MOSCOW (Mineweb.com) – Victor Vekselberg has taken so much value out of the Siberian region of Tyumen, it’s understandable that he says he is thinking of putting something back.
According to Vekseiberg’s spokesman, Tyumen – the oil-rich region that has been home to one of Vekseiberg’s properties, the Tyumen Oil Company (TNK) – is being considered for a showing of a collection of Faberge eggs. Dozens of these jeweled ornaments were fabricated for the family of Nicholas II, the last Russian tsar, and eventually ended up in New York, the property of the Forbes family, publishers of a business magazine. Early price year, the 194-piece collection was bought by Vekselberg, after he paid a price he will not confirm, except to say that it was at the upper limit of the Sotheby auction house estimate. Ahead of the sale, the estimate was between $90 and $120 million.
Until July 25, Vekselberg is showing the eggs at the Kremlin in Moscow. After that, they will move to displays in Yekaterinburg and St. Petersburg. Then Vekselberg is considering despatching them for a showing in England Afterwards, he is planning to tour them to regional cities in Russia. Tyumen and Irkutsk lead the list, according to Vekselberg’s spokesman.
Not that Vekselberg is thinking of giving away his eggs to Tyumen, although returning $120 million to the region would be a minuscule fraction of the profit he has extracted. Nor is a temporary glimpse of his property quite the compensation Vekselberg means to offer for what others have openly called his theft of their property from Tyumen,
Take, for example, the affair of who owned the right to lift crude oil from the Kalchinskoye oil fields in Tyumen in 1998. Estimated to contain reserves of 20 million tonnes – worth $5.3 billion at today’s oil price – Kalchinskoye was licensed to joint-venture companies that in 1997 were part-owned by Ivanhoe Energy of Calgary, Canada. In 1998, Vekselberg’s TNK went to the regional court in Tyumen to revoke the Canadian rights, and take them entirely for itself. The Canadians accused TNK of violating its contracts, and stealing the oil. TNK disputed the claim, but after lawsuits were filed, the Canadian government applied pressure, and police arrived at TNK, Vekselberg and his partners offered about $30 million – the sum was kept secret, like the price of the eggs -so that Ivanhoe would drop its claims, pack up, and go home. In August 2000, if did. That might have been the end of the Kalchinskoye affair, except that the civil settlement did not eliminate TNK’s liability to criminal charges that the statute of limitations may yet allow time to file against those involved.
In the same month that Ivanhoe accepted TNK’s offer, Yugraneft, the Russian affiliate of another Canadian company, Norex Petroleum, refused to accept 30 percent of 172,000 tons of oil (now worth $46 million) which Norex had pumped to a TNK storage for safe. In January 2001 TNK gave Yugraneft and Norex an ultimatum – either take the 30-percenf offer, or risk losing, not only the oil already pumped, but the oilfields which had produced them. Six months later, using local court orders, TNK took everything. In papers filed subsequently by Norex in a US federal district court in New York, the Canadian company has accused Vekselberg, his partners, and subordinates, of fraud, bribery, extortion, use of armed force, racketeering, money laundering, and other crimes, in order to steal the oil, $40 million in cash and securities, oil production facilities, and oilfields; the total losses were estimated at more than $500 million. In a first ruling, a New York judge has rejected jurisdiction over the case, and a New York appellate court will shortly rule on whether jurisdiction should be accepted or refused. The charges in the case, including the criminal charges, have yet to be tested in court, and for Vekselberg – identified in the US court documents as holding permanent residency in the US – there remains the risk of prosecution. The trail of cash, identified by Norex in court filings, extends through dozens of international havens, remains open to prosecution for money laundering offences, and casts a shadow over the objects which that money has been spent to acquire.
Other court or government claims have been filed in New York and Washington against Vekselberg and his TNK men. In one, pursued by an investment company acting for Harvard University’s Endowment Fund, they were accused of “one of the most bizarre and brazen acts of corporate theft in recent memory.” in another case, pursued by British Petroleum, similar accusations were lodged, again relating to the theft of oilfields. In these two cases, involving the bankruptcies of Kondpetroleum and Chernogorneft court documents claim that the corruption of local government and court officials in the Tyumen region were instrumental in achieving TNK’s enrichment. Ultimately, BP settled its differences with TNK out of court, and a year ago, bought out Vekselberg and his partners for a multi-year payment of cash and shares, worth a total of $6.4 billion.
It is on account of this history that Vekselberg’s eggs require careful handling. They are controlled by him, his spokesman confirms. But legal title is vested in the “non-profit cultural historical fund Time Connexion. When the eggs move, they do so on customs documents that keep them out of the grasp of the Russian tax authorities, prosecutors, or other potential litigants. According to Vekselberg’s spokesman, this is no fly by night operation. He blames the existing Russian customs legislation, which imposes tax penalties and other restrictions on the movement of such cultural artifacts, for the precautions Vekselberg has had to take. He also says that Vekselberg has no intention of presenting the eggs to a Russian museum, although he is discussing a project for establishing a brand-new museum of private collections in Moscow, where she eggs might be shown. There is also the thought of presenting some of the lesser pieces in the collection, the non-eggs, the non-imperial items, to “regional museums which do not yet have Faberge work”
And that brings us back to the Tyumen region, where the goose got his start. Ignoring Ivanhoe and British Petroleum, which have buried the hatchet for approximately $6,380,000,000 in consideration, there is still the Norex claim for compensatory damages of $500 million, and punitive damages of $1,5 billion. They are the really golden eggs in this story. Vekselberg may succeed in driving his pursuers out of the US courts, but it is from Tyumen that the money originated. And it is in Russia, especially in Tyumen, where we shall find the goose, who lays the oil, that made the money, that Vekselberg took to pay Malcolm Forbes, who acquired the tsar’s treasure, which was also produced from wealth originating, among other places, in Tyumen. In the fantasy which Vekselberg’s Time Connexion foundation is proposing, Tyumen will be allowed a brief glimpse of the golden eggs; and the time cycle will be disconnected at the moment when the last hand on the eggs is Vekselberg’s.
This little fairy tale would be of next to no interest to South Africans, were it not that Vekselberg has been promising eggs of a different sort – nest-eggs, you might say – to black entrepreneurs willing to back Vekselberg’s plan to swap his Russian assets into South African ones. This is the scheme which Vekselberg has also proposed paying a fortune to Brian Gilbertson, the Mother Goose of fantastic mining mergers, to promote.