Russia launches probe of Uralkali chief

The "Potash War" between Russia and Belarus took an unexpected turn on Monday when Russian police launched a probe into the financial dealings of Vladislav Baumgertner, CEO of Russian fertiliser group Uralkali, in an attempt to get him extradited to Russia.

Mr Baumgertner is under house arrest in Minsk, the Belarusian capital, following the collapse of a price-fixing cartel between Uralkali and Belaruskali, the two largest world players in potash. He was arrested in Minsk when he flew in on the invitation of Belarus' prime minister in August.

In July, Uralkali pulled out of the cartel, sending the price of potash plummeting - which threatened Belarus with a payments crisis, as it relies on Belaruskali for one-quarter of export revenues.

With an eye to renegotiating the deal between Uralkali and Belaruskali, which was in effect from 2010 to 2013, Belarus' president Alexander Lukashenko has attempted to pressure Uralkali's main shareholder Suleiman Kerimov into selling his 22 per cent stake.

Some Uralkali shareholders have insisted that Mr Baumgertner be freed as a precondition of any negotiations or a sale by Mr Kerimov, said people familiar with the situation. The people added that if Mr Baumgertner were to be extradited to Moscow, it might help to end the stand-off, which could presage a sale by Mr Kerimov and an attempt to reinstate the cartel.

Analysts said it was not clear whether the Russian investigative committee intends to press charges against Mr Baumgertner - or whether the investigation is a means to get him back to Russia and offer Belarusian President Alexander Lukashenko a face saving way out of the crisis.

"This is the fastest track to get him [Baumgertner] back to Russia" argued Konstantin Yuminov, analyst at Raiffeisenbank in Moscow, who added that the Russian prosecutor's announcement was "a positive development for the company". 

Vladimir Markin, a spokesman for the Investigative Committee - Russia's version of the FBI - said the committee had launched a criminal investigation into Mr Baumgertner's conduct as CEO, as well as that of his deputy Konstantin Solodovnikov and "other figures", based on materials provided by Belarusian police on Friday. But he explained that the committee had not decided whether to charge him.

"The materials show that the above named official . . . misused his powers . . . for the benefit and profit of other figures, causing significant harm and serious consequences for Belaruskali," Mr Markin said.

Mr Kerimov is understood to be in talks with two groups over the sale - one group led by billionaire Mikhail Prokhorov interested in acquiring half of Mr Kerimov's stake, while another led by banker Vladimir Kogan interested in the whole stake.

In the stand-off with Mr Lukashenko, time is on Mr Kerimov's side, as Uralkali has more export options than Belaruskali, which labours under US and EU sanctions against Belarus. "Belarus needs the Russian channel in order to interface with the rest of the world" said a person close to Uralkali.

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