BP's Browne to see Putin amid tax crisis

LORD Browne, chief executive of oil giant BP, is to fly to Moscow next week for crisis talks with Russian President Vladimir Putin over a tax bill facing its joint venture in the country.

Russian federal tax collectors slapped a $1bn (£550m) demand for back taxes on the group's TNK-BP joint venture last week. The move has alarmed the market and could dent confidence at a time when President Putin is keen to reassure foreign businesses about the number of tax checks they face when operating in Russia.

The Russian president was in Germany recently where he attempted to shore up confidence among foreign investors, which has been damaged by a succession of investigations and prosecutions into big business.

Lord Browne is expected to ask why such a large tax bill has emerged. TNK-BP first received a revised tax bill for 2001 that amounted to 4bn rubles (£80m) but the latest demand is for some 22bn rubles ? and even this sum may not be a final one, according to Russia's Federal Tax Service. The civil servants say that arrears for the following years could also be found when it has completed further investigations.

Oil industry experts fear that TNK-BP could see a repeat of the Yukos debacle, when more and more alleged arrears were discovered and its chairman Mikhail Khodorkovskii ended up on trial as the company faced a £13bn tax debt. Viktor Vekselberg, co-owner of TNK-BP, vowed to fight the demands. But the robust reaction was not enough to prevent its shares tumbling.

President Putin is thought unlikely to want to see a repeat of the Yukos saga, which has severely dented investor confidence. Last month he promised that the Russian government would reduce the number of major tax investigations amid evidence that foreign investors are reining in the amount they put into local ventures.

But with the Federal Tax Service insisting that its investigations are still not complete, confusion surrounds the exact picture, particularly after an economic aide to the government insisted that companies which evaded tax would not escape justice.