Russia's Yukos left reeling after new multi-billion tax claim

Oil giant Yukos faced a new multi-billion-dollar tax claim in a potentially fatal blow for one of Russia's largest firms, already reeling from a massive bill that could see assets seized within days.

Russia's tax ministry said it was demanding an extra 98 billion roubles (3.4 billion dollars) in unpaid taxes, fines and interest for the year 2001. It is also investigating the company's accounts for 2002 and 2003.


The massive tax claim, delivered as Russian President Vladimir Putin (news - web sites) hosted worried business magnates in the Kremlin, marked the latest onslaught against Yukos which has been the target of a politically-charged campaign for the past year.


Foreign investors have closely watched the fate of Russia's top oil exporter, worried about the safety of their own investments in a country where the courts appear to be used by the government to settle political scores.


The announcement came hours after bailiffs accompanied by armed officers descended on the Yukos headquarters in central Moscow to present a demand for payment of 99.4 billion roubles from 2000 after a court ruling backed the claim this week.


Bailiffs handed over a copy of an execution writ authorising the tax ministry to start seizing money from the company's bank accounts and Yukos assets and ordering an inventory to be compiled. They gave the firm five days to pay up.


Yukos says it has only around one billion dollars in cash and cannot meet the tax demand because its assets are frozen, putting the major blue-chip firm at risk of bankruptcy.


Yukos founder Mikhail Khodorkovsky, Russia's richest man, who was arrested at gunpoint in October on his private jet and went on trial a fortnight ago on charges of fraud and tax evasion, is widely believed to have been targetted because of his political opposition to Putin.


Analysts say that the aim of the government is not to drive Yukos into liquidation but to force Khodorkovsky and his associates to surrender control of the company.


"It appears that the objective of the government is not to bankrupt Yukos but to seperate Khodorkovsky from its stock, and I think this is part of a complicated game in which they are trying to achieve that," William Browder, head of Hermitage Capital investment fund, told AFP.


The announcement of the new tax demand sent Yukos shares plunging down by 12.3 percent on MICEX stock exchange. The benchmark RTS index was already closed when the announcement was made.


Yukos is accused of misusing domestic tax havens to underpay tax but has argued that the practice was legal at the time.


The spectre of bankruptcy looming over Yukos cast a shadow over the first meeting between Putin and the nation's top businessmen grouped in the Russian Union of Industrialists and Entrepreneurs (RSPP) since the president's re-election in March.


But in a measure of the reluctance to offend Putin, who is widely believed to have approved campaign against Yukos and Mikhail Khodorkovsky, the issue was officially not raised during the meeting.


Commentators note that any of the other dozen or so business barons who snapped up a huge chunk of the Russian economy in dubious privatisations in the early 1990s could be hauled into court on similar charges to Khodorkovsky.


"This is not dialogue, it is a royal summons. Big business is painfully facing up to the government's demands for social responsibility. This is capitalism with Putin's face," the respected business daily Kommersant said Thursday.


The World Bank joined in voicing alarm Wednesday, warning in its latest report on Russia that uncertainty surrounding the fate of Yukos was weighing on the economy because of the damage to investor confidence.

The bankruptcy of Yukos would provoke howls of protests from foreign creditors and minority shareholders, destroy one of the country's top blue-chip firms and do lasting damage to investor confidence in Russia's emerging market economy, analysts have warned.

HERE