Court Upholds Order on Yukos Account

A Moscow court on Tuesday upheld a decision to freeze the Swiss bank accounts of Yukos, Russia's largest oil producer, and several of its principal shareholders, Russian news agencies reported, while shares in the beleaguered company sank another 15 percent.

The accounts were frozen in March after a similar decision by another court, but Swiss authorities later overturned much of the freeze order. Tuesday's court ruling means Russia's federal prosecutors would have to petition Swiss authorities to reinforce the freeze.

The ruling comes amid intensifying pressure against Yukos on an overdue 99.4-billion-ruble ($3.4 billion) back taxes bill for 2000 that the company warns could drive it into bankruptcy. Authorities say Yukos owes a similar amount for 2001 and have indicated they may make further demands for subsequent years. Yukos has asked for two years to pay the bill, but so far there has been no indication the government is willing to compromise.

Bailiffs last week said one of Yukos' key production arms, Yuganskneftegaz, was being prepared for sale to settle the 2000 bill - a move that Yukos warned could sap the company of revenue to keep other operations going and that could make it unable to fulfill export contracts.

Yuganskneftegaz produces 60 percent of Yukos's 1.7 million barrels per day output and the possibility of a state-sponsored sell-off of a prize asset - possibly at fire-sale prices - has driven the share price down.

Yukos shares closed down 15 percent on Moscow's RTS index on Tuesday - a day after dropping more than 20 percent - and trading in the shares was temporarily frozen for the second day in a row on the MICEX exchange after they fell by more than 10 percent.

"Yukos shares could be worth anything at the moment," said James Fenkner, head of research at Troika Dialog. "But if the company doesn't cut a deal with the government then they won't be worth anything."

The tax case is part of a complex web of legal actions against Yukos and its former CEO Mikhail Khodorkovsky that are widely seen as a Kremlin-led drive to punish Khodorkovsky for funding opposition political parties and to stifle his presumed political ambitions.

Khodorkovsky, who was arrested in October, and associate Platon Lebedev are on trial on charges of forgery, fraud and tax evasion.

Fears that Yukos or its assets could be turned over to Kremlin-friendly executives intensified Tuesday when the state-owned oil company Rosneft said that Igor Sechin, a deputy head of President Vladimir Putin's administration, has been appointed its chairman of the board.

Sechin, a close Putin ally, is seen as an architects of the law enforcement campaign against Yukos. Along with natural gas monopoly Gazprom and Kremlin-connected Surgutneftegaz, Rosneft is seen as a likely buyer for Yuganskneftegaz or other assets if they are sold.

Also on Tuesday, Interpol's Moscow division said it has forwarded charges of complicity to murder and attempted murder against core Yukos shareholder Leonid Nevzlin to law enforcement authorities in other Interpol states and in Israel, the Interfax news agency reported.

A Moscow court issued an arrest warrant Monday for Nevzlin, who lives in self-imposed exile in Israel.



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