Official: No Compromise for Yukos

Russia's finance minister firmly rejected the prospect of restructuring the crushing back taxes bill of Yukos, the country's biggest oil producer, making state seizure of the company's assets almost certain.

Finance Minister Alexei Kudrin's statement followed assurances by another top official that Yukos' production would not be affected.

Those statements appeared to support speculation that the state plans to redistribute the company's choice assets and redistribute them into Kremlin-friendly hands rather than to let the company collapse — a move that would undermine trust in Russia's business environment and tarnish President Vladimir Putin (news - web sites)'s prestige abroad.

The deadline for Yukos to pay a $3.4 billion back taxes bill for 2000 passed Thursday. The company says it has only about $1.4 billion in ready cash and had sought a schedule of staggered payments to fulfill the claim.

However, Kudrin rejected that strategy, saying "the shareholders and managers of Yukos have assets that can be sold off to resolve these (tax) issues," Russian news agencies reported.

However, the company has said that its hands are tied because of a court order preventing it from selling its assets voluntarily to raise cash.

Yukos' ex-CEO Mikhail Khodorkovsky, Russia's richest man, this week proposed giving up his stock to settle the tax claim, but the government has not said whether it is considering the proposal.


Also Friday, bailiffs worked to freeze accounts in Yukos' production companies in Siberia that could be used to pay off the tax bill.


Yukos' stock was buoyed earlier in the week after the offer of Khodorkovsky, who is jailed on charges of fraud and tax evasion, was made public. But they ended the day Friday down nearly 3.5 percent.


Justice Minister Yuri Chaika said that recent attempts by Yukos to slow the bailiffs' work by moving records from the company's headquarters to its Siberian production facilities were doomed to fail.


"Let no one think they can succeed in hiding or secreting anything... We will do everything to carry out the court order as quickly as possible," Chaika was quoted by the news agency Interfax as saying.


A team of bailiffs and investigators was already at work in the regions where Yukos key subsidiaries operate, Chaika said.


Putin has said the state is not interested in driving the company that produces a fifth of Russia's oil into bankruptcy, but the government has shown no inclination to reach a compromise.


It increased the pressure this week, with the Tax Ministry announcing an additional bill of $3.3 billion for 2001.


On Friday, bailiffs removed computer servers from Yukos' registry company in Moscow, Russian news agencies reported.


"If they do not want to fulfill the court ruling voluntarily, we will take tough and uncompromising measures to achieve it within our powers prescribed by the law," chief bailiff Andrei Belyakov was quoted as saying by the ITAR-Tass news agency.

He said "the servers are being seized in order to establish the assets and other monetary resources for payment of Yukos' debts."

Belyakov said bailiffs were treading carefully and "we won't interrupt the company's operations — at least we don't intend to."

Russian Industry and Energy Minister Viktor Khristenko said the situation around Yukos should not affect the nation's oil exports.

"There are no worries about the oil exports, no company has withdrawn its request (to pump oil for export) or had the request withdrawn," he was quoted as saying by Dow Jones Newswires, citing the Prime-Tass news agency.

While the government has portrayed its investigation into Yukos and its owners as a drive against corruption, observers have said that Khodorkovsky's jailing and the probe against his company has more to do with his political activities before last year's parliamentary elections than dubious business practices. His fraud and tax evasion trial with co-defendant Platon Lebedev resumes Monday.

Chris Weafer, a strategist for Alfa Bank, said that the state's actions appeared carefully considered.

Yukos subsidiary Tomskneft could be a likely candidate for sale, Weafer said. He said Russia's gas monopoly Gazprom would be interested; Gazprom has said it plans to increase its annual oil production from 10 million tons to 40 million.

HERE