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*Friday, July 13, 2001 – Print Edition, Page A10*
**But Chretien tells businessman who lost company to armed men to rely on courts**
*The Globe and Mail*
*GEOFFREY YORK*
MOSCOW - Prime Minister Jean Chretien says he cannot interfere in the armed takeover of the biggest Canadian-owned oil company in Russia because it is a matter for the courts.
The company, Yugraneft, was seized by heavily armed men sent from a giant Russian oil corporation last month. The Canadian embassy in Moscow has called it "an illegal confiscation of assets" based on a fraudulent shareholders' meeting.
Mr.Chretien says he will raise the issue with Russian President Vladimir Putin during a scheduled 90-minute lunch in the Kremlin today. But he said there is little he can do about the seizure of the company, which has about $65-million (U.S.) in annual revenue from production of about 10,000 barrels of oil a day.
"I will mention it to the government, but most probably the government will reply to us that 'we have courts here too,' " Mr. Chretien told reporters in Moscow yesterday after he arrived for a three-day visit.
"In Canada, if a businessman from the United States comes to Canada and he has a conflict in a minority-majority position, he has to refer this case not to the government but to the courts."
The Canadian investor in Yugraneft said the Prime Minister seems to have misunderstood the case. "This is nothing to do with the courts," said Alex Rotzang, chairman of Norex Petroleum Ltd., the Calgary-based company that says it owns 98 per cent of Yugraneft.
"It's robbery," he said. "An armed gang came and took over my company. I'm not complaining about the courts; I'm complaining about a gangland-style takeover."
Canadian investors should be careful to get good advice and write proper contracts if they want to do business in Russia, the Prime Minister advised.
"It's not up the government to come two years later to rectify the situation. We cannot. We can raise the problem with the government, and I don't know what they will do. I know that in Canada I cannot interfere with the courts. This I cannot do. I'm not a Russian; I don't live here, and I'm not a lawyer here."
Pressed further by journalists, Mr. Chretien said the case is similar to a dispute between Canada and the United States over their justice systems. "Are you satisfied with the American system of courts? They elect judges there. I don't like it. We have a better system, I think. But the Americans must think they have a very good system."
Norex was dealt another blow this week when a local politician in western Siberia, where Yugraneft is based, ordered that corporate control of the company be transferred to Tyumen Oil Co., the Russian corporation that deployed dozens of armed men to seize Yugraneft.
This will give Tyumen access to Yugraneft's bank accounts, which contain about $30-million (U.S.), and allow the newly installed managers to go ahead with plans to sell oil to Tyumen at one-third of the market price, Mr. Rotzang said.
He estimates that it would take two years for him to regain control of Yugraneft through the courts, with all the appeals included.
"But in three months they will strip our company bare and leave us only the bones," he said. "If someone throws you onto the street, how can you fight it in court when you're homeless? That's the tragedy."
Mr.Chretien should press the Kremlin to restore the Canadian-appointed managers and give back control of the company to Norex, he said. "I only hope that the Prime Minister is properly briefed. In his long political career, he's probably never seen a case like this, a case where people change the managers with machine guns."
Norex says that Tyumen is the owner of only 2 per cent of Yugraneft. It has taken legal action against Tyumen to recover payments for oil deliveries in the early 1990s that it says were never paid for. Tyumen, which says it owns 40 per cent of Yugraneft, persuaded a judge to freeze Norex's voting rights and allow a shareholders meeting where Tyumen took control of Yugraneft.
A senior Canadian official said the Yugraneft case is another example of the poor reputation that Russia has developed among foreign investors. "We can say that the image created by the treatment of foreign investors here is pretty bad," the official told a briefing for journalists last night. "There's a serious problem here in terms of the perception that's created."
Mr.Putin will probably escape any tough questions about the Yugraneft controversy today. He was originally scheduled to meet Canadian reporters at a press conference after his lunch with Mr. Chretien, but the Kremlin announced that it had cancelled the meeting because the session between the two leaders is an "unofficial working lunch."
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