KGB Offers Tolstoy as Russia Presses Belarus to Free Potash CEO

Photographer: Andrey Rudakov/Bloomberg

OAO Uralkali chief executive officer Vladislav Baumgertner, who is also chairman of Belarus Potash Co., Uralkali's trading partnership with state-run Belaruskali, is charged with abuse of office and faces 10 years in prision. Close

OAO Uralkali chief executive officer Vladislav Baumgertner, who is also chairman of... Read More

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Photographer: Andrey Rudakov/Bloomberg

OAO Uralkali chief executive officer Vladislav Baumgertner, who is also chairman of Belarus Potash Co., Uralkali's trading partnership with state-run Belaruskali, is charged with abuse of office and faces 10 years in prision.

Belarus granted jailed OAO Uralkali (URKA) chief Vladislav Baumgertner’s request for a Leo Tolstoy novel as its feud with Russia intensified over the collapse of a venture that supplied two-fifths of the world’s potash exports.

Russian diplomats were allowed to visit Baumgertner, 41, for the first time today since Aug. 26, when he was detained at the Minsk airport after being invited for talks, said Gavriil Mamontov, first secretary at the Russian embassy in Belarus. Mamontov delivered a two-volume set of “Anna Karenina,” to Baumgertner in his cell at the KGB’s headquarters.

Baumgertner, who was also chairman of Belarus Potash Co., Uralkali’s trading partnership with state-run Belaruskali, is charged with abuse of office and faces 10 years in prison. The Uralkali CEO said July 30 that he was dissolving Belarus Potash because President Aleksandr Lukashenko, in power since 1994, “violated” their agreement by allowing Belaruskali to export some of its soil nutrient independently.

“He looks tired, but hasn’t reported any acts of humiliation or improper treatment,” Mamontov told reporters in front of a monument to Felix Dzerzhinsky, a founder of the feared Soviet secret police force known as the Cheka who was born in what is now Belarus.

Photographer: Aliaksandr Kudrytski/Bloomberg

The KGB’s headquarters in Minsk where OAO Uralkali chief Vladislav Baumgertner is being held. Close

The KGB’s headquarters in Minsk where OAO Uralkali chief Vladislav Baumgertner is being held.

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Photographer: Aliaksandr Kudrytski/Bloomberg

The KGB’s headquarters in Minsk where OAO Uralkali chief Vladislav Baumgertner is being held.

‘Hostage Center’

Belarus Potash had been one of Lukashenko’s main sources of hard currency, accounting for about 20 percent of government revenue in a country that has about half of Russia’s per capita gross domestic product, according to World Bank data.

Baumgertner’s whereabouts were undisclosed before today, though state television showed him being led around the courtyard of an unidentified prison in handcuffs. The 18-cell facility in the KGB’s headquarters, nicknamed Amerikanka, or American Lady, is the “hostage center of choice for politicians and executives who run afoul of Lukashenko,” Anatoly Lebedko, an opposition leader who spent 108 days in the facility for leading a protest rally, said this week.

Russia, which led a $3 billion bailout loan to Belarus in 2011, today repeated its demand for Baumgertner’s release. Russia expects Belarus to comply in the “coming days,” Yuri Ushakov, a Kremlin foreign policy aide, told reporters in Moscow. Belarus is scheduled to receive the final $440 million of the Russian-led emergency funding by the end of the year.

Oil, Hogs

Russia, which shares a customs union with Belarus and Kazakhstan, earlier today imposed a ban on Belarusian hogs and pork products, a move the country’s food safety and health watchdog attributed to African swine flu. OAO Transneft, Russia’s oil-pipeline monopoly, said Aug. 28 it would cut oil shipments to Belarus in September, citing maintenance work.

Putin, 60, and Lukashenko have sparred over prices for Russian fuel, leading to a brief shut-off of oil supplies in January 2007. Lukashenko sold Belarusian pipelines to Russian natural gas exporter OAO Gazprom (OGZD) after the dispute, leaving Belaruskali, which he’s valued at $36 billion, as the nation’s biggest asset. Belarus earned $2.7 billion selling potash abroad in 2012, or 5.9 percent of total exports.

Baumgertner and four other Uralkali executives for whom Belarus has issued arrest warrants are accused of conspiring to cut Belaruskali out of decision-making at Belarus Potash and causing $100 million of damages.

Chief Financial Officer Viktor Belyakov will take over as interim CEO to ensure “continuity of efficient operations,” Uralkali said in a statement today.

Uralkali shares fell as much as 1.9 percent today and were down 1.3 percent to $23.43 at 11:45 in London, valuing the world’s biggest potash producer at about $13.8 billion.

The company said it “continues to refute all charges” and is confident “the situation will be resolved in accordance with commonly accepted moral and legal norms.”

To contact the reporters on this story: Aliaksandr Kudrytski in Minsk, Belarus at akudrytski@bloomberg.net; Stepan Kravchenko in Moscow at skravchenko@bloomberg.net

To contact the editor responsible for this story: Hellmuth Tromm at htromm@bloomberg.net

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