Identifier
Created
Classification
Origin
06BRATISLAVA816
2006-10-06 14:46:00
CONFIDENTIAL
Embassy Bratislava
Cable title:  

SLOVAKIA PURSUES TRANSPETROL THROUGH MURKY LEGAL

Tags:  ENGR ECON EPET PREL PGOV LO RS 
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RUEHTA/AMEMBASSY ALMATY PRIORITY 0043
RUEHKV/AMEMBASSY KIEV PRIORITY 1533
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RUEHWR/AMEMBASSY WARSAW PRIORITY 3335
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
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C O N F I D E N T I A L SECTION 01 OF 02 BRATISLAVA 000816 

SIPDIS

SIPDIS

E.O. 12958: DECL: 10/06/2016
TAGS: ENGR ECON EPET PREL PGOV LO RS
SUBJECT: SLOVAKIA PURSUES TRANSPETROL THROUGH MURKY LEGAL
WATERS

REF: BRATISLAVA 720 AND PREVIOUS

Classified By: Ambassador Rodolphe M. Vallee for reasons 1.4 b) and d)

C O N F I D E N T I A L SECTION 01 OF 02 BRATISLAVA 000816

SIPDIS

SIPDIS

E.O. 12958: DECL: 10/06/2016
TAGS: ENGR ECON EPET PREL PGOV LO RS
SUBJECT: SLOVAKIA PURSUES TRANSPETROL THROUGH MURKY LEGAL
WATERS

REF: BRATISLAVA 720 AND PREVIOUS

Classified By: Ambassador Rodolphe M. Vallee for reasons 1.4 b) and d)


1. (C) Summary - Slovakia's efforts to repurchase the 49
percent stake in Transpetrol have been hampered by legal
uncertainties surrounding ownership and the right to sell the
shares. Economy Minister Jahnatek has repeatedly tried to
meet with Eduard Rebgun, the Yukos Oil receiver who was
nominally given the reigns of Yukos Finance in August and has
subsequently tried to gain full control of both Yukos Dutch
entities. A September 21 Dutch court decision cast doubt on
Rebgun's legitimacy to control Yukos Finance, thereby
creating an opening for the GOS to pursue other strategies.
The Transpetrol deal is being closely watched throughout the
region, especially by Russian interests who believe
Gazpromneft offers the best possibilities for future
development of the pipeline. End Summary.

GOS STICKS TO STRATEGY AND BUILDS SUPPORT
--------------


2. (SBU) Minister of Economy Lubomir Jahnatek is continuing
to pursue the strategy outlined in Reftel for buying back the
shares of Transpetrol from Yukos Finance (YF),which is
disputably controlled by Yukos Oil Receiver Eduard Rebgun,
and Yukos International (YI, which remains in the hands of
the American management team including Steve Theede, David
Godfrey and Bruce Misamore). Rebgun has so far put off
Jahnatek's requests for a meeting while he works to secure
his control of YF. In the meantime Jahnatek continues to
argue publicly and privately that a government repurchase of
the shares is the only acceptable option for the GOS.
Jahnatek received the public support of EU Energy
Commissioner Andris Pielbalgs for the Slovak buyback after
meetings in both Brussels and Bratislava in mid-September.
In a Commission press release, Pielbalgs expressed his
support for the Slovak Government's efforts including the
objective of ensuring third party access to oil
infrastructure within Slovakia.


RUSSIAN STRUGGLES TO GAIN CONTROL OF YUKOS FINANCE
-------------- --------------


3. (SBU) Rebgun followed up the August 11 Dutch court
decision, which gave him voting rights on the shares of Yukos
Finance, with several measures to solidify his control of the
Netherlands-based company that is also the parent of YI.
After dismissing directors David Godfrey and Bruce Misamore,
Rebgun named his associate, Sergey Shmelkov, as Director. On
August 15 Rebgun sent a letter to NautaDutilh, the Dutch law
firm that represents YI and YF under Godfrey and Misamore,
requesting that all files pertaining to Yukos Oil to be
transferred to the Rebgun-friendly Simmons & Simmons law firm
and that NautaDutilh discontinue all work related to Yukos
Oil.


4. (SBU) Rebgun brought a case against NautaDutilh in an
Amsterdam court when the law firm refused to comply with
earlier requests. NautaDutilh argued that Rebgun's position
was untenable because the bankruptcy proceedings in Russia
are a sham. In a September 21 decision, the Amsterdam court
rejected Rebgun's claims, noting that there are no grounds to
forbid Misamore and Godfrey "to take the position (at law or
otherwise) that they are still the lawful directors of Yukos
Finance B.V. and to be represented by the lawyers of their
choice." As a result of this decision, neither Rebgun and
Shmelkov, nor Misamore and Godfrey, can take the position
that they validly represent YF at this time.


5. (C) On September 25, Rebgun sent a letter on behalf of YF
to the Transpetrol Board of Directors requesting the board to
convene an extraordinary general meeting to change the
members of the board representing YF. According to the
shareholders agreement, YF appoints three of the five members
of the Transpetrol board, and the GOS appoints the other two.
(Note: Only one of the five board members currently has
clear ties to any of the interested parties. The two GOS
board members were appointed by the previous government and
are loyal to the Hungarian Party, SMK. MOE officials have
told us that they have not had any contact with the
"government's representative," and had no idea how they will
vote. The GOS would also like to fill their slots with

BRATISLAVA 00000816 002 OF 002


directors loyal to the current government. One of the three
YF-appointed board members, Jan Kridla, remains loyal to
Godfrey and Misamore, but the other two, who also have close
ties to Hungarian interests, are seen as acting somewhat
independently. End Note.)


6. (SBU) In response to Rebgun's request for a shareholders
meeting to change the members of the Board, NautaDutilh and
Greenberg Traurig, which represents the Yukos Oil creditor
Moravel Investment Ltd., sent separate legal opinions to the
Transpetrol Board. Both opinions argue that the September 21
court decision casts doubt on Rebgun's claim that he
represents YF and ask the board to deny his request to seek a
general meeting to appoint new board members. Greenberg
Traurig further argues that YF lacks authority to enter into
negotiations concerning Transpetrol with third parties. This
claim is based on the irrevocable power of attorney granted
by YF to YI in April 2005 to effectuate the legal transfer of
the Transpetrol shares from YF to YI.


7. (SBU) On October 5 the Transpetrol board of directors
voted unanimously to postpone a call for a general meeting
due to the uncertainty surrounding the control of YF. The
board noted that they had received contradictory legal
opinions (from Rebgun and the two law firms) and requested
Transpetrol to solicit an independent legal analysis of the
situation.

DEAL CLOSELY WATCHED AROUND THE REGION
--------------


8. (C) Despite Minister Jahnatek's repeated statements that
Slovakia will veto the sale of the Transpetrol shares to any
third party, several countries continue to pursue a deal for
the 49 percent stake. Not surprisingly the most interested
party is Russia. Ambassador discussed energy security in the
region with the Russian Ambassador to Slovakia, Alexander
Udaltsov, on October 4th, noting the transparency and open
access improvements with Slovak ownership as well as
improvement in the upgrade timeline, which could benefit
Russian interests. Udaltsov was very well informed about
Transpetrol shares and the GOS attempts to buy them back from
Yukos. He noted that Gazpromneft remains interested in
purchasing the shares and would be willing to cede management
control of Transpetrol to the Slovaks, which has been one of
Jahnatek's primary objectives. Udaltsov insisted that
Gazpromneft is the best option for development of the
pipeline as it has both the financial resources and technical
know-how. Udaltsov noted that "not everyone in the
government supports the buyback option." Jahnatek is
scheduled to travel with Slovak President Gasparovic on his
November 7 trip to Moscow, and energy security and the
Transpetrol pipeline will be at the top of the bilateral
agenda.


9. (C) In an October 4 courtesy call on the Ambassador,
Kazakh Ambassador to Slovakia Sharip Omarov outlined the
GOK's interest in regional energy issues, especially the
related to Odessa/Brody/Plock. Omarov noted that Kazakh
president Nazarbayev is planning a visit to Slovakia on
November 19 and 20th, and that energy would be one of the
main topics for discussion, including the
Odessa/Brody/Bratislava option for Kazakh crude.

COMMENT
--------------


10. (C) By casting doubt on Rebgun's legitimacy to act on
behalf of Yukos Finance, the September 21 Dutch court
decision has reopened the possibilities available to Minister
Jahnatek. He will continue to push for a meeting with Rebgun
to effectuate a sale by YF. With Slovak veto authority over
any sale of the shares lapsing in April 2007, the GOS does
not have the luxury of waiting for the various legal issues
to come to a final resolution. Unless Rebgun changes tact
and begins negotiations in the coming weeks, Jahnatek will
likely pursue other options. He would urge the current
Transpetrol Board to approve the transfer of shares from YF
to YI. A second option would be to negotiate a sale directly
with YI based on the power of attorney granted to YI in 2005.
Neither option is without risk, but may be the only ways for
Slovakia to regain control of the company. End Comment.
VALLEE