Pipeline deal haunts ministry

CONTROVERSY continues to dog former Economy Minister Pavol Rusko, who was dismissed from office in August for alleged conflicts of interest.
Finance Minister and acting Economy Minister Ivan Mikloš announced September 23 that he would sue Rusko for what he calls an abuse of power.

Ivan Mikloš, left, and Pavol Rusko pictured in more conciliatory times.
photo: TASR

CONTROVERSY continues to dog former Economy Minister Pavol Rusko, who was dismissed from office in August for alleged conflicts of interest.

Finance Minister and acting Economy Minister Ivan Mikloš announced September 23 that he would sue Rusko for what he calls an abuse of power.

Mikloš said Rusko behaved suspiciously when he tried to buy back the state's 49-percent stake in Slovak pipeline operator Transpetrol from the troubled Russian oil colossus Yukos, which is currently under the control of the Russian government.

According to Mikloš, although the Economy Ministry stopped official talks with Yukos over the shares in February 2005, Pavol Rusko secretly continued the talks. Mikloš says that even the former minister's closest colleagues were left in the dark.

Mikloš told the press that Rusko continued to send letters to the Russian company using Economy Ministry letterhead and signing his name.

"The problem is that the Economy Ministry has no official records on letters sent by Rusko after February 26, but Yukos has sent the letters it received to the current leadership," Mikloš explained.

In one of the three letters that Rusko addressed to Yukos after February 26, he asked Yukos to transfer Transpetrol shares to ENEX Utilities Ltd. Bratislava, Mikloš said. It is not clear why Rusko suggested such a move.

After Yukos' founders, oil tycoons Mikhail Khodorkovsky and Platon Lebedev, were arrested in 2003 for tax evasion, Russian authorities have kept the company under state control. Since 2005, Khodorkovsky and Lebedev have been serving prison sentences.

"Rusko made it clear in November 2004 that Slovakia might want its Transpetrol shares back from Yukos," Rusko's advisor, Maroš Havran, told The Slovak Spectator. The Economy Ministry sold its 49-percent stake to Yukos just two and half years previously. It still owns 51 percent of the former state-owned pipeline company.

With the Russian government moving in, Yukos asked the Slovak Economy Ministry to take a stand on the future of Yukos' Transpetrol package. Rusko stated that Slovakia would do everything possible to regain the Transpetrol package - in other words, to buy it back from Yukos.

The SME daily reported that Rusko planned to meet with Yukos Chief Financial Officer Bruce Misamore on April 21. The meeting did not take place, however.

Ex-minister Rusko claims that all the steps he made in connection with the buyback were done as a minister and not as a private person.

According to Havran, there was a threat that the Transpetrol shares could have slipped into the hands of a third party that would not have served the strategic interests of the country. "Rusko decided to solve the problem in a discreet way, since he realized that Slovakia's efforts to buy back the shares from Yukos could be thwarted by competition," Havran explained.

"As of February, I was discreet in negotiating the buyback, as our attempts to this end were being blocked by major energy players," Rusko said in a press release, indicating that MOL, Hungary's major oil and gas player, had an interest in the stake. MOL is Yukos' biggest customer in the region.

ENEX, the company to which Rusko envisioned Yukos transferring the Transpetrol shares, would only act as a consultancy, according to Rusko. It would not be allowed to trade in Transpetrol shares. Rusko added that the purchase price of the 49-percent stake would have been close to Sk74 million (€1.9 million) - similar to what Yukos paid two and a half years ago.

Reportedly Yukos and ENEX signed an agreement in which the Transpetrol shares would be returned to Yukos if the oil giant did not receive the purchase price within 30 days.

"If Yukos would have accepted our offer the shares would have been at home and we could have decided whether to keep them or return them," he added.

Rusko said that Mikloš' reasons for filing a criminal charge built on sand and he would sue the minister for libel.

Transpetrol has offered very little comment.

"The repurchasing of Yukos' 49-percent share of Transpetrol by the Slovak government is a matter of agreement between the two shareholders. The leadership of Transpetrol does not consider comments over the issue appropriate," Transpetrol General Director Štefan Czucz told The Slovak Spectator earlier this year.

In October 2003, after the parliament passed legislation allowing the state to sell its majority stake in strategic companies, Rusko suggested that the Ministry planned to keep its 51-percent stake in Transpetrol.

Assuming Slovakia regained Yukos' shares, Rusko last November said the best thing to do would be to sell them directly to a new investor without announcing a new tender.

Analysts have been concerned all along that Transpetrol shares could end up in the wrong hands, turning the shares into a tool for economic blackmail.

Yukos took control of the 49-percent stake April 29, 2002, having secured the tender in December 2001 after competing with Slovak oil refinery Slovnaft. Yukos had hoped to use the stake to gain access to western and southern European markets, as well as initiate a pipeline sea route to North America.

The Slovak pipeline network enjoys an advantageous position in the European crude petroleum market, giving Transpetrol leveraging power. The network consists of two routes - the Druzhba and Adria pipelines.

Druzhba was built on Slovak territory between 1960 and 1961. Its route starts in the Russian Federation and continues to the Czech Republic through Belarus, Ukraine, and Slovakia.

Druzhba's overall length in Slovak territory reaches 507 kilometres; beyond Slovakia's borders it stretches a further 2,280 kilometres. The throughput capacity of Slovakia's section is 21 million tonnes of crude petroleum per year.

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