Yukos CFO tells court of threats

Yukos chief financial officer Bruce Mismore on Thursday testified that Russian authorities were threatening him with legal action and possible extradition over attempts to halt the forced auction of its largest asset on Sunday.


Mr Mismore was testifying before a bankruptcy court in Houston, where the company is seeking a temporary injunction against the sale of its Yuganskneftegas unit.

He said the company's office in Moscow had been raided hours before the court sat. The raid had covered the area of his old office. The General Prosecutor's office in Moscow confirmed that 20 of its employees had searched the offices.

A Yukos employee said the prosecutors had taken away Anton Zakharov, the head of the company's personnel department, for questioning.

Mr Mismore said that as a result of his affidavit to the court, he had been informed that Russian authorities would try to pursue criminal charges against him and even seek his extradition.

Mr Mismore is a US citizen and has worked from his home in Houston since December 4, citing concern that he faces arrest if he returns to Russia.

Yukos filed for bankruptcy protection in the US on Tuesday, and has also asked the court to require the Russian government to agree to arbitration over its long-running tax dispute with Yukos. The move was viewed as a last-ditch effort to halt Sunday's auction, where Russia's Gazprom is viewed as the main contender to pick up Yuganskneftegas.

The sale is viewed by many observers as a continuation of politically-orchestrated moves against Yukos. Judge Letitia Clark may rule on the injunction as late as Friday following a six-hour hearing on Thursday characterised by arguments over the jurisdiction of her court.

Gazprom filed a motion to dismiss late in the hearing, citing a 2002 suit filed against Yukos in which the company claimed US courts had no jurisdiction over its affairs.

Observers in Moscow doubted that a US court would take jurisdiction over the Yukos case.

Mikhail Khodorkovsky, the key shareholder and a former chief executive of Yukos, who is standing trial for fraud and tax evasion in Moscow, said through his lawyers that the filing for bankruptcy in the US "of course will not help the shareholders".

A spokesman for the Russian Federal Property Fund, which will administer the sale of Yuganskneftegas, said the auction was set to go ahead on December 19 regardless of any US ruling.

However, Gazprom, the front bidder for Yuganskneftegas, may find it difficult to obtain the necessary funds if the US court imposes an injunction.

(The Finantial Times, 12.16.2004)