With its chief executive scuttling off to a secret location, dozens of foreign employees flooding out of the country and the threat of impending court battles, TNK-BP's messy shareholder dispute has helped push Russia's indexes into a downward spin.

The location of CEO Robert Dudley remained unknown Sunday to some of his closest colleagues, who insisted that the veil of secrecy would be lifted once he had succeeded in setting up the logistics to run Russia's third-largest oil company from abroad.

"No one is pretending it's going to be perfect," said one source inside the company. "But it was way less than perfect when he was here."

Faced with a protracted battle with migration authorities in attempts to renew his visa, inspections by labor agencies and a prosecutors' campaign that continued into the weekend, Dudley fled the country on Thursday citing "sustained harassment."

The British Foreign Office weighed into the dispute on Friday, saying in a statement issued by its embassy in Moscow: "We will continue to stress to the Russian government the importance of a resolution between the shareholders in full accordance with the rule of law."

Yet a spokesman for Prime Minister Vladimir Putin, who blessed the signing of the TNK-BP deal as president in 2003, said the state would not intervene in the dispute.

"The state remains aside from this dispute and doesn't see itself as a part of this dispute," Dmitry Peskov said by telephone Sunday. "It still doesn't have the slightest intention to interfere in this."

Analysts continue to believe that the clashes inside TNK-BP, 50-50 owned by BP and the AAR consortium that groups a team of billionaire Russian shareholders, will be resolved when a state-run firm is ready to buy into the venture.

"Just as TNK-BP's creation was only possible with the Kremlin's indirect participation, so it is likely that the current dispute over ownership will only be resolved with the Kremlin's intervention," Roland Nash, chief strategist at Renaissance Capital, said in a research note Friday.

Peskov, Putin's spokesman, dismissed claims by the British Foreign Office that the dispute was "detrimental to the British and Russian economies and to the global energy market."

"I don't see any way it could harm Russia's economy," Peskov said, noting that the firm, which released stellar first-half results last week, was continuing its operations.

The slide in Russia's markets on Friday, prompted foremost by Putin's harsh dressing-down of mining giant Mechel late Thursday, was "temporary," Peskov added.

Yet investors and analysts appeared to think otherwise. Nash, of RenCap, had some of the harshest statements, arguing that the scandal around Mechel and TNK-BP, as well as a slide in oil prices, "has finished the equity market's reputation as a safe haven."

William Browder, the head of Hermitage Capital Management, once the biggest Russia-focused investment fund until he was denied entry into the country in November 2005, said in an interview with the BBC over the weekend that the country was no longer safe for investment.

"At this point, you have no rule of law, no property rights and the prices are high — that's kind of a sucker's bet," he said.

Analysts were split on whether Dudley's departure from the country would force BP and AAR into broaching the possibility of compromise.

One source inside TNK-BP acknowledged the difficulty Dudley would face in running the firm from abroad. "Operationally, logistically, we don't know yet how it will work," the source said.

Another source said Dudley would issue directives by e-mail, despite a wide-ranging spyware campaign that has forced some TNK-BP employees to regularly switch mobile phone numbers and limit their use of e-mail.

"It was happening when he was in the company," the source said. "Everything was overheard, screened and listened to — and it still is."

Upon leaving Russia on Thursday, Dudley went to an interim location known to some inside the company, before leaving for an undisclosed location that remains secret to most, the source said.

Dudley would not work from London, BP and TNK-BP officials said Sunday.

"Bob's decision to leave Moscow was a personal decision," BP spokesman David Nichols said by telephone from London. "He's not in the BP office, he doesn't work for BP."

BP is due to release its first-half results on Tuesday. TNK-BP accounts for one-quarter of BP production and one-fifth of its reserves.

AAR, the consortium that groups Mikhail Fridman's and German Khan's Alfa Group, Viktor Vekselberg's Renova and Len Blavatnik's Access Industries, has been seeking Dudley's ouster arguing that he has run the firm in the interests of BP.

AAR CEO Stan Polovets said he believed that BP was behind the decision to evacuate Dudley. "This is all theatrics. Bob Dudley has not spontaneously gotten up and left," Polovets said. "It was well orchestrated and planned."

AAR would continue to push for an "independent CEO" who represents both sides' interests in TNK-BP, Polovets said.

"We are prepared to have Viktor Vekselberg and German Khan step down when the new CEO joins the company. Does this sound like an attempt to usurp control?" he added.

The acrimony surrounding TNK-BP appears set to continue into the week. Despite conflicting statements from prosecutors as to whether Dudley had been summoned for questioning on Monday, one TNK-BP source said they would send a legal representative to the office of the Moscow Central Administrative District on Monday afternoon, as requested.

Vladimir Kutovoi, a prosecutor at Moscow's Central Administrative District, wrote to Dudley on Friday saying he would initiate proceedings after finding Dudley "in violation of labor and migration legislation requirements," according to a copy of the letter obtained by The Moscow Times.

City prosecutors told Russian news agencies Saturday, however, that Dudley had not been summoned.

Meanwhile, it appears as though BP is moving closer to initiating legal proceedings against AAR over alleged violations of the TNK-BP shareholder agreement.

BP refused to confirm that it was taking any such legal steps, but a TNK-BP source said he believed that the oil giant was getting close. The Sunday Times reported that BP had hired law firm Linklaters to begin legal action in Stockholm.

Polovets said the consortium "categorically rejected allegations" that it violated the shareholders' agreement. "AAR has made every effort to resolve our differences with BP constructively and amicably," he said.

A source close to the Russian shareholders said they were also considering legal action.

"AAR's legal team is currently assessing a variety of legal options in a number of jurisdictions related to protecting AAR's interests," the source said.