Moscow court overrules seizure of key Yukos oil subsidiary
By Peter Baker
Washington Post
MOSCOW — A Moscow court yesterday overruled the Russian government's seizure of the core production unit of embattled Yukos Oil Co., the first major ruling won by the company and its chief shareholders since the government began pressing multiple civil and criminal cases against them more than a year ago.
Associated Press
The Moscow Arbitration Court concluded that the government acted illegally in taking Yukos' shares in its subsidiary, Yuganskneftegaz, in preparation for an apparent fire-sale to settle back-tax claims. The subsidiary produces 60 percent of Yukos oil, and without it the company had said it would be forced into bankruptcy.
A Russian court yesterday ruled illegal the government's seizure of shares in a key subsidiary of the troubled oil company Yukos, whose headquarters, above, are in Moscow.
The news sent crude oil futures lower in the United States and Britain.
Light crude for September delivery settled yesterday at $43.95 a barrel, down 46 cents from Thursday's record close of $44.41 on the New York Mercantile Exchange.
The decision can be appealed. "We are satisfied with the decision of the court and this ruling should be executed immediately," Yukos spokesman Alexander Shadrin said. But the decision leaves the long-term fate of Yukos even more in doubt. In a country where the court system is heavily influenced by the state, analysts said the ruling may have rested on a technicality and could be overturned quickly.
Some analysts speculate that the Kremlin may have ordered the ruling as a way of retreating from the Yuganskneftegaz sale, which generated negative reactions from investors, business leaders and international governments. "Frankly, I feel the whole thing is a puppet show for us and we're the puppets being bounced around," said Al Breach, chief economist at the Brunswick UBS brokerage office in Moscow. "The whole thing is they're going to do what they want to do. The question is what do they want to do? The rest is just us trying to extrapolate what they want to do."
The court decision capped off a topsy-turvy week. The government at one point suggested Yukos would be given extra time to pay $3.4 billion in back taxes, then it threatened additional audits and tax bills. The government agreed to let the company use its frozen bank accounts to keep day-to-day operations going, only to rescind the decision a day later. "It's absolute comedy," Breach said.
The battle for the future of Yukos has been intertwined with the political struggle between President Vladimir Putin and the company's billionaire chief owner, Mikhail Khodorkovsky, now on trial in another Moscow courthouse on charges of tax evasion and fraud.
