Updated at 11:50,16-10-2017

Kommersant has shared the details of Uralkali heads arrest

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In Minsk they decided to set Uralkali up and get the clients, who would be afraid to make deals with the company.

The scandalous breach of relations between Uralkali and Belaruskali spilled over into an unprecedented step on the part of Minsk, a Russian media Kommersant reports.


Arrest

Investigatory Committee and KGB officers detained the director general of the public corporation Uralkali and the chairman of the supervisory board of the closed corporation Belarusian Potassium Company (BPC) Vladislav Baumgartner around 13 o'clock as, after having met the country's Prime Minister, he was supposed to fly from Minsk's airport to Moscow.

The top-manager came to Minsk on the invitation of Mikhail Miasnikovich, received on 23 August. Similar invitations were sent to the main owner of Uralkali Suleiman Kerimov, the head of the company's board of directors Aleksandr Voloshin and a vice-Prime Minister Arkadiy Dvorkovich. Kerimov and Voloshin did not manage to come, but "were willing to meet the Prime Minister later". The representatives of Dvorkovich, Kerimov and Voloshin refused from commenting on the situation.

Kommersant has shared the details of Uralkali heads arrest


Vladislav Baumgartner arrived to Minsk on Monday morning without a large delegation. The meeting was set for around 10 o'clock. According to a source, familiar with the course of the meeting, the conversation lasted for around and hour and "was far from being constructive". "In essence, it was the Prime Minister's monologue, who was accusing Vladislav Baumgartner personally and Uralkali of destroying the Union State", - the interlocutor said. He assured that it was not the matter of any criminal accusations. Immediately after the meeting the top-manager headed to the airport to fly to Moscow.

According to the interlocutor, at the security check Vladislav Baumgartner was told that an additional inspection was needed, because "he could be carrying drugs on him". Immediately after that the top-manager was detained and taken to jail. "Apparently, Mikhail Miasnikovich knew that the meeting with him was used as a bait", - the interlocutor is sure, pointing out that "only one person could authorize such actions Aliaksandr Lukashenka". At 14.00 the country's Investigatory Committee officially announced the detention.


Events preceding

Vladislav Baumgartner was the key figure and the face of the scandal, which broke out between Uralkali and its long standing partner Belaruskali late in July. The Russian company then officially refused from cooperating with the Belarusian one via the joint trader BPC, by the means of which almost all the output had been sold since 2005. The volumes accounted for 43% of the world's potassium market.

"It is not surprising that it was exactly Mr Baumgartner, who became Belarus' main target", - one of the sources says. At the same time the market reacted much calmer to the top-manager's arrest Uralkali's shares lost only 3.36% while the MICE index grew by 0.01%

In the opinion of market participants, the non-public Belaruskali, having lost its main distribution channel, ended up in a worse situation than others, who also suffered from Uralkali's demarche. The Belarusian company has already received tax benefits from the state, but has not yet been able to conclude actual contracts for potassium export supplies. "This very much pisses the company's and the country's leadership off", - the source says. He adds that almost always it was Uralkali that dealt with marketing in the framework of the joint trader, and now they do not know what to do in Belaruskali. That is why, another source adds, who is familiar with the situation, in Minsk they "decided to set Uralkali up at get the clients, who will be afraid to conclude contracts because of the conflict and the charges against the management".


Charges

Bringing charges against Uralkali's managers Belarus emphasizes that other market participants also suffered. At the country's Investigatory Committee they say that there are facts "of Uralkali top-managers' dubious actions not only against Belarusians, but also against Russian banks, Chinese financial bodies and many other foreign partners". In the investigators' opinion, Uralkali's employees planned on failing the market already back in 2011. The damage done by BPC's employees is estimated in Minsk as $100 million.


Prospects

The deputy dean of the faculty of World's Economy and Politics of the Higher School of Economics Andrei Suzdaltsev believes that the unprecedented decision of the Belarusian authorities on the part of Uralkali's top-management has to a large part a hidden political motive. "It is an attempt to hold hostages in order to start a high-level bargain with Russia from the position of strength, first of all on the issue of providing economic subsidies", - the expert claimed. He notes that the balance of oil shipments for Belarusian refineries has not been signed yet, the Eurasian Economic Community loan's tranches are running out and finally Minsk is counting on advance deliveries of the newest Russian armory for the modernization of the air defense. "This is Minsk's usual tactic in the relations with the West and Russia alike in 2007 during the gas crisis the Belarusian authorities ordered to arrest the then head of Transneft Semen Vainshtok", - Andrei Suzdaltsev adds. In his opinion, if Moscow reacts tough, demanding to immediately release Russian businessmen, "there will be a scandal, which Lukashenka counts on as he is expecting the next negotiations round".