Belarus moves potash CEO from prison to house arrest

Belarus has moved the head of Russian potash giant Uralkali from a KGB jail to house arrest, his lawyer said Thursday, signalling a possible scaling down of a case that raised tensions between the two ex-Soviet neighbours. Vladislav Baumgertner has been placed "under the surveillance of agents from the (Belarussian) KGB" in a rented apartment in the capital Minsk, his lawyer Dmitry Goryachko told AFP. Goryachko said he had visited his client, who also briefly met with his mother at the flat. Baumgertner's August 26 arrest on suspicion of devising a scheme to enrich himself and other Uralkali executives at the expense of Belarus has been condemned by Russia and risked harming ties between the sometimes uneasy allies. Belarussian investigators have also charged Suleiman Kerimov, a powerful Russian billionaire who owns the Anzhi Makhachkala football club and is an ally of Russian President Vladimir Putin, in the probe. Baumgertner's arrest came after Uralkali -- one of the world's largest potash producers, with a share of about 20 percent of global production -- stunned markets by pulling out of a joint venture with the Belarus state potash firm. Uralkali's decision broke up one of the two global cartels of the vital product, which is primarily used as a fertiliser and is in growing demand due to fast expansion in Asia. Potash prices have plunged as a result, delivering a heavy blow to the struggling Belarus economy, which generates about a fifth of its revenues from potash sales. 'We see this as a first step' Baumgertner's transfer came hours ahead of a meeting later Thursday between Russian President Vladimir Putin and his Belarussian counterpart Alexander Lukashenko, who are due to observe joint military exercises in Belarus and the Russian exclave of Kaliningrad. Highlighting the importance Moscow has attached to the issue, Baumgertner's fate was also discussed during a visit to Belarus earlier this week by Russian Prosecutor General Yury Chaika, as well as during telephone talks between Russian Prime Minister Dmitry Medvedev and his Belarussian counterpart. Uralkali said its chief executive's transfer underscored the weakness of Belarus's case. "We view this as the first step... towards the complete lifting of all charges against our company executives, and the company's general director's quick return home," Uralkali spokesman Alexander Babinsky told the Interfax news agency. Baumgertner's detention surprised observers, given that Lukashenko's regime is hugely dependent on cheap energy imports from Russia and Russian credits to keep its economy afloat. Baumgertner was detained after flying to Minsk on an invitation from Belarussian Prime Minister Mikhail Myasnikovich. Moscow claims the move was an act of revenge by Belarus for its likely loss of income. The mercurial Lukashenko has needled Russia on occasion with his sometimes maverick behaviour, but observers believe the Kremlin prefers him to a pro-Western figure who could steer Belarus toward the European Union. Lukashenko faced protests after his controversial re-election in 2010 and a severe economic crisis afterwards, but largely remains unchallenged at the helm of Belarus. Potash is highly sought-after in fast-growing emerging economies as the fertiliser can be used to dramatically increase crop yields. Uralkali announced Tuesday that a Chinese state investment vehicle has taken a 12.5-percent stake in the company. According to Uralkali, its new shareholder structure means that after the Chinese transaction, 54 percent of shares are in free float and 21.75 percent are owned by Kerimov, the firm's largest stakeholder. Facing the unexpected charges in Belarus, Kerimov has sought to divest himself from the company and pursue his vast other interests, which include stakes in gold mining and energy firms. Russian tycoon Mikhail Prokhorov's Onexim Group is interested in at least a part of Kerimov's Uralkali holding, Moscow press reports said this week.