YUKOS Warns Mikhail Fradkov

Steven Theede, YUKOS-Moscow president, sent another letter to Prime Minister Mikhail Fradkov yesterday asking to settle the situation around YUKOS (in the past year, the company has sent more than 70 letters on this subject to government officials of various levels). Mr. Theede advised the prime minister that YUKOS and its shareholders were preparing lawsuits against the future owner of Yuganskneftegaz. The letter was evidently sent in connection with the consideration of YUKOS's case in Houston, where the next hearings began yesterday evening (Moscow time).

According to Kommersant sources at YUKOS, Steven Theede, who is in the United States, informed Mikhail Fradkov on behalf of the management of YUKOS-Moscow that YUKOS has requested the Russian Federal Property Fund (RFFI) to “provide it with information on the full registration data of the winner of the Yuganskneftegaz auction – OOO Baikal Finance Group (the company appears under this name in RFFI documents; it is registered in the tax services as Baikalfinansdgrup – Kommersant) –and on its actual owners or beneficiaries, as well as to indicate where the funds Baikal Finance Group paid as a deposit were generated, and if it pays for the shares – information on the sources of these funds”.

YUKOS needs this information to begin prosecuting the owners of Baikal Finance Group and those who ,provide it with the funds to buy Yuganskneftegaz ($9.3 billion, including the deposit). However, according to Kommersant's information, the RFFI has data on Baikal Finance Group only from December 3, the date the company was formed. Its founder is OOO MAKoil, owned by three individuals – Georgy Zhernokov, Viktor Panichev, and Igor Kuzmuchenko. However, the day before the auction, Baikal Finance Group probably changed owners, as happened with the other auction participant, OOO Gazpromneft.

If Baikal Finance Group does not pay the full amount and the shares of YUKOS's main production division are transferred to state ownership (Aleksandr Buksman, the head of the Ministry of Justice's main office in Moscow, spoke of that possibility after the auction), YUKOS and its shareholders will take the Russian government to court.

After outlining YUKOS's future actions, Mr. Theede asked Prime Minister Fradkov to return to an examination of the company's previous proposals for restructuring the tax arrears and repaying them out of revenues from day-to-day operations and sales of nonspecialized assets at fair market prices, as well as in shares of YUKOS's principal shareholders (Kommersant has written about this on a number of occasions).

The letter's timing was fortuitous for YUKOS – yesterday evening, the bankruptcy court in Houston, Texas began the next hearings in the YUKOS case. We remind our readers that the day before the Yuganskneftegaz auction, bankruptcy judge Letitia Clark imposed a moratorium on operations with YUKOS's property.

Kommersant has learned that yesterday lawyers of the American firm Fulbright&Jaworsky representing YUKOS filed several applications in court. This became known from a letter sent by Fulbright&Jaworsky lawyer Zack Clement to all interested parties, including the RF Ministry of Justice, Gazprom, the head of the consular division of the Russian Embassy in Washington, Vadim Savelev, and the director of the Ministry of Justice's special consular services department in the US, Edvard Betankort. In these applications, YUKOS's lawyers request Judge Letitia Clark to allow the company to conduct its business and to “issue an interim order allowing existing bank accounts to stay in operation and the continued use of the existing system of monetary transactions”. This means that YUKOS is asking for the release of its accounts frozen by the Russian Federal Bailiff Service.

Although the decisions of the American court have no legal force in Russia, they could lead to seizure of the foreign property of the auction winner and those who assisted in the acquisition, e.g., banks that granted loans for the purchase. Since Baikal Finance Group's deposit for participation in the auction ($1.7 billion) was transferred from Sberbank, claims against it could originate from Judge Clark. Sberbank, like other large Russian banks, has funds in correspondent accounts and deposits in foreign banks (more than $100 million is deposited in them). Freezing them could paralyze Sberbank's foreign economic activity; many large Russian companies, including Gazprom, operate through Sberbank.

As this issue was going to press, the session in Houston was still going on. Kommersant will return to this topic tomorrow.


by Petr Sapozhnikov, Dmitry Sidorov, Washington

(Kommersant, 12.23.2004)