Russia may compromise over Yukos tax debt

In the first sign that the government might compromise to save the Yukos oil company from bankruptcy over back taxes, Russian news agencies reported today that the Cabinet was considering a Yukos proposal to pay €7.5bn over a three-year period.

The report came on the same day that a glum-looking Mikhail Khodorkovsky, the former head of Yukos, returned to court to face his own charges of tax evasion and fraud which could land him a 10-year prison term if convicted.

Yukos has passed the deadline to pay a €3bn tax bill for 2000 and the Tax Service has made a further claim for €3bn for 2001. Russia’s Prosecutor-General Vladimir Ustinov has hinted that further claims for 2002 and 2003 are also likely.

Yukos says it does not have enough cash on hand to pay the 2000 bill and has sought to stagger the payments.

Interfax reported that the three-year £5bn (€7.5bn) payment proposal was made in a letter to the government last week by Yukos chief executive Steven Theede.

The letter is “under study in corresponding government departments,” the Interfax and ITAR-Tass news agencies cited an unidentified Cabinet source as saying.

Under the proposal, Yukos would make the payments in three £1.8bn (€2.7bn) instalments, and would use £300m (€450m) in unreimbursed VAT on exported oil to help cover the first payment, Interfax said.

Meanwhile, Khodorkovsky’s lawyer Anton Drel confirmed that the oil magnate’s offer to turn over his stake to settle the tax claim still stood.

Khodorkovsky sat inside the defendant’s cage alongside his business associate Platon Lebedev, while Judge Irina Kolesnikova considered a series of minor defence motions.

The men are being tried in connection with their activities as core shareholders in Menatep, the holding company that is Yukos’ principal shareholder.

Their joint trial is just one component of a complex web of legal cases against Yukos and its owners, which the government insists is part of as a drive against corruption.

At today’s hearing, the court rejected a defence-supported request from journalists and a rights organisation to organise broadcasts of the proceedings by setting up a microphone in the courtroom. The hearing was adjourned until tomorrow.

HERE