Yukos’ 34% Stake in Sibneft Frozen by Moscow Court

Russia’s embattled oil giant Yukos said on Wednesday, Nov. 10, that a Moscow court has frozen its 34.5-percent stake in Sibneft Oil Company, thus halting a de-merger process that would provide Yukos with the cash it needs to settle massive back tax bills.

A Yukos official told France Press agency that the court ruling took effect a week ago, but declined to comment further.

Sibneft, controlled by Russian business tycoon Roman Abramovich who owns Chelsea Football Club in London, is in the process of unwinding a merger with Yukos. The merger was agreed upon before the Russian authorities launched a ferocious campaign against the country’s top oil producer and exporter last year.

While based in London Abramovich is believed to have kept on good terms with the Kremlin, unlike Yukos founder and former CEO Mikhail Khodorkovsky, who has been in jail for more than a year, facing a trial on counts of fraud and tax evasion.

The ruling by Moscow’s Basmanny Court was made on Nov. 3 means that Yukos cannot return the shares to Sibneft. This in turn could open the way for their appropriation if it can be proved they were acquired with illegal funds, Russian business daily Vedomosti wrote.

A prosecution official, quoted by the paper, said that the decision to freeze Yukos’ stake in Sibneft was linked to a criminal case for tax evasion against the head of Yukos’ accounting unit. However, a source in the United Financial Group brokerage firm said: “It is possible that the prosecutors’ actions have been inspired by influential enemies of Roman Abramovich or other principal Sibneft shareholders.” At the same time it was noted that a more likely interpretation is “that it is simply designed to ensure the destruction of Yukos”.

Yukos has already paid off $3.6 billion in back taxes for 2000, but faces larger bills for 2001 and 2002. The oil company stood to get back $3 billion in cash that it paid for 20 percent of Sibneft’s shares.

(From Moscow News, 10.11.2004)