YUKOS Trials Grind On, Unlikely to Bring Respite

A Moscow court trying former YUKOS boss Mikhail Khodorkovsky starts hearing evidence on Thursday in a case widely seen as a campaign orchestrated by the Kremlin to punish the oil magnate for his political ambitions.
Khodorkovsky is on trial, along with Platon Lebedev, for fraud and tax evasion, while YUKOS fights to avoid tax bills running to $7 billion driving it into bankruptcy.

Both men have pleaded not guilty.

Analysts believe the two have been singled out for harsh treatment, while other "oligarchs" who profited from shady 1990s privatisations walk free, because Khodorkovsky posed a political challenge to President Vladimir Putin.

The trial, which began in mid-June, has moved at a snail's pace as the prosecution presented 400 volumes of documentary evidence.

Khodorkovsky could serve 10 years in a labor camp if found guilty.

In another court across town, a judge is expected to rule on YUKOS's final appeal against the annulment of an additional share issue designed to facilitate its failed merger with its smaller rival Sibneft last year.

YUKOS's legal plight began with the arrest of Khodorkovsky, once Russia's richest man, last October and has ground on this year as the firm fought to avoid crippling tax bills running to $7 billion, sending its shares tumbling at almost every turn.

Its dollar-denominated shares, which topped $500 before Khodorkovsky's arrest, closed on Wednesday at $107.22, more than 12 percent down on the day.

But many of those trying to read the tea-leaves of the YUKOS saga have long since given up, hoping instead for a speedy conclusion so that investors wanting a piece of Russia's vast energy potential can do so on a sure footing.

YUKOS pumps 1.7 million barrels of oil a day -- as much as Libya -- and has helped Russia become the world's top producer and number two exporter of crude, reaping billions of dollars for an economy still recovering from Soviet paralysis.

But the firm has repeatedly warned of bankruptcy, saying it cannot pay the tax bills because bailiffs have frozen its accounts and stopped it selling assets, while threatening to sell off its major operating unit in settlement of the claims.

The firm's tribulations have worried industries already smarting from record oil prices and have cost YUKOS investors billions of dollars.

Both are vigilant for any hint that YUKOS's problems are affecting production, a scenario that some observers have warned was perilously close -- but that never yet materialized.


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