The CEO of Uralkali, the world’s No. 1 potash producer, faces up to 10 years in prison for corruption after his arrest in Belarus this week; Vladislav Baumgertner’s detention took place after Uralkali’s company removed itself from a cartel controlling more than 40% of world exports.
Baumgertner is charged with abusing his office at Belarusian Potash Co. (BPC), the trading company the two companies established in 2005, a Belarusian investigator told Bloomberg News; Baumgertner was in Minsk meeting Belarusian Prime Minister Mikhail Myasnikovich and was taken into custody at the airport after their talks ended, according to Uralkali.
An Uralkali spokesman called the arrest an “outrageous provocation” and that the company is seeking help from Russia’s foreign ministry.
Belarus officials also said they’ve issued further arrest warrants for four other Uralkali executives for devising a tax scheme to keep the state-owned Belaruskali out of the decision-making at BPC, causing losses of $100 million. Uralkali officials said in Q3 2013 they would quit the venture. Belarus added that it is seeking help from Interpol.
Uralkali decided to end output restrictions underpinning global potash prices and halt exports through BPC, announcing in Q3 that BPC had undermined the partnership by letting Belaruskali export potash outside of the trader. Baumgertner had said Uralkali’s plans to produce at full capacity could bring global potash prices down below $300 a metric ton — compared with Chinese prices of $400 in Q1 and Q2 2013.
The lion’s share of global potash is sold through BPC and North America’s Canpotex, which represents Potash Corp. of Saskatchewan, Mosaic and Agrium. Both traders established identical prices for major markets, thus establishing a cartel.