was already overbudgeted by 1.5 billion rubles (50 million dollars due to "substantial mistakes and project flaws," the document said.

"We estimate that four billion dollars were stolen in course of (the ESPO project)," Navalny said in his blog, linking to the online report.

Transneft's representative Igor Demin confirmed to RIA Novosti that the company carried out a review of ESPO "at the end of 2007." "Transneft's new management initiated this review... because deadlines of ESPO construction were not met," he said.

The 12 billion dollar 2,694 kilometre long East Siberia-Pacific (ESPO) pipeline connects the oilfields of Siberia with the Far Eastern port of Kozmino.

Last December, Prime Minister Vladimir Putin pressed the button to get oil flowing from the pipeline into the first Hong Kong-bound tanker in Kozmino.

Putin called it a "New Year's present to Russia". But Navalny suggested the project stole about 1,100 rubles (35.50 dollars) "from each adult Russian citizen".

Navalny is a lawyer and longtime minority shareholders rights crusader who has written about Russia's state bank VTB, gas monopoly Gazprom and oil giant Rosneft, against which he won a lawsuit in August to force it to reveal transcripts from board meetings. His blog has about 22,000 subscribers.

While the latest allegations caused a riot on Russian blogs and were featured on the front page of respected business daily Vedomosti, Putin's spokesman Dmitry Peskov brushed off Navalny's post.

"I don't see any need to comment on bloggers' materials. There is mention of the Audit Chamber in there. If there was something (notable), we would find out everything directly from (the Audit Chamber)," he told RIA Novosti agency.

The Audit Chamber completed its review of ESPO expenditure in February, 2009. The in-depth report was not been made publicly available, but the chamber noted "infractions in meeting contract and agreement obligations".

© 2010 AFP

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