Russian Prosecutors Accuse Yukos of Money Laundering

By ANDREW KRAMER
Published: October 6, 2005
MOSCOW, Oct. 5 - Russian prosecutors on Wednesday raided offices affiliated with Yukos, the oil company in a tax dispute with the Kremlin, and for the first time accused its employees of money laundering.

The Prosecutor General's Office said in a statement that it was investigating as much as $7 billion in illegal money transfers out of Russia.

Once Russia's most prosperous company, Yukos last year lost its most valuable asset and faces tax evasion charges that the company contends are politically motivated.

The Prosecutor General's office reported raids on a Yukos subsidiary, two banks and a law firm in and around Moscow. The office said it was investigating money laundering by Yukos employees and lawyers.

The direct allegation of money laundering is new, Claire Davidson, a Yukos spokeswoman, said. The accusation apparently evolved from a previous charge of improper accounting at a subsidiary. "We absolutely refute it," she said.

Also on Wednesday, police in the Netherlands searched a Yukos subsidiary there. And in Lithuania, a Yukos banker, Igor Babenko, asked for and received political asylum, Agence France-Presse reported.

According to the Interfax news agency, a statement by Russian prosecutors said that their investigation of Yukos employees and lawyers had "discovered schemes developed to steal profits from oil sales and launder them." The report did not give names of any of those suspected of wrongdoing.

Yukos issued a statement saying that an accounting office and independent law firm that had worked with Yukos were raided in Russia. In the Netherlands, the company said the Dutch police searched Yukos Finance, a subsidiary. Russian authorities accompanying the Dutch officials were not allowed into the offices, the Yukos statement said. Citigroup and other foreign banks sued Yukos in the Netherlands in August, saying it defaulted on a loan.

"We have not received such a coordinated program of raids, searches and interviews organized by the Russian Federation for some months," Ms. Davidson, who is based in London, said in a telephone interview. "We are once again the focus of an inappropriate, coordinated and unfounded series of attacks."

Yukos contends that the tax claims against it began after the company's founder, Mikhail B. Khodorkovsky, supported political opponents of President Vladimir V. Putin.

The company's principal assets are frozen, top executives live abroad, Mr. Khodorkovsky is in prison and two-thirds of its headquarters employees have been laid off or have quit; yet Yukos continues to be an object of intense investigation by Russian authorities. Oil analysts say the company's future is in doubt.

"These are the last legal hurdles to proceed with more asset seizures; sooner or later, it will happen," said Caius R. Rapanu, an oil and gas analyst at the UralSib brokerage firm.

The company faces a court ruling that week that puts its remaining assets at risk of seizure by tax authorities and would take effect within two weeks, Ms. Davidson said.

After the loss of its largest unit, the company holds reserves of 3.4 billion barrels of oil and gas equivalent.

(The New York Times, 6.10.2005)