the times | Tuesday March 15 2022 2GM 39Business
The City’s highest-earning law firm has
pulled the plug on its Russia operation,
joining the exodus of English lawyers
from the country as the Ukraine war
intensifies.
DLA Piper said that it was closing its
Moscow and St Petersburg offices,
while another prominent transatlantic
practice also shut down in the Russian
capital. DLA, which last year recorded
revenues of £2.16 billion, opened in
Russia 17 years ago. Its announcement
came after two other City firms —
Hogan Lovells and CMS — announced
late on Friday that they were closing
their Moscow offices.
DLA Piper is the creation of a seriesnoted, arguing that they “could be drill-
ing right now, yesterday, last week, last
year” but had decided not to. Granholm
went further, accusing lobbyists of
peddling “the same old DC BS” during
an emergency. She asked: “Aren’t we
ready to finally work together to con-
front this moment of crisis?”
Some executives have expressed
apprehension that Washington’s appe-
tite for oil could be short-lived. “The
rhetoric from the administration is we
need more oil now, but we don’t need it
later,” Mike Sommers, chief executive
of the American Petroleum Institute,
told Axios. How could companies make
long-term investments, he mused,
when they did not know what policies
to expect in future? Biden, meanwhile,is standing by his climate agenda and a
goal of transitioning away from fossil
fuels. His officials insist that there is no
tension between the desire for more do-
mestic oil and gas output today and
alternative sources tomorrow. They are
trying, as Granholm put it, to “walk and
chew gum at the same time”.
With US inflation at a four-decade
high, Biden has vowed to throw all he
can at mitigating the cost of surging oil
prices for consumers. “This is not a
‘drill, baby, drill,’ administration, that’s
for sure,” Kilduff said. It is, nevertheless,
one that faces the ballot box in Novem-
ber. Officials would “bite the bullet”, he
predicted, and do everything possible
“in the short term” to boost oil produc-
tion and get prices down.Top law firm joins Moscow exodus
of mergers, most importantly in 2005
between DLA, the English practice, and
Piper Rudnick, which was based in
Baltimore. Hogan Lovells — with
present revenues of nearly £1.8 billion
— was created five years later by the
merger of Lovells, of London, and
Hogan & Harston, a renowned firm in
Washington that specialised in lobby-
ing the US government and congress.
CMS, which last year had revenues of
£1.3 billion, is based in London and
came into being after the merger in
1999 of practices in the City, Germany,
the Netherlands and Austria.
Both Hogan Lovells and CMS are
among the top ten highest-earning law
firms in the City. Last week, a string of
firms in that group announced theclosure of their Russian offices,
including all four of the City’s “magic
circle” elite that have overseas offices
— Allen & Overy, Clifford Chance,
Freshfields Bruckhaus Deringer and
Linklaters.
Two other transatlantic firms —
Norton Rose Fulbright and Eversheds
Sutherland — and Herbert Smith
Freehills, an Anglo-Australian prac-
tice, also said last week that they were
pulling out of Russia.
After yesterday’s development, all of
the City’s top ten law firms by revenue
have left Russia. Others that have
exited include Kennedys, a specialist
insurance law firm, and several of the
large American practices, including
Latham & Watkins and White & Case.Jonathan Ames Legal EditorToxic four are finally
shown the door
B
it late for the tracker fund.
If only FTSE Russell had
kicked Evraz, Polymetal,
Petropavlovsk and Raven
Property out of the stock
market indices sooner — before
shares in the quartet imploded.
The Russian-focused quartet have
been toxic ever since Putin’s assault
on Ukraine, if not before. So it does
look a bit late for the index compiler
owned by the London Stock
Exchange to be finally chugging into
action. It says market “feedback” is
that “major international brokerage
firms” are “no longer supporting
trading of these securities”. No
kidding. Whatever, the tracker
fraternity have no trades to mimic.
The upshot? The four stocks will be
ejected from the indices on Friday.
It’s all part of Londongrad’s belated
clean-up: one that’s also seen the
suspension of the global depository
receipts in around three dozen
companies, spanning the likes of
Rosneft, Gazprom and Sberbank.
The quartet being booted off the
indices aren’t state-backed and, with
one exception, don’t star a famous
oligarch. Yet they’re a rum bunch.
Most famous is Evraz: the
steelmaker 29 per cent-owned by
Roman Abramovich, the man
desperate to sell Chelsea FC who
Britain finally sanctioned last week.
It triggered an overdue suspension of
Evraz shares at 80¾p — down 70 per
cent since Putin’s invasion of
Ukraine. Plus a mass exodus of the
non-execs. They included the senior
independent director Sir Michael
Peat: a man aboard for a decade,
lately snaffling $254,000 a year.
Perhaps the former private secretary
to the Prince of Wales might like to
donate his Evraz pay to the Ukraine
humanitarian appeal. Failing that, he
could always be stripped of his
knighthood.
Elsewhere, goldminer Polymetal
has been similarly friendless, with the
shares down 85 per cent in three
weeks — despite BlackRock topping
up its stake to more than 10 per cent.
Polymetal has also seen a mass
resignation: six directors gone,
including chairman Ian Cockerill. On
top, there’s Petropavlovsk, mining’s
version of Groundhog Day: a business
typically in a state of internecine
warfare without any help from
Vladimir Putin. Its shares are down
almost 80 per cent since he invaded
Ukraine.
The last of the quartet? Raven
Property, the owner of warehouses
mainly around Moscow. It’s run by
executive deputy chairman Anton
Bilton, hubby of model Lisa B, and
chief executive Glyn Hirsch. Floated
in 2005, it followed up a year later
with a £310 million fundraising at
115p. The shares today? 5¾p, with the
group warning a fortnight ago that
its “greatest uncertainty” was over
access to the “funds of its Russian
subsidiaries” and whether they “can
be converted to the correct currency
at a commercial exchange rate”.
The Raven duo are best known
lately for their walk-on part in the
Neil Woodford farrago. It was their
firm Belasko that sponsored his
dodgy Guernsey share listings: the
ones that enabled him to claim that
his fund hadn’t breached the 10 per
cent cap on unquoted stocks. The
pair also produced 2019’s deal thatbought out Woodford’s 12 per cent
stake in Raven for £26 million: a
decent trade by his usual standards,
given the entire Raven group is now
valued at just £33 million.
Anyway, sadly this quartet will no
longer be starring in your tracker
fund. Don’t all complain at once.Digging in
C
all that gratitude. Rio Tinto
investors have just been treated
to a $16.8 billion full-year
dividend (report, page 44). So you’d
think they might be a bit more
chilled if the miner wants to spend
just $2.7 billion on something more
interesting: a bid to take majority
ownership of its copper project in
Mongolia. Think again: Rio shares
fell 5 per cent to £52.99.
So much for the attempt by Rio
boss Jakob Stausholm to clean up the
messy corporate structure via which
the miner holds its one third interest
in Oyu Tolgoi. Rather than own it
directly, Rio holds 51 per cent of the
Toronto-listed Turquoise Hill, the
owner of two thirds of the vast Gobi
Desert copper mine. The rest is held
by the Mongolian government.
Hence Stausholm’s offer to buy out
Turquoise’s minorities. It would give
Rio control of the project. And, as he
put it, “strengthen” Rio’s clout in
copper: a top net zero commodity,
used in everything from electric cars
to battery power. It would also leave
Rio less skewed to iron ore.
Strategically, it makes sense. Yet
Rio shareholders have grounds to be
wary. Stausholm’s C$34-a-share offer
is at a 32 per cent premium — for a
project that’s been beset by delays
and cost overruns, not to mention
Turquoise writing off $2.4 billion of
loans owned by Mongolia. There’s a
risk, too, that Rio will have to pay
more. Turquoise shares leapt a third
to just below the offer price. Yet that
may not be enough for hedge fund
Pentwater, the owner of just under a
tenth of the shares that last year
launched a class action suit against
Rio over the project’s rising costs.
True, Rio’s offer potentially gets the
minorities out of funding a $1.5 billion
rights issue. But it may have to
sweeten its bid.
Even so, Stausholm knows Rio can
easily afford to dig a little deeper. It’s
no big deal if he does.Fashion victim
F
orget number-crunching.
Fashion advice has long been
the key forte of the Office for
National Statistics. And, once again,
the wonks haven’t disappointed.
They’ve killed off men’s suits: the
overpriced uniform slung out of the
inflation basket after 75 years. Fewer
blokes want to be trussed in a two-
piece, what with trackie-bottomed
working from home accelerating the
fall in suit sales: down from
five million to two million a year over
the past decade, on Kantar estimates.
An alternative bit of clobber, “bin
liners for kitchen use”, is also out of
the basket. Still, luckily, pet collars for
dogs or cats are in. Try wearing one
of those to work instead.[email protected]business commentary Alistair Osborne
new gold rush in shale
Talks hope
and Covid in
China take
heat off oil
Oil prices tumbled by 6 per cent yester-
day amid hopes that there could be a
breakthrough in talks between Russia
and Ukraine and as a resurgence of
Covid cases in China threatens to
dampen demand.
Brent crude, the global benchmark
price, was down at about $106 a barrel
last night, having hit highs of as much
as $139 a barrel last week as the Ukraine
crisis escalated — levels not reached
since 2008.
Last week the United States imposed
an embargo on Russian oil, while
Britain vowed to end imports by the
end of the year. At the same time, many
energy companies voluntarily stopped
buying Russian oil, leaving the market
scrambling to find alternative supplies
and leaving prices highly volatile.
Oil prices are expected to continue to
moderate this week as investors digest
the impact of sanctions on Russia,
along with tentative signs of negotia-
tion towards a ceasefire.
Boris Johnson, the prime minister, is
preparing to visit Saudi Arabia to urge it
to pump more oil.
Yesterday Johnson met chief execu-
tives and senior leaders from oil and gas
companies operating across Britain to
urge them to keep investing in the
North Sea and to increase domestic gas
production. Those at the meeting are
understood to have included Bernard
Looney, the chief executive of BP, Sam
Laidlaw, the chairman of Neptune
Energy, and David Bunch, the Shell UK
country chairman.
No 10 said that the prime minister
and the leaders had discussed “how the
UK can remove barriers facing inves-
tors and developers, and help projects
come online more quickly” and had
“agreed to work together going for-
wards to help accelerate this further”.Emily Gosden Energy Editor6 Trading in nickel is set to resume to-
morrow at the London Metal Exchange
after Tsingshan Holding Group, the
world’s largest producer, reached a deal
with its bank counterparties to resolve
a bet. Last Tuesday, the LME suspend-
ed nickel trading after its price briefly
doubled to more than $100,000 a
tonne. The surge was driven by a giant
short wager made by Xiang Guangda, a
Chinese billionaire behind Tsingshan.