U.S.:Yukos sale erodes trust in Russia

Washington, DC, Dec. 20 (UPI) -- The U.S. State Department said Monday the sale of oil giant Yukos' main unit will further erode investor confidence in Russia.

"It adds to the erosion that had already occurred," spokesman Richard Boucher said. "I think we have seen reaction at earlier stages, even, from business community, from major potential investors, based on some of the earlier events. And this only adds to that."

He said the issue would continue to be a subject of discussion with Russian officials.

Yukos' main unit, Yuganskneftegaz, was bought Sunday by the little-known Baikal Finance Group for $9.3 billion, payable Jan. 2. The firm's troubles began more than a year ago when it was hit with a multimillion-dollar tax bill and its key shareholders were arrested. Its founder, Mikhail Khodorkovsky, is being tried on charges of tax evasion and fraud.

Washington has criticized the manner in which the issue has been handled, saying it has "raised serious concerns at the lack of transparency and independence of Russia's investment and tax laws and the courts."

(UPI via The Washington Times, 12.20.2004)