A controversial deal intended to consolidate oil and polymer capacity at the Russian oil giant Rosneft has ended in the prosecution of Russia's economic development minister Alexei Ulyukayev for corruption.
The transaction, involving the $4.98 billion sale of a 50 percent government stake in Bashneft, Russia's sixth ranked oil company and polyolefins producer, to Rosneft, has led to the arrest of the minister for allegedly accepting $1.97 million bribe for agreeing not to block the deal.
In what has been seen by some as part of a top level political struggle, Ulyukayev's arrest comes after he was accused by Russia's chief anti-corruption body, the Investigative Committee (SK) of extorting money from Rosneft.
SK was reported to have stated the minister was “caught red-handed” Nov. 14 accepting the bribe for withdrawing threats to create obstacles to the Rosneft takeover in an apparent sting operation.
Ulyukayev, who denies the accusation, is an economic liberal who was known to be against increased state control of the Russian economy and who opposed the Bashneft privatization bid which was led by Rosneft's powerful boss Igor Sechin, a close ally of Russia President Vladimir Putin.
The deal was already controversial because this privatization sell-off, aimed at raising funds for the Russian government, involved a state-owned buyer, while Bashneft was also state controlled.
If Ulyukayev, 60, is found guilty of the corruption charges brought against him, the minister could face a sentence of up to 15 years in prison.