Trader feels jagged edge of Russia's metals market

You have a mighty London-based metals trading interest and a very irate Russian Interior Minister. Add to the mix, a contest over billions in potential profits, the shadow of organised crime, and suspicions of a Kremlin plot involving Boris Yeltsin's ex-bodyguard, and you have the picture. Russia's latest industrial scandal lacks nothing in intrigue.

The group is Trans-World Metals, which has in the last six years quietly built itself into the world's third largest aluminium producer by acquiring control of several of the huge, but largely moribund, Russian smelters where the Soviet Union used to churn out metal for missiles and aircraft.

The UK-based firm's willingness to brave the perilous waters of Russia's metals industry - which has seen regular murders, and where fortunes are quickly be made and lost - has given it sizeable stakes in smelters which account for nearly 40 per cent of the country's aluminium output. These include the world's largest at Bratsk in Siberia. This activity has generated vast profits for Trans-World, but now the future is clouded by an acrimonious dispute which has set the company against powerful elements within Russian officialdom.

Last week, grievances erupted into the open when the group's chairman, David Reuben, published an open letter in the Wall Street Journal, and elsewhere, addressed to the US Vice-President, Al Gore, and Russia's Prime Minister, Viktor Chernomyrdin.

In it he complained that, despite ploughing hundreds of millions of dollars into Russia, the group now "stands on the verge of seeing all our investments and achievements destroyed" by "a craven, political power play, Russian- style". There was, he continued, a move led by the Russian Interior Ministry and "renegade banks" to "re-privatise" aluminium enterprises.

A particular target of his complaint was General Anatoly Kulikov, Russia's hard-line Interior Minister, whom he accuses of wanting to restore state control of the national aluminium industry. Such a move, Mr Reuben's letter warned, would cause the international market for investment in Russia to dry up altogether.

However, this is more than a cautionary tale about foreign interests operating in a country which still has strong protective instincts.

Beneath the surface there is a complex, but crucial, sub-plot. For the last few weeks, some of the Russian mass media - much of which is under official influence - have focused on alleged crime in the aluminium industry. The issue has been championed by General Kulikov, who has made allegations of embezzlement and bribery about a company with links to Trans-World - although it should be noted that Trans-World has repeatedly stated that it has done nothing wrong.

It is believed that the motive for such strong official interest in the industry includes a political dimension - namely, to discredit Boris Yeltsin's security chief, Alexander Korzhakov, and one of his former deputy prime ministers, Oleg Soskovets. Both men were fired last year.

Since his ousting, Mr Korzhakov, a former KGB officer with close ties to the metals industry, has become an enemy of the Kremlin and Mr Chubais. He is loosely allied to Alexander Lebed, the ex-general who is often named as the favourite to win the presidency next time. After a brief stint as Mr Yeltsin's national security adviser last year, Mr Lebed was also sent packing - following a row with General Kulikov.

According to NTV's flagship current affairs programme, Itogi, elements in the aluminium industry financed Mr Lebed's brother, Alexei, in a successful bid to become a regional governor. The Interior Minister's assault on the industry - or so the theory runs - is therefore partly an attempt to stop Mr Lebed turning to the same golden goose.

It is a murky business, shot through with speculation and political gamesmanship. It seems likely to fester on, aggravating international relations and jeopardising jobs and incomes.