Kremlin Moves In On Yukos Yet Again

By Elif Kaban

Reuters

MOSCOW — The Kremlin has moved in for the kill at fallen oil firm Yukos with a new money-laundering probe aimed at its imprisoned founder, while an international scramble intensifies for what is left of the company’s assets.

Raids this week at the Amsterdam and Moscow offices of Yukos as part of an investigation into an alleged scheme to launder $7 billion signaled an escalation in Russia’s attack against Yukos, which it has already crushed with a $27 billion back-tax claim, legal experts said.

“One would think they would just give up at this point,” said Jamie Firestone, a lawyer at the Moscow office of U.S. law firm Firestone Duncan.

“Most of us would just wish this thing to end as soon as possible, but it looks like the Russians are going for the maximum damage for everyone involved,” he said.

“The government is bent on the utter destruction of everybody and everything that had anything to do with Yukos.”

The raids contrast starkly with the market-friendly way Russia has announced plans for gas producer Gazprom to buy No. 5 oil firm Sibneft, which investors cheered as the dawn of a less aggressive Kremlin approach to business.

In May when Mikhail Khodorkovsky, Yukos’s founder and former CEO, was convicted of fraud and tax evasion, a prosecution spokesman promised that new charges would soon be brought against him, which would accuse him of other crimes.

On Wednesday, Yukos’s Dutch unit Yukos Finance B.V. was raided in Amsterdam, and in Moscow at least five offices including banks linked to the company were raided in a probe into an alleged scheme to spirit $7 billion out of Russia.

Included in the raids was the office of one of Khodorkovsky’s lawyers, Anton Drel.

Drel told Reuters the search lasted until midnight. “I don’t even know what they seized. It’s all political,” he said.

The head of economic security at Russia’s Interior Ministry, Lieutenant General Sergei Meshcheryakov, told Interfax news agency that a number of banks were under investigation, including foreign banks with Russian correspondent accounts.

Khodorkovsky’s lawyers said prosecutors launched the searches to keep their politically ambitious client under control in a Moscow pre-trial center rather than move him to a penitentiary with a milder regime outside the capital.

Khodorkovsky, who says he is the victim of Kremlin intrigue, held a week-long hunger strike and launched a failed attempt to run for parliament after being sentenced on May 31.

“The authorities are so scared of Khodorkovsky that they don’t want him out of their sight,” Garry Kasparov, former world chess champion and now an opposition figure, told Kommersant daily.

As creditors are pressing and huge tax claims are outstanding, the Yukos saga appears to be entering its finale, observers say.

How the end-game proceeds may depend on a ruling next week by a court in Amsterdam, where Western bank creditors are chasing Yukos for $475 million of bad debts.

At stake in Amsterdam is the last remaining choice morsel in the Yukos carcass, its Dutch-based 53.7 percent stake valued at over $1 billion in Lithuanian oil refinery Mazeikiu Nafta, the biggest employer in the Baltic state.

The court is due to rule on Oct. 13 on whether to uphold a London High Court ruling in favor of a consortium of banks including Citigroup, Deutsche Bank AG and France’s Societe Generale.

With most Yukos assets in Russia frozen and its bank accounts seized, the banks are seeking to force Yukos to sell its Dutch-based assets.

In a parallel court action, Yukos’s main shareholder, Menatep Group, is also chasing the wealth tied up in the Dutch holding firm.

Menatep is suing its own company — in its capacity as a creditor — in a bid to retrieve $650 million.

Mazeikiu Nafta, with the only refinery in the Baltic states, an oil export terminal and Lithuania’s pipeline system, is 40.66 percent owned by the Lithuanian state, which has an effective veto on who buys control from Yukos.

(The St Petersburg Times, 10.6.2005)