European Trade Commissioner Peter Mandelson accused Russian shareholders of "menacing" behaviour yesterday in the struggle for control of TNK-BP.

Mr Mandelson, attending the EU-Russia summit in Khanty-Mansisyk, Siberia, said that the dispute over the embattled oil giant was damaging Moscow's image with international investors.

He described the conflict between BP and the quartet of Russian billionaires who own half of the company as "primarily an issue between shareholders". But he added that it raised wider questions about Russia's relationship with the European Union and with international investors.

"The first is the somewhat menacing behaviour on the Russian shareholders' part towards corporate governance and the management of TNK-BP, which is a Russian company," Mr Mandelson said.

"The second is the use of state resources, apparently, to back up the position of the Russian shareholders. This raises questions about the climate for international investment in Russia, about the operation of the rule of law and about the relationship of the state, its agencies and resources, to what should be purely a private-sector business relationship."

Mr Mandelson said that he had warned senior government ministers during talks in Moscow last week about the damage being done to Russia's image among investors by the dispute at TNK-BP. Bafflingly, Kremlin officials had claimed ahead of the summit that the issue was not raised in discussions.

TNK-BP has come under sustained attack from government bodies in Moscow since the corporate war erupted between BP and its Russian partners Mikhail Fridman, Viktor Vekselberg, Len Blavatnik and German Khan.

It is the target of a tax investigation and a separate inquiry into alleged violations of immigration and employment law. TNK-BP's chief executive, Robert Dudley, was summoned for a five-hour interrogation by Interior Ministry police earlier this month as part of the tax inquiry.

TNK-BP's headquarters were also raided by the FSB, the federal security service, after an employee was charged with industrial espionage. The FSB has also raided BP's Russian headquarters twice.

The Russian shareholders' AAR consortium has demanded Mr Dudley's dismissal, accusing Mr Dudley of running the company solely in the interests of BP. But BP said this week that it was "absolutely committed" to Mr Dudley.

Suspicions persist that Russia's third-largest oil company is the target of a Kremlin-backed campaign to force it to cede control to a state-owned rival such as Gazprom. The Russian shareholders accused BP on Tuesday of conspiring with the Kremlin to force them to sell out to Gazprom, a claim dismissed by BP officials.

However, BP's senior management are understood to accept that control will pass to the Russian state, with the British side retaining a minority stake. The TNK-BP joint venture was formed in 2003 in what was then the largest single foreign investment in Russia.

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