MOSCOW (Reuters) - Russian billionaire Viktor Vekselberg is considering suing RUSAL 0486.MM over accusations that he failed to fulfill his duties as its chairman, intensifying a battle with rival oligarch Oleg Deripaska at the world’s largest aluminum producer.
A lawsuit between two of Russia’s richest men would risk becoming a spectacle to rival a legal battle between two other oligarchs, Boris Berezovsky and Roman Abramovich, which gave an unflattering insight into the Russian business world. It could also be deeply embarrassing for RUSAL.
The two billionaires have been fighting over Deripaska’s ambition of turning RUSAL into a global-scale metals and mining business by merging it with Norilsk Nickel (GMKN.MM), the world’s top nickel and palladium miner.
Vekselberg quit as chairman on Tuesday, criticizing the management of the heavily indebted company and saying it was in “deep crisis”. RUSAL, which Deripaska controls, hit back by saying Vekselberg had simply pre-empted his sacking.
Vekselberg’s spokesman, Andrei Shtorkh, rejected RUSAL’s allegation that Vekselberg had not attended board meetings for a year and that his removal had already been discussed. “This does not correspond to reality,” Shtorkh said on Wednesday. “Vekselberg is thinking of filing a lawsuit against RUSAL.”
Legal action “would throw petrol on the fire of the conflict”, said Andrey Tretelnikov, an analyst at Rye, Man & Gor brokerage in Moscow.
He said a legal battle could damage Vekselberg if it helped to push down the value of his RUSAL shares and predicted more sniping between the two billionaires which could do further harm to RUSAL by revealing “skeletons in the closet”.
RUSAL shares, which have fallen more than 40 percent from their value at a 2010 initial public offering, fell 4 percent in Hong Kong trade. Trading had been halted on Tuesday.
CHAIRMAN SOUGHT A replacement for Vekselberg will be sought at a board meeting scheduled for Friday. Whoever wins the job will face a struggle to help RUSAL recover - it is carrying an $11 billion debt burden at a time when global aluminum prices have sunk.
Deripaska’s debt-financed purchase, through RUSAL, of a one-quarter stake in Norilsk Nickel four years ago quickly turned sour when the global crisis hit.
RUSAL was forced into a debt restructuring that killed Deripaska’s dream of a mega-merger but he has blocked calls by Vekselberg to sell the stake back to Norilsk.
The next chairman could be one of the company’s five independent directors, who include Anatoly Tikhonov, first deputy chairman at Russian state development bank VEB, WPP (WPP.L) chairman and former U.S. ambassador to Britain, Philip Lader, and Hong Kong Mercantile Exchange chairman Barry Cheung.
Cheung said the chairmen should be “someone strong” with independence, especially as the current chief executive is the largest shareholder. This, he said, would improve RUSAL’s corporate governance.
“The company is not in deep crisis. Its operations are normal, but it faces challenges because of falling aluminum prices,” Cheung said in Hong Kong. “However, the debt level is much lower than when it was listed.”
Cheung declined to say whether he wanted to be chairman.
Kommersant newspaper reported that Max Goldman, an executive of Vekselberg’s Renova Group investment arm and a lawyer who used to work for RUSAL, would take Vekselberg’s place on the board of RUSAL.
Vekselberg said in a statement that a “deep crisis caused by the actions of the management” had prompted his resignation.
RUSAL said in response the data on individual directors’ participation in board meetings was recorded in protocols and published each year in the company’s annual reports.
The protocols showed Vekselberg had not attended any board meeting where directors were required to be present in 2011 since February of that year, RUSAL said in an emailed statement.
Vekselberg’s performance as chairman of the board of directors was discussed at board meetings on December 23, 2011, and February 10, 2012, the company said.
Deripaska is already facing legal action by Israel-based businessman Michael Cherney, who says he has an interest in RUSAL relating to an agreement he said was reached in 2001.
That case, which originated in a 2006 lawsuit, will soon be heard in Britain, according to media reports. Deripaska has said he “strongly denies and will vigorously resist” the allegations.
Additional reporting by Alison Leung in Hong Kong, Melissa Akin in Moscow, editing by Timothy Heritage and Elizabeth Piper