Mystery remains over backers of Baikal

Baikal Finance Group, a mysterious company that won the auction for Yuganskneftegas, may not reveal its true identity until at least January 11, when it must pay for Yukos's main production asset.


The Russian public was on Monday kept guessing as to who might stand behind a shell company that bid $9.35bn for Yuganskneftegas.

Alexei Kudrin, Russia's finance minister, admitted he had never heard of Baikal Finance Group: “I don't know what company it is.” But he said its identity would become clear when Baikal paid the money.

The Russian Federal Property Fund, which conducted the auction, said Baikal had until January 11 to settle the bill. If Baikal did not pay, the shares would revert to the state and it would lose its deposit of $1.7bn.

Most analysts in Moscow believe Baikal to be a shell company set up to assist Gazpromneft, the oil arm of gas monopoly Gazprom, to buy Yugansk without violating a US court ruling. Gazpromneft was told not to participate in the sale of Yuganskneftegas, which was subject to a 10-day restriction order by a Houston court.

It is understood that although Gazprom publicly brushed off the US court ruling, it took extremely seriously the risk of being found in contempt of a US court. Nikolai Krylov, a partner with Winston & Strawn, a US law firm representing Gazpromneft said: “We advised Gazpromneft to take the decision of the US court very seriously and to comply with its terms. We understand this is exactly what happened.”

Gazpromneft was present at the auction on Sunday, but did not bid. The only bid came from the previously unknown Baikal Finance Group, which was not cited in the US court ruling.

“Baikal could be an intermediary controlled by pro-Kremlin businessmen which for a handsome fee will safeguard Yuganskneftegas until the dust settles over the US court ruling,” one Moscow based analyst said. Parking Yuganskneftegas in a specially created company also gives the Kremlin an option to declare the auction void and take over the assets.

However there were also strong suggestions yesterday that Surgutneftegas, Yukos's rival company, could be behind Baikal. Surgut has $6.2bn in cash and it operates in the same areas as Yuganskneftegas. Mikhail Khodorkovsky, the key shareholder of Yukos and its former chief executive, on trial for fraud and tax evasion, said the means the government used to sell Yuganskneftegas on Sunday were similar to those he is accused of using during controversial loans for shares privatisation in the 1990s. “If that is the case, they should be sitting next to us [on the trial bench],” Mr Khodorkovsky said through his lawyer.

(Financial Times, 12.20.2004)