Sweden’s Foreign Minister Carl Bildt finds it difficult to explain how he manages to find balance between interests of Sweden and vested interests in the prosperity of Russian energy giants.
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Post-Election Investment Campaign
// Sweden’s foreign minister tainted in Gazprom-related scandal
A major political scandal rocked Sweden last weekend, involving the country’s foreign minister. Carl Bildt is accused of having vested interests in Russia’s energy wealth since he holds stocks in Vostok Nafta, which invests in Gazprom. The Swedes say Bildt therefore cannot carry out unbiased policy in relation to Moscow. Kommersant correspondent in Stockholm Sergey Prokofyev has the details.
After one month in office, Karl Bildt is already close to losing his job. The Swedish press and opposition parties accused the former prime minister last weekend of having vested interests in Russia’s energy success. This backlash followed Carl Bildt’s purchase of stocks in Vostok Nafta, a company which invests in Gazprom.
Vostok Nafta Investment was founded in October 1996 by Sweden’s Adolf Lundin and was registered in the Bermuda Islands. The investment fund’s assets amounted to $2.65 billion as of September 29, 2006. Net profits in the first six months are $897 million. The fund’s portfolio is made up of shares of Russian natural resources giants. 90.83 percent of the stock is held in Gazprom, 2.31 percent is kept in Rosneft and 2.21 percent is in TNK-BP. Vostok Nafta also owns 1 percent in Gazprom. The board of directors is chaired by Lukas Lundis, the son of Adolf Lundis who died this September. The Lundis family holds 30 percent in the company while private Swedish investors own the remaining stocks.
“It is reckless that the Swedish foreign minister has vested interests in a company which acts as an influence tool of Russian policies,” Russian expert Professor Kristian Gerner said in Svenska Dagbladet. Observers point out to an amazing metamorphosis which took over Carl Bildt, once known as a staunch anti-Russian, after he gained a stake in the Russian company.
In the early 1990s when Carl Bildt was prime minister, he held some kind of battle against Russian submarines in Swedish waters and even sent a protest note to Moscow once.
After he stepped down as prime minister, Carl Bildt remained in politics, serving as UN Secretary General’s special envoy in the Balkans. It was then that he found interest in fuel business. Bildt first staked on oil and gas, entering the BOD of Lundin Oil, a move which was much criticized as the company extracted oil in war-ridden areas of Sudan. In 2001, he was elected to sit on the board of Vostok Nafta and soon struck the most lucrative deal of his life. He took part in two option programs which gave him a right to buy stocks at an early set price during a certain period of time. Carl Bildt used this right and bought 2,000 stocks in Vostok Nafta last January when the Russian-Ukrainian gas row was approaching a pinnacle. A day after the purchase, the stocks in Vostok Nafta skyrocketed 22 percent and they still keep on growing. The option that Bildt has a right to use until December will apparently help him boost this fortune.
Bildt is naturally interested in the success of his business, which means prosperity for Russian natural resources companies. His opponents say this is the reason for the excessively lenient policy of the Swedish foreign ministry towards Moscow. Urban Ahlin of Swedish Social Democrats believes that Carl Bildt did not give an adequately stiff reaction to the murder of the Russian journalist Anna Politkovskaya. Observers note that the new foreign minister is extremely cautious making any statements relating to Russia.
Meanwhile, Carl Bildt’s possible dismissal may lead to a governmental crisis in Sweden after a series of scandals involving recent resignations of two ministers of the new Swedish government and precarious position of three other ministers. Yet, Carl Bildt’s opponents are determined to go the whole hog. A group of deputies demanded last week that the constitution committee of the Swedish parliament decide on the professional propriety of the politician. Prime Minister Fredrik Reinfeldt has ordered to consider legal grounds for the minister to continue holding the Russian stocks in case he keeps the position.
Sergey Prokofyev from Stockholm
All the Article in Russian as of Oct. 24, 2006
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