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February 18, 2004.

NOREX PETROLEUM LTD., Plaintiff, -v- ACCESS INDUSTRIES, INC., et al. Defendants

The opinion of the court was delivered by: LAURA TAYLOR SWAIN, District Judge Page 2



  This is a case involving alleged violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, et seq. Specifically, Plaintiff contends that Defendants orchestrated a massive racketeering and money laundering scheme to take control of the Russian oil industry, including Plaintiffs business. Defendants move to dismiss the Complaint on various grounds, among which is, the doctrine of forum non conveniens. The Court has considered thoroughly all arguments and submissions in connection with the instant motion. For the following reasons, Defendants' motion is granted.


  Plaintiff's principal material allegations, and the undisputed facts pertinent to the instant motion, can be summarized as follows. The summary takes as true the allegations and undisputed factual assertions, but does not in any way constitute factual findings by the Court. Plaintiff Norex Petroleum Limited ("Norex") is organized under the laws of Cyprus, maintains a representative office in Calgary, Canada, and is owned by J.I.V. LLC, which is organized under the laws of California.*fn1 (Id. ¶ 32.) Alexander Rotzang, a Canadian individual, is the beneficial owner of Norex's parent. (Rotzang Decl. ¶¶ 2, 4.) Allegations Regarding the "Illegal Scheme" and "Illegal Takeover"

  In its Complaint, Norex alleges that the Defendants are participants in a widespread racketeering and money laundering scheme whose principal purpose is to take over a substantial portion of the Russian oil industry, principally through the use of Tyumen Oil Page 4 Company ("TNK"), a Russian oil company, and subsidiaries of TNK.*fn2 (Compl. ¶ 1.) According to Norex, the Russian oil industry is riddled with corruption, and Russian oligarchs exercise undue influence over government and judicial officers in aid of their own economic goals.

  Several of the Defendants are United States citizens or conduct business here, and the conspiracy is alleged to have been directed from the United States. American and other international banking facilities have allegedly been used to conceal financial transactions through which Defendants have diverted oil and related revenues from Russian companies to their own offshore affiliates and have committed tax fraud in several countries. In seeking to show the scope of the alleged conspiracy and sufficient United States connections to support the exercise of subject matter jurisdiction to hear Plaintiff's RICO claims, Norex describes a range of worldwide activities alleged to have been part of this overall "Illegal Scheme," including transactions involving companies in which Norex held no equity interest but which have (or had) Page 5 United States or other international investors. Those investors include BP-Amoco and the Harvard University Endowment Fund. (Id. ¶ 8.)

  Norex claims that, pursuant to this scheme, it was deprived of its majority ownership stake in Yugraneft, a Russian oil company, and of certain quantities of oil owed to it by Yugraneft and other Russian oil entities, through a series of unlawful actions that included influence wielded through bribery of Russian governmental officials and corrupt Russian bankruptcy proceedings.

  TNK, which was privatized in two stages beginning in 1997, is owned, directly or indirectly, by Defendants Access/Renova and Alfa Group in approximately equal shares. Defendants' interests in TNK were obtained through corrupt privatization proceedings. (Id. ¶¶ 75, 121-38.) Norex alleges that the Defendants' Illegal Scheme utilized TNK, improper influence of Russian government and judicial officials, and threats of violence to 1) divert oil flows from other Russian oil companies to TNK and its affiliates, 2) achieve an "Illegal Takeover" of Yugraneft, and 3) launder illegally diverted oil profits and achieve massive United States, United Kingdom, and Russian tax fraud through offshore "Slush Fund" arrangements involving certain of the Defendants and their affiliates.

  In 1997, after acquiring their initial interest in TNK, Access/Renova and Alfa Group arranged through corrupted government officials to divert the flow of oil from Nizhnevartovsk Nefte Gaz ("NNG") (a Russian oil company that owed oil to Yugraneft) to TNK, thereby forcing NNG into bankruptcy and stripping NNG of assets that were subsequently transferred to TNK or its affiliates. (Id. ¶¶ 144-47.) Through the corrupt bankruptcy proceedings and asset-stripping, Norex, which was one of NNG's creditors, was deprived of an oil debt owed Page 6 to it by NNG.

  Some or all of Defendants also utilized TNK to corrupt the bankruptcies of Kondpetroleum and Chernogorneft, two oil companies that were subsidiaries of OAO Siberian Far Eastern Oil Co. ("Sidanco"), an entity in which BP-Amoco and the Harvard University Endowment Fund were investors. Through the strategically manipulated appointment of bankruptcy managers who were loyal to TNK, as well as improper payoffs of certain of Chernogorneft's debts that resulted in TNK's ability to control the creditors' committee in the Chernogorneft bankruptcy, TNK and its affiliates obtained the assets of Kondpetroleum and Chernogorneft at below-market prices. Those assets included shares of Yugraneft that had been owned by Chernogorneft. The bankruptcy transfer of Chernogorneft's Yugraneft shares violated a shareholder agreement right-of-first-refusal provision in Norex's favor to which Norex and Chernogorneft were parties. The Chernogorneft asset sale also violated several Russian court decisions prohibiting the sale of Chernogorneft's assets. (Id. ¶¶ 148-74.) Complaints by BP-Amoco and others to American government officials arising from the Chernogorneft proceedings led to a State Department block on Export-Import Bank loan guarantees to TNK for purchasing equipment from the United States. (Id. ¶¶ 175-78.)

  Following the bankruptcy proceedings, Chernogorneft did not fully repay a pre-bankruptcy oil debt to Yugraneft. (Id. ¶¶ 185-89.) A TNK official threatened Norex's board chair and general director when they attempted to obtain full payment of the oil debt to Yugraneft, and at least one of the threats was communicated to Norex's board chair, Rotzang, while Rotzang was in the United States. (Id. ¶¶ 198-206.) The TNK official, German Khan, told Yugraneft's general director that TNK "own[ed] people at all levels of government" and that Page 7 TNK "controlled" Russia's Supreme Arbitration Court, where commercial disputes are decided. (Id. ¶¶ 200-206.) Norex further alleges that Khan threatened a Yugraneft officer and attempted to bribe her to cooperate with TNK's efforts, and that the bribe was refused. (Id. ¶¶ 212-216.)

  In June 2001, a few days before a scheduled Yugraneft shareholders meeting, TNK-NV (the TNK affiliate that had acquired Chernogorneft s interest in Yugraneft) filed a complaint in Russian court, petitioning to arrest a substantial portion of the Yugraneft shares held by Norex. (Id. ¶¶ 217-18.) TNK-NV's petition was premised on the false representations that it had acquired its shares legally in the Chernogorneft bankruptcy and that Norex had been served properly with the court papers. (Id. ¶¶ 217-19.) The Russian court enjoined Plaintiff from voting a major portion of its Yugraneft shares and prohibited Yugraneft from counting a major portion of Plaintiff's shares at any shareholders meeting. (Id. ¶¶ 219-20.)

  At the shareholders meeting, Norex voted its shares in favor of continuing current management. TNK and other Defendants, however, prepared fraudulent minutes reflecting the election of Alexander Berman, an officer of a TNK affiliate, as general director of Yugraneft. (Id. ¶¶ 222-26, 229-30.)

  On the day after the shareholders meeting, Berman, along with six TNK attorneys and "at least 16 thugs" in military fatigues and armed with machine guns, took over Yugraneft's Nizhnevartovsk offices by force. (Id. ¶¶ 227-228.) TNK also sent armed security guards that same day to take over the Yugraneft oil field and field office and cut off phone and Internet service at the Yugraneft offices. (Id. ¶¶ 231-232.) The president of TNK went to Yugraneft's field office, told the employees that the company had been taken over, and instructed them to sign employment agreements with TNK or leave. (Id. ¶¶ 233-34.) Page 8 Yugraneft's pre-takeover management thereafter obtained a court order enjoining Berman from acting as Yugraneft's general director and went, along with a marshal and attorneys, to Yugraneft's offices to enforce the order. A TNK-affiliated guard at the offices threatened one of the attorneys, and a TNK officer who came on the scene with armed "thugs" instructed the local chief marshal to order the Yugraneft parties to leave the offices. He then "instructed someone" to call the chief judge of the Nizhnevartovsk Regional court and order the court to dismiss its order, stating that TNK controlled the local government. (Id. ¶¶ 236-43.) TNK personnel sought to bribe Yugraneft officers with offers of appointment to a local government post and TNK employment, and threatened the Yugraneft representatives. (Id. ¶¶ 243-52.) Defendants also used false criminal proceedings to intimidate Yugraneft officers and quell opposition to the takeover. (Id. ¶¶ 259-65.)

  Following the takeover of Yugraneft, TNK stripped the company of its assets, including $40 million which was transferred to Alfa Bank for Defendants' use. (Id. ¶¶ 253-54.) TNK and the Crown Group have also converted and sold Yugraneft oil in the Russian domestic market and foreign ...

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