The fertilizer industry was already reeling from the international attention resulting from the July 30 break-up of Belarusian Potash Co. (BPC). The Aug. 26 arrest by Belarusian authorities of OAO Uralkali CEO Vladislav Baumgertner in Minsk upped the ante. He was arrested at the airport following a meeting with Belarus Prime Minister Mikhail Myasnikovich.
Baumgertner was charged with abuse of office as chairman of BPC. Baumgertner’s Russian lawyer, Alexei Basistov, who cannot represent him in Belarus, told The Voice of Russia that based on public information it appears he will be detained for two months. He termed the arrest as purely political. Russia has demanded the immediate release of Baumgertner. Basistov said a Belarusian legal team has been assembled to represent Baumgertner.
Belarus authorities were also reported to be looking for four other Uralkali executives, including Oleg Petrov, head of sales, as well as major shareholder Suleiman Kerimov. It was also looking to seize Uralkali assets in the country.
Uralkali Board Chairman Alexander Voloshin called the detention “an outrageous act,” and insisted that Baumgartner be immediately released and that Belarus cease the legal pursuit of his colleagues.
“The statements from the Belarusian authorities with respect to supposed illegality perpetrated by BPC management look highly irregular,” said Voloshin. “The related allegations contradict common sense and would not stand up to scrutiny. I would like to point out that the Advisory Board of BPC chaired by Mr. Baumgertner is an overseeing body which convenes only a few times a year. The Chairman of the Advisory Board has no authority to be abused.
“The de-facto head of BPC is its General Director, who has always been nominated by the Belarusian side,” he added. “Several weeks ago BPC’s General Director was appointed to one of the highest official positions in Belarus, i.e., deputy head of the President’s administration. I assume this indicates that the results of BPC’s activities and the company’s operations are highly regarded by the officials at the highest level of Belarusian government. In light of the above, accusations of abuse of power against Vladislav Baumgertner look simply absurd.”
Almost immediately there were reports of Russian trade actions against Belarus, with Russian oil pipeline Transneft cutting oil supplies to Belarus for September, purportedly for pipeline repairs. Belarus relies on Russian oil for its two refineries. Russian inspectors were also finding fault with Belarusian dairy imports, though there were no reports of them being halted last week.
Gilad Alper, an analyst at Tel Aviv-based Excellence Brokerage, called the arrest an “act of desperation.” He does not believe that the move will have any positive impact on potash prices. When the news broke, share prices of Israel Chemicals Ltd. and other potash companies rose in response. But Alper believes that this is in effect a battle between Russian President Vladimir Putin and Belarusian President Alexander Lukashenko, and that like every confrontation in the past, Putin will again be victorious – mainly because Russia is Belarus’ energy supplier.
Alper also speculated that the Russians do a lot of business in China, and that Uralkali would not have broken up the cartel without permission from Putin. He doesn’t see much chance of a compromise regarding the cartel and said the consequences are not good for the potash market in general, and ICL in particular.