Board war blocks TNK-BP dividend and investment

By Michael Stott - Exclusive

MOSCOW (Reuters) - A boardroom war between BP (BP.L) and its four Russian partners over their troubled joint venture TNK-BP has left the company without an approved 2008 investment programme or an interim dividend, two sources with direct knowledge of the matter told Reuters on Monday.

TNK-BP (TNBPI.RTS) has been the subject of a battle between BP and its four billionaire Russian-connected partners over management, strategy and control for the past year.

The affair has turned into a major international issue after accusations that the Russian side is using state resources, such as the police, courts and tax service, to put pressure on BP. The Kremlin has insisted it is staying out of the dispute, though some investors are sceptical.

One source said the ten-person board meeting of the holding company TNK-BP in Cyprus last week was deadlocked on all the main issues on the agenda and the firm's investment plan for 2008 and its interim 2008 dividend payout were not agreed.

"It was a kind of stylised corporate war," the source said. "Each side vetoed the other's resolutions."

Underlining the increasingly bizarre nature of the dispute, TNK-BP's senior managers attended by videoconference from Moscow because problems in renewing visas made them worry that if they left Russia they might not be allowed back.

At Friday's board meeting in the Cypriot port of Limassol, the Russian side tabled resolutions calling for the dismissal of TNK-BP CEO Bob Dudley, the firing of the company's senior management team and for equal representation on all company subsidiaries. BP vetoed these resolutions, the source said.

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