Gerashchenko Refuses to Go Quietly

Gerashchenko Refuses to Go Quietly

In a standoff that indicates Yukos could be cracking under relentless government pressure, board chairman Viktor Gerashchenko on Friday faced down a call for his dismissal by the oil firm's jailed owner Mikhail Khodorkovsky and appeared to try and take control.

Calling Khodorkovsky's demand last week for his ouster "improper," Gerashchenko lashed out at his employers, accusing Yukos' owners of standing in the way of attempts to save the company, which is facing potential bankruptcy over nearly $7 billion in back tax charges.

Gerashchenko claimed the company was wracked by deep internal conflict and that factions inside the company were deliberately pitching it on a collision course with the state.

"I have reason to believe that both within the company and outside it, in Russia and abroad, there are groups of influence that have an interest in a protracted conflict with the state to resolve their personal, mercantile interests," he said in a statement issued Friday.

Making an apparent pitch for control of the company, over and above the wishes of its majority owners, he said, "A Yukos board headed by me will oppose these groups by all means."

Gerashchenko rejected Khodorkovsky's claims made in statements via his lawyer last week that Gerashchenko had failed in his mission to negotiate with the government over the company's fate. Instead, he laid the blame for the apparent lack of progress on talks squarely with Yukos' shareholders and the company.

"The authorities do not yet see sufficient sincerity in the company's offers linked to the judicial and legal procedures being conducted against the company," he said.

He said that only when the company's owners would stop interfering in the management's operational and executive activities, "stop whipping up public opinion both in our country and abroad with various schemes and stop cunning attempts to resist the implementation of lawful decisions, [only then] will constructive dialogue with the authorities not just intensify but demonstrate the genuine good will of the state toward our company."

Yukos sent a tax debt restructuring proposal to the government 10 days ago, offering to pay up to $8 billion in additional taxes over two years if a court-ordered asset freeze is lifted. But so far the government has made no official public response to the letter, other than to say it had not yet received it.

Some observers suggested Gerashchenko's remarks could be aimed at conveying the government's position on the proposal to Khodorkovsky, who is isolated in jail. Otherwise, analysts said, it looked like the company was slowly beginning to fracture internally in the face of government pressure.

It was also not clear Sunday whether Gerashchenko was trying to take over the company in the interests of a third party, or acting in the interests of the state in trying to drive a wedge between the company and its owners.

"This shows there are significant cracks between management, the board of directors and the shareholders, and shows the absence of a united front at a crucial juncture in the company's life," said Steven Dashevsky, head of research at Aton.

It is not the first time cracks have appeared within Yukos as a result of the yearlong legal onslaught against the company and its owners, which has seen Khodorkovsky and his business partner Platon Lebedev thrown in jail on charges of fraud and tax evasion.

Last month, CEO Simon Kukes was dismissed amid reports of conflict between majority shareholders and factions of the management team over a rescue plan sent to the government.

Gerashchenko's appointment as board chairman on June 24 was meant to put an end to that strife. As Central Bank chairman for most of the 1990s, his contacts with most of the nation's top officials were thought likely to give him a better chance to settle the dispute with the government.

But the hopes of investors -- and those of the company's majority shareholder, Group Menatep, which proposed him as board chairman -- appeared to collapse just days after his election when Gerashchenko publicly admitted top Kremlin and government officials were not returning his calls.

Last week, Khodorkovsky called via his lawyer Anton Drel for the board to dismiss Gerashchenko, saying that Gerashchenko's posturing was making it even harder to strike up a dialogue with the government.

But some observers said that the public call for Gerashchenko's ouster may have exacerbated the situation, because Khodorkovsky had previously been trying to distance himself from the management of the company.

Other analysts said anyone appointed to the post of board chairman would face an impossible task convincing the government to rein in its legal onslaught. "Who's Khodorkovsky going to nominate in his place -- God?" said one observer, speaking on condition of anonymity.

Despite the escalating rhetoric surrounding Gerashchenko's fate, it remained unclear Sunday whether he would be removed as chairman.

Drel has said that Gerashchenko has refused to stand down.

For the board chairman to be ousted, Menatep has to win a simple majority at an extraordinary shareholders meeting. In doing so, however, the company's entire board would have to be dismissed.

Drel would not comment Sunday on Gerashchenko's remarks.

One board director, speaking on condition of anonymity, said: "I am unaware of any formal requests to the board" to discuss the issue.

Meanwhile, Yukos spokesman Alexander Shadrin said the company had not yet received a request to hold an extraordinary shareholders meeting.

As the company appeared to be roiled by internal infighting, Yukos announced Friday it had appointed two major investment banks, Renaissance Capital and Credit Suisse First Boston, to conduct an audit on the value of its assets.

The announcement came as court marshals continued to conduct their own inventory of Yukos ahead of possible asset sales to pay off the overdue back tax bill worth $3.4 billion.

A source close to the Kremlin indicated to Vedomosti last week that the presidential administration had also requested that Renaissance Capital take over Gerashchenko's role as middleman between Yukos and the state.

The chairman of RenCap's supervisory board, Alexander Shokhin, denied that report in an interview with Ekho Moskvy radio on Friday. When reached by telephone Sunday, he declined any further comment.

Shokhin and Gerashchenko worked closely together in the early 1990s, when Shokhin was economics minister and Gerashchenko was Central Bank chairman.

Shokhin was among a handful of investment bankers recently invited to the Kremlin for a meeting between President Vladimir Putin and big business.

Analysts at other investment banks said Sunday they doubted that RenCap would take on the risky job of the alternative audit of Yukos' assets, unless it believed it would not put them on a collision course with the Kremlin.

"The fact that they are taking a role suggests there may be scope for a deal," said Stephen O'Sullivan, co-head of research at United Financial Group. "There may not be bankruptcy, but at the same time [the state and Menatep] are still fighting as they get closer to the edge of the cliff."

A spokeswoman for the Justice Ministry would not comment Friday on how much cash court marshals had collected from the company so far. The ministry said Thursday that Yukos was beginning to transfer funds to pay off the $3.4 billion tax bill. The spokeswoman said the amount would be announced Monday.