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Sistema, the Russian telecoms and oil holding, must return oil company Bashneft to state ownership, Moscow's commercial court ruled on October 30 in a hearing that lasted just 90 minutes.

The speed with which the court returned a decision in such a complex case - Bashneft has had a convoluted ownership history spanning two decades - will strengthen perceptions that the proceedings were politically motivated, and that the verdict represents a de facto nationalisation of the assets.

The lawsuit brought by the prosecutor general argued that Bashneft's shares had been illegally privatised in 2001-2002, and that Sistema had known this when acquiring the assets in 2009 for $2bn.
 
Criminal proceedings launched by Russia's feared Investigative Committee in July led to the arrest on September 16 of Vladimir Evtushenkov, founder of Sistema and one of Russia's richest men. 

Sistema's main asset is Russia's largest mobile telecoms operator MTS. Evtushenkov has been held under house arrest since, in the first arrest of a major oligarch since that of oil tycoon Mikhail Khodorkovsky in 2003, a move that shocked Russia's business elite and shook investor confidence in the country. Sistema's share price on Moscow exchange has collapsed from nearly RUB50 per share in July to currently just over RUB14. 

Sistema's share price had shot up by 10% at the opening of proceedings on October 30 when it became clear that the prosecutor general would not sue Sistema for compensation for five years of dividend payments, totaling around $6bn, since Sistema acquired the assets from businessman Ural Rakhimov, the son of former president of Russian constituent republic of Bashkortostan Murtaza Rakhimov. 

Bashneft production and refining assets are located in Bashkortostan, and the fact that the son of the republic's president ended up as owner of entities originally controlled by the state strongly indicated corruption. The prosecutor general argued that Sistema had known of this fact when acquiring the company. 

The defence argued that the statute of limitations applied to the circumstances surrounding the privatisation of the assets by the Bashkortostan authorities, which had taken place over 10 years previously in 2001-2002. Moreover, the defence argued that the assets had not been Russian federal property since 1991, when Murtaza Rakhimov suspended a decree by then Russian president Boris Yeltsin listing what are now the Bashneft assets as belonging to the Russian Federation. 

The court has not yet presented its reasoning behind the decision, and Sistema has made no statements about lodging an appeal, for which it has a month. 

The decision will be widely regarded as politicised by market participants, as an attempt by the Kremlin to nationalise Bashneft at a time when the Russian budget is coming under pressure. The combination of criminal charges brought personally against Evtushenkov for receipt of stolen property in acquiring Bashneft, and a commercial lawsuit against the company, suggests a bad cop / good cop game in the eyes of many observers. The perception would be confirmed if criminal charges against Evtushenkov were to be dropped after Sistema surrendered the contested Bashneft shares to state ownership, say pundits.