Strange Approach

I n October 1997, refreshed after my sailing in Maine with Robin West and living in the McLean house, I received a call from someone I didn’t know and whose name I don’t remember. He wanted to discuss a job opportunity with me, which, given that I was unemployed, intrigued me. He didn’t share any details but said he would send his private jet to pick me up in Washington to fly me to meet him. The meeting would be in a small town in New Hampshire just across the border from Quebec. I had nothing to lose, so I went.

The meeting was perfectly pleasant even though the content was definitely unconventional. Mr. X as I’ll call him was a middle-aged American businessman and tax exile living in the Bahamas, hence his flight into Canada. Intriguingly, he told me he had two sons in a boarding school near Dublin (Castleknock College), a facility Pierce and Aisling had once attended a summer camp at. Anyway it transpired that he and an English share trader owned shares in a large Russian oil enterprise in partnership with BP! How this came about he never shared, but it had to be a bit dodgy. Throughout the ‘90s there had been a lot of ruthless jostling going on in Russia over the ownership of significantly large businesses with a lot of associated murders.

Mr. X said they wanted an experienced oil executive to go to Russia to run this company. My compensation would be significant and would be paid in a tax-free arrangement. Next steps would be for me to go to London to be interviewed by John Browne, BP’s CEO and then on to Moscow to meet the asset owners and company management.

John Browne at that time was probably the best known CEO of any oil company. Born in 1948, his entire career had been with BP, and he was chief executive from 1995 to 2007. He and I knew each other quite well. The first time we met was in 1980 when he tried to persuade me to join BP. Another significant occasion came in 1990 when he hosted me (from Mobil) and a senior Exxon executive and our wives for a celebration dinner related to Abu Dhabi oil production milestones at Henry VIII’s castle, Hampton Court. Browne’s partner for the gala was his mother, Paula, who was a Hungarian-Jewish survivor of Auschwitz.

Unfortunately she was seated beside me and her nearly impenetrable accent made for a very challenging conversational environment! She kept referring to Browne as “my Chon”.

Subsequently there were other occasions when our paths crossed.

Browne’s business career had been stellar. During his time BP acquired three American oil companies, Sohio (’96), Amoco (’98) and Arco (2000), thus bulking up BP. This was BP’s “golden period of expansion,” aiming to put BP on an equal footing with Shell and Exxon. Now, in 1997, BP had bought a 10% interest in a Russian oil company called Sidanco for $571 million.

Its strategy was to use this stake to grow a significant oil business in Russia. Sidanco’s owner was a notorious oligarch named Vladimir Potanin. He was reputed to be the richest man in Russia with a net worth of $24 billion.

My meeting with Browne went smoothly. It appeared BP, and its silent partners Mr X and friend, wanted a CEO of the new Russian entity who knew Russia and could be trusted. Oops, that was me. From London I flew on to Moscow to meet with Potanin.

To gain access to his office I had to pass through a guard on the sidewalk outside the office door, comprised of three burly men armed with AK-47s in full view. The conversation/interview lasted for about 1½ hours and was straightforward. On the flight home I very quickly decided that, irrespective of the money, this wasn’t for me and so I turned the job down.

It wasn’t long before my decision was validated. A company called TNK (Tyumen Oil Company) launched a hostile takeover bid for Sidanco (which declared bankruptcy in 1998) and somehow its assets were acquired by TNK, controlled by the Alfa Group (owned by Mikhail Fridman, an infamous oligarch,) and Access/Renova (owned by Len Blavatnik and Viktor Vekselberg).

We’ll meet these three again in the next chapter. Thus, BP ended up with a minority stake in TNK.In 2003, to try to resolve the commercial arguments and restore some value to their Russian investments BP paid approximately $8 billion to end up with 50% of a new entity, TNK-BP. This resolved, for the time being, the squabble between BP and the TNK owners. BP said its renewed faith in Russia justified this major investment and came as a consequence of its (Browne’s?) confidence in the pro-business sentiment of the new Russian president, Vladimir Putin!

The history of TNK-BP was fractious, argumentative, sometimes bordering on crooked, on the part of the Russians, and occasionally dangerous, so much so that Bob Dudley, the CEO, left Russia secretly and tried to operate for a time from Bermuda.

Ultimately TNK-BP was acquired by Rosneft, the national oil company of Russia, in 2013, for cash and shares.

As for Browne, he was like Icarus. After soaring to the heights, he crashed and burned. He was knighted in 1998, made a Lord (Baron) in 2001, and was “encouraged” to retire from BP in 2007 by no less a man than the chairman of BP, the Dubliner Peter Sutherland. A High Court judge had found that Browne had lied to the court about his homosexuality, and had unfairly damaged the reputation of his Canadian lover.

I met him again around 2003 when I negotiated the very-favorable asset swap between Hess and BP mentioned above. The Russian oligarchs I also met again while working for Texaco. As for Mr. X and his British friend I never heard from them again but I assume they lost everything when Sidanco (their Russian investment destination), was bankrupted by the TNK shareholders in 1998. And speaking of losses, after the Russian invasion of Ukraine in 2022 BP exited Russia and took a write down of $22 billion on the way out.