By Rachel Ehrenfeld and Alyssa A. Lappen
Washington Times | June 1, 2006

On May 25, Norex Petroleum, a Cyprus company with Canadian shareholders, received permission to begin discovery against Alfa Group in the U.S. District Court for the Southern District of New York. Norex charges that Alfa Group, the Russian conglomerate and its many affiliates wired millions through U.S. banks, created an illegal slush fund, avoided U.S. and U.K. taxes, and fraudulently seized the oil-producing assets of Norex’s Yugraneft subsidiary, thus violating the Racketeer Influenced and Corrupt Organizations Act (RICO), among other U.S. laws.

If Norex proves its case against the Alfa Group and wins in U.S. courts, the outcome could further damage already shaky U.S. relations with purportedly capitalist, democratic Russia. Meanwhile, global investors should consider Alfa Group’s alleged behavior as a stern warning of the kind of treatment foreigners can expect from Vladimir Putin’s increasingly autocratic regime.

Mr. Putin seeks to secure his state’s role in global energy markets, and further control energy production and prices. On March 1, Mr. Putin declared, that “global energy security” is the most pressing issue facing the G8 and the world.

On May 22, he announced a Russia-Kazakhstan venture to expand capacity at Orenburg’s natural gas refinery, for 50 percent Russian ownership in the facility. Reasserting Russia’s energy might, Putin aide Igor Shuvalov stated: “We are prepared to provide Europe with oil and gas on a long-term basis and we are taking on the role of the leader…We will continue our expansion whether our European partners like it or not.” Continue reading “Russian roulette” →

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