Way Cleared for Seizing Yukos Assets

The Moscow Arbitration Court on Wednesday lifted an injunction against enforcing payment for a potentially crippling $3.4 billion back tax claim against Yukos.

"This means the tax service can act to enforce the claim" and seize assets if the court rejects Yukos' appeal against the claim itself, said Sergei Pepelyayev, the lead defense lawyer in the case.

Those hearings were scheduled to continue Thursday, but Pepelyayev said a quick ruling was unlikely.

The court must first hear a tax service appeal over a previous ruling that reduced the $3.4 billion bill by $14,000 over a technicality.

The court has spent three days hearing appeals by Yukos Moskva, a key Yukos subsidiary, without issuing a ruling, and it must also hear an appeal from Yukos itself.

Finance Minister Alexei Kudrin opened the door for negotiations Monday, saying Yukos had sent a schedule for paying the bill to the government and that the company could pay the bill despite a court order barring it from selling assets.

Kudrin's deputy, Sergei Shatalov, has said the tax service could consider reducing the sum. If forced to pay immediately, Yukos, which has $1 billion in cash, says it may be forced into bankruptcy.

Yukos' board, meanwhile, met behind closed doors for the last time to discuss proposals to pay off the debt. The new board of directors, which is responsible for hiring management, will be elected at Thursday's annual shareholders meeting.

Menatep is expected to strengthen its position on the company's board Thursday with the election of its candidate for the chairmanship -- former central banker Viktor Gerashchenko.

In a move that threatens to drive a wedge between ownership and management, Deputy CEO Yury Beilin sent the government a proposal to resolve the dispute in which he said that policies of major shareholders and former management had resulted in significant tax evasion in the past. The plan entails the gradual sell-off of the controlling stake in the company currently held by Group Menatep, the holding company controlled by jailed billionaires Mikhail Khodorkovsky and Platon Lebedev.

It was unclear whether Khodorkovsky or other core Yukos shareholders would agree to back out of Yukos, a condition that many experts say is key to resolving the tax dispute.

"We are open to any reasonable proposal," Tim Osborne, a Menatep director, said by telephone from London. "But I wouldn't like to say anything more specifically than that."

Meanwhile, the fraud and tax evasion trials of Khodorkovsky and Lebedev resumed Wednesday, but were quickly adjourned until July 12 to allow defense lawyers more time to review their combined cases.

Khodorkovsky told the court that he personally was powering through eight to 10 volumes of the 400-volume case per day and needed only seven more days to finish. Anton Drel, a lawyer for Khodorkovsky, said later that the trial could last months. "We expect some kind of decision before the New Year, but that depends on many things."

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