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Oil giant Yukos faces dismantling

Date Class
20th Jul 2004 Fraud Investigation
 
Details
Russian oil giant Yukos faced being torn apart after bailiffs said they would sell off its main operating arm to settle a $3.4bn bill for back taxes.

Analysts said it was the worst-case scenario for the firm, which has been trying to agree a deal with the authorities over payment of the bill.

Many Russians believe the legal moves against Yukos are politically motivated.

The company's main shareholder and ex-chief funded opposition groups and is now on trial for fraud and tax evasion.

Yukos claimed that the government was planning to sell off the unit, Yuganskneftegaz, at far below its market value.

It said it had information that the price for Yugansk would be just $1.75bn, despite reserves it valued at $30.4bn.

The unit accounts for 60% of Yukos' total oil output.

Estimated value of Yugansk is about $11bn, even after a discount for a quick sale.

This is far in excess of the $3.4bn in back taxes the court has ordered Yukos to pay so far, or tax officials' total demand of almost $7bn for two tax years.

On Monday the firm lost a court bid to stay the bailiffs' demand. A court said it could appeal - but only on 6 September. Until then, it must pay up.

Yukos has said that it is unable to pay the tax bill immediately because its assets are frozen by court order.

Supporters of both Yukos and Mr Khodorkovsky have long charged that the 2000 tax bill - another similar one could be enforced for 2001 as well - is politically driven.

Mr Khodorkovsky's political ambitions posed a threat to the administration of President Vladimir Putin, they argue.

They see the hounding of Yukos as a warning to Russia's other "oligarchs" - the men who bought up the country's big companies at fire-sale prices in privatisations during the 1990s - to stay off the political stage and avoid investigation of their financial affairs.

Mr Khodorkovsky, meanwhile, is shuttling between jail and the courtroom where his trial is being heard.

On Tuesday, prosecutors began to set out their case in detail against him and a key business associate, Platon Lebedev.

Both men face seven counts of fraud and tax evasion and could face 10 years in jail if convicted.

In court on Friday, Mr Khodorkovsky described the accusations against him as "shameful".

 

 

 


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