Prosecutors seize Yukos records

Prosecutors have seized financial papers for the last two years from oil giant Yukos, sparking fears of a fresh multi-billion dollar tax demand.

The Russian firm already owes $3.4bn (£1.9bn) in back tax for 2000.

A similar claim for 2001 is before the courts and Yukos fears a current ban on asset sales means it could go bankrupt.

Separately, Russian finance minister Alexei Kudrin said $9bn would flow out of Russia this year but he downplayed any link between this and Yukos.

He said that global factors dictated the movement of money, not nervousness about the security of investment in Russia in the wake of the Yukos affair.

Struggle to continue

Yukos is struggling to continue operating following the seizure of funds by bailiffs to pay off part of the bill. It has already cut output and reduced costs.

The company will have paid half the current bill by the end of August but that still leaves it $1.7bn short of the total amount, which has to be paid in full by 30 August.

This recent seizure of documents adds weight to fears among observers that Yukos, responsible for one barrel in five of Russia's overall crude oil output, could eventually face tax liabilities of more than $10bn.

This threat has seen its shares tumble.

Bailiffs have repeatedly threatened to sell off the company's biggest asset: Yuganskneftegas, the firm which produces 60% of its oil.

The state has hired Dresdner Kleinwort Wasserstein, the US investment bank, to value Yugansk.

Yukos fears the unit, which it claims is worth up to $30bn, could be sold off on the cheap.

Many observers believe the company's problems stem from President Vladimir Putin's desire to discourage political threats from Russia's super-rich business magnates.

Yukos founder Mikhail Khodorkovsky is currently in jail facing charges of fraud and tax evasion.

HERE