Russian investigators have charged Economy Minister Alexei Ulyukayev with extorting a $2 million bribe from Rosneft, Russia’s biggest oil company, in a case that threatens to expose fault lines in President Vladimir Putin’s inner circle.
Ulyukayev, a 60-year-old technocrat whose ministry has been overseeing a sale of state assets, is the highest-ranking Russian official to be detained while in office since the collapse of the Soviet Union in 1991.
He faces up to 15 years in jail if found guilty.
The Investigative Committee, the state agency that investigates major crimes, said Ulyukayev had extorted the bribe in exchange for approving Rosneft’s $5 billion purchase of a stake in mid-sized oil producer Bashneft (BANE.MM).
His detention was announced in the early hours of yesterday, with state TV and pro-Kremlin politicians presenting it as part of a high-profile fight against corruption.
Others said it was evidence of infighting at the highest levels of power, possibly involving Igor Sechin, the chief of Rosneft, a close Putin lieutenant who is one of Russia’s most powerful men, and might herald a shake-up.
Low oil prices and Western sanctions mean the government is struggling to plug holes in the state budget ahead of a 2018 presidential election, and that competition for resources inside the tightly-controlled system has become more acute.
Law enforcement sources told Russian media the minister’s phones had been tapped and his electronic communications monitored. Investigators set up a sting operation in which the alleged bribe was handed over on Nov. 14, the reports said.
Investigators said Ulyukayev had threatened to use his position to cause problems for Rosneft unless it paid him. They said they were not challenging the legality of Rosneft’s purchase of the Bashneft stake or investigating it. Putin was informed about the case when the investigation was first launched, Kremlin spokesman Dmitry Peskov told reporters.
Rosneft’s acquisition of Bashneft last month was the focus of a major turf war between rival Kremlin camps, sources close to the deal and in the government have told Reuters.
Sechin lobbied hard for the green light to buy Bashneft, but the deal was fiercely opposed by economic liberals in the government, some with ties to Prime Minister Dmitry Medvedev, who believed Bashneft should go to private investors.
Ulyukayev initially opposed Rosneft buying Bashneft, , but eventually signed off on the deal.
A 19.5 percent state-owned stake in Rosneft is up for privatization next. Rosneft is poised to buy the stake itself to sell on to investors later.
Sources told Reuters last week that Rosneft’s parent holding company may help Rosneft with funds for the deal. One state company helping another conduct a privatization is likely to be controversial among some members of the government.