On May 25, Norex Petroleum, a Cyprus company with Canadian shareholders, received permission to begin discovery against Alfa Group in the U.S. District Court for the Southern District of New York. Norex charges that Alfa Group, the Russian conglomerate and its many affiliates wired millions through U.S. banks, created an illegal slush fund, avoided U.S. and U.K. taxes, and fraudulently seized the oil-producing assets of Norex’s Yugraneft subsidiary, thus violating the Racketeer Influenced and Corrupt Organizations Act (RICO), among other U.S. laws.

If Norex proves its case against the Alfa Group and wins in U.S. courts, the outcome could further damage already shaky U.S. relations with purportedly capitalist, democratic Russia. Meanwhile, global investors should consider Alfa Group’s alleged behavior as a stern warning of the kind of treatment foreigners can expect from Vladimir Putin’s increasingly autocratic regime.

Mr. Putin seeks to secure his state’s role in global energy markets, and further control energy production and prices. On March 1, Mr. Putin declared, that “global energy security” is the most pressing issue facing the G8 and the world.

On May 22, he announced a Russia-Kazakhstan venture to expand capacity at Orenburg’s natural gas refinery, for 50 percent Russian ownership in the facility. Reasserting Russia’s energy might, Putin aide Igor Shuvalov stated: “We are prepared to provide Europe with oil and gas on a long-term basis and we are taking on the role of the leader…We will continue our expansion whether our European partners like it or not.”

Mr. Putin, G8 president for 2006, pretends to rule a developing capitalist economy. But Russia lacks business ethics: Upon gaining power in 2000, Mr. Putin signaled Russian businessmen that “The state wouldn’t question whether they’d acquired their companies legally, as long as they started investing their profits at home rather than stashing them in foreign banks.”

Alfa Group is a closely held $20 billion-plus empire, which seems to follow Mr. Putin’s advice. It has Russian, European, Asian, Caribbean and U.S. branches and offices managing companies in banking and finance, oil and gas, mobile telephone service, construction material, commodities, food processing and supermarkets. Its subsidiaries include Alfa Capital Markets, Alfa Bank, Tyumen Oil, Altimo, Perekriostok Group and countless others. Chairman and “oligarch” Mikhail Fridman, 42, owns 40 percent.

Given Alfa’s important role in Russian markets, the ninth annual Russian Economic Forum hosted Alfa President Peter Aven in London in April. Mr. Aven sang Russia’s praises. “Russia’s favorable economic trend should translate into more equal revenue distribution and stronger investment growth in order to reduce vulnerability to oil price trends,” he said, ignoring Russia’s dubious seizure of Yukos in 2004 .

Alfa seems an unlikely advocate for Russian “equal revenue distribution,” much less shareholder rights. Indeed, with state backing, the group allegedly wrested control of two key Siberian oil production companies from their rightful owners.

To maintain good government relations, Mr. Fridman associates with central Russian figures past and present. Mr. Aven, for example, was trade minister in Yegor Gaidor’s 1992 government, and reportedly remains Mr. Putin’s close friend. Similarly, Leonard Vid, former U.S.S.R. First Deputy Head of the Gosplan central planning committee, was for at least five years chairman of Alfa Bank’s executive board, responsible for legal divisions, interest committees and representation in Russia’s federal government and Central Bank.

In November 1999, Alfa’s TNK and Tyumen Oil subsidiaries purportedly bought Sidanko’s Chernogorneft operation through court-ordered bankruptcy proceedings. Britain’s BP-Amoco oil giant, Secretary of State Madeleine Albright and the U.S. Export-Import Bank, among others, questioned the deal. After the Siberian court approved a June 29, 2001 armed takeover, Alfa also grabbed Yugraneft from Norex.

In Russia, such court- “approved” takeovers, observes Alexander’s Oil and Gas Connections, “usually involve bribing regional judges to provide the necessary legal pretext to send in armed guards,” after which “oil and profits are pumped out to the new owner’s affiliated companies.” Those are among the allegations in a February 2002 Norex lawsuit against Alfa in New York.

Alfa’s Bank and related financial subsidiaries frequently underwrite major Russian equity and bond offerings. In December 2005, Novolipetsk Iron & Steel raised $609 million in London, bringing overall Novolipetsk equity to some $15 billion. Anticipating similar results, Alfa’s TNK-BP unit later this year will publicly sell shares of its Udmertneft oil subsidiary, now worth $3.8 billion.

In an amended December 2005 complaint, Norex alleges that Alfa’s agents include the New York-based Access Industries and Renova Inc. and a bevy of other U.S. and foreign individuals and companies, including British Petroleum.

After stripping BP of 10 percent of Sidanko in 1999, Alfa returned BP’s stake to procure a $500 million Ex-Im Bank loan guarantee. In 2002 at other shareholders’ expense, Norex alleges, Alfa sold BP another 15 percent of Sidanko for a steeply discounted $176 million. In 2003, BP agreed to pay $6.75 billion for 50 percent of a new BP-TNK joint venture, allegedly advancing Alfa’s conspiracy to defraud other shareholders. Mr. Fridman specifically asked Mr. Putin to approve the “multibillion-dollar deal that would give foreigners 50 percent of what would be Russia’s third-largest oil producer.” Outside Russia, BP-TNK’s oil producing assets would be worth at least $80 billion, according to Norex.

Alfa’s victims, Norex alleges, include Harvard University’s endowment fund and American owners of the Chernogorneft American Depositary Receipts “terminated” in October 2003. Norex also says Alfa illicitly traded oil with Iraq and oil-for-sugar with Cuba, allegedly violating RICO and the Helms-Burton Act, and thus acting against U.S. interests. If proven, Alfa Group’s actions may intensify the cold winds blowing between Russia and the U.S.