Dmitry Magonya, managing partner of ART DE LEX, commented on the decision of the Romanian court to reduce the amount of Lukoil property it froze
Interfax reported that the court in Prahova, Romania, had reduced the size of security measures imposed on two Lukoil subsidiaries, Romanian Petrotel, which owns the refinery in Ploiesti, and Dutch Lukoil Europe Holdings B.V., which controls Petrotel. In the summer, the court froze the assets of these companies worth EUR 2.2 billion. The court did not report the sum of the reduced property, and a representative of Lukoil refused to comment.
Interfax, referring to a source, noted that a new prosecutor recalculated the damage that Lukoil allegedly had inflicted. A source close to Lukoil then confirmed that the Prosecutor’s Office admitted serious errors in their calculations.
Lukoil’s problems in Romania began in October 2014. Afterward, the prosecutor froze the property of Petrotel, and an oil refinery shut down for several weeks. The authorities threatened to nationalize the factory if Lukoil closed it. The company appealed against the action to freeze its assets and reinstated refinery operations. In the summer, the Romanian prosecutor’s office accused six managers of Petrotel of doing EUR 1.8 billion damage to the company.
According to the prosecutor’s office, from 2011 to 2014, the managers used loans and the assets of Petrotel to benefit the companies in which they owned direct or indirect shares. They allegedly signed contracts for and on behalf of Petrotel to purchase oil and fulfilled contracts to supply petroleum products at unprofitable prices for the company, which resulted in losses.
Lukoil rejected all the claims. In September, the president of Lukoil, Vagit Alekperov, told Vedomosti: “We believe that Petrotel fulfills all its obligations to the government of Romania, and in terms of privatization, it even exceeded them. Instead of US 200 million, it invested USD 500 million. . . . In August, at the request of the prosecutor’s office, the tax agency conducted a comprehensive tax inspection of the plant. It found no violations. . . . We appealed to the European institutions, which considered our complaint. They are expected to work on the case in September and October. We expect that the judicial institutions will consider the evidence objectively and that they will make a balanced decision.”
The company will be forced to sell refineries, experts say. There even are potential buyers, such as Kajel Holdings Limited, which is incorporated in the British Virgin Islands. Unconfirmed reports from Interfax claim that Kajel Holdings represents the interests of the China Peace Petroleum Group. Another is Vienna Investment Trust SA, which is registered in Austria, but more than 73 of the firm is in the hands of the businessman Konstantin Tom. A third potential purchaser is the Universal Premium Fund, which is registered in Luxembourg and is in the hands of the businessman Theodore John Vostinaru, according to the Romanian news television Digi24. Alekperov maintained that Petrotel is well integrated into the process chain of the company, and it is not rational to sell the asset.
The managing partner of the law firm ART DE LEX, Dmitry Magonya, said that law enforcement authorities in Romania were likely attempting to make a reasonable decision. That is, they did not want to take interim measures against Lukoil. At the same time, they did not want to create difficulties that would result in a refinery shut down. Mr. Magonya added that, in a legal sense, the court’s decision does not give a clear signal whether it will meet the future requirements of the prosecutor’s office regarding Lukoil.
