Telegraph: Yukos bankruptcy tips balance in favour of state control of oil

By Nick Allen in Moscow

The Moscow Court of Arbitration declared the Yukos oil company bankrupt yesterday, driving the final nail into the coffin of the business empire built up by now jailed tycoon Mikhail Khodorkovsky.

Official receivers had earlier concluded that the once leading oil company was £9.8bn in debt while having a market value of £9.5bn.

Its American chief executive officer Steven Theede tendered his resignation last month in protest at what he called farcical proceedings and a gross undervaluation of the company, which he claimed was worth more than double the official estimate.

Yukos lawyers said that they would appeal against the decision of the court.

The company was largely dismembered by the state when it could not meet demands for billions in back taxes and fines that were imposed after Mr Khodorkovsky was arrested in 2003 on tax fraud charges.

The main inheritor of Yukos' assets, the Russian state oil company Rosneft, took over the outstanding debt from the banks.

Together with Yukos's other main creditors, Rosneft recently rejected a plan to save the company and called for it to be declared bankrupt.

The oil major's demise is widely seen as Kremlin retribution for Mr Khodorkovsky's business and political ambitions.

Formerly Russia's richest man, he was jailed last year for tax evasion and fraud.

Rosneft later bought Yukos' main production unit Yuganskneftegaz from a shadowy shell company after it was sold at compulsory auction in order to cover the tax debts.

Russian President Vladimir Putin's former economics adviser, Andrei Illarionov, at the time called the acquisition the "scam of the year."

The removal of Yukos tips the balance in favour of state control of the Russian oil sector.