Russian court upholds tax claim against Yukos

A Moscow commercial court on Tuesday upheld a $3.4bn demand by the Russian tax authorities against the embattled oil group Yukos, clearing the way for the potential bankruptcy of the company.


Trading in the company's shares fell by nearly 7 per cent in the afternoon on the back of the news, which could swiftly require reimbursement of money that Yukos does not currently hold in liquid form.

The company, which rejected the claims in court, had requested a stay in proceedings while it attempted to negotiate an out-of-court resolution, but a representative for the tax authorities said: "We have no intention of an amicable agreement."

Theoretically, the decision clears the way for bailiffs to request immediate court approval to seek assets from the company, which is bound by a freezing order preventing it from selling businesses in order to raise the cash.

However, there was dispute among lawyers over whether the freezing order should be automatically lifted as a result of the ruling, and over the likelihood of any swift move by bailiffs to call in the debts in the current political climate.

"We are surprised and disappointed by the ruling," a Yukos spokesman said on Tuesday. "We maintain that we operated fully within the law, we will appeal and if we lose, we will pay our debts."

Yukos says it currently only holds $1.5bn in cash, but recently wrote to Mikhail Fradkov, the Russian prime minister, proposing an organised sale of assets, and possible contribution of shares by its majority shareholder, to settle the debts in the coming months.

Its proposals were made public as President Vladimir Putin said earlier this month that it was not in his administration's interests to see Yukos bankrupted, and indications by Yukos executives and government officials that contacts had been established.

Nevertheless, representatives in the dispute on both sides have downplayed suggestions that any serious discussions are yet underway, and the government has been keen to give the impression that the process is being managed by the courts without political interference.

Its statements come despite a widespread belief that the tax claims were brought as part of a growing number of persecutions against the company and its former chief executive Mikhail Khodorkovsky on political grounds.

Combined with a previous ruling imposing a freeze on the sale of assets and permitting swift repayment, the judgement risks bailiffs seeking repayment, despite Yukos' claims that it only currently has cash totalling $1.5bn.

Yukos officials fear that the $3.4bn bill imposed for the year 2000 may yet be followed by further demands for additional taxes for the subsequent three years, further threatening the company's survival.

However, the latest legal actions are seen by some analysts as an attempt by the authorities to negotiate the dilution of Mr Khodorkovsky's controlling stake in Yukos simply from the greatest position of strength.

Bankruptcy could risk triggering international legal actions, dispossessing bankers and minority shareholders and provoke a strong reaction from abroad.

HERE