Home / World Business
Fri, Dec 17, 2004 - Page 12 News List

Yukos takes fight with Kremlin to a US court

OIL ASSETS Yukos filed for chapter 11 protection in Houston, claiming it needs it to halt the planned auction of its assets, but some analysts think the move is motivated by politics

THE GUARDIAN , MOSCOW

Russian oil giant Yukos on Tuesday increased the stakes in its battle with the Kremlin when it filed for bankruptcy in the US in an unusual move possibly intended to pitch Washington against Moscow.

The world's second largest oil producer filed for chapter 11 protection in Houston, Texas, the home state of US President George W. Bush, despite Yukos having few assets in the US.

Some industry experts believe Yukos is deliberately trying to win US political -- as well as legal -- backing just four days before state bailiffs in Russia sell off its main production unit to settle a US$28 billion tax debt.

The move comes at a time when relations between Bush and his Russian counterpart, Vladimir Putin, are strained over the controversial election results in Ukraine.

On Tuesday the newly formed Yukos Minority Shareholder Coalition, based in New York, but backed by Russian Yukos investor Menatep, took out full-page newspaper advertisements calling on investors to oppose this weekend's auction.

Yukos, whose pursuit by Russian prosecutors has caused havoc on the Russian stock exchange for the past 14 months, demanded an injunction in Texas to halt the planned sale of Yuganskneftegaz, responsible for 60 percent of Yukos's production.

It was unclear whether chapter 11, a far-reaching provision designed to protect companies during bankruptcy, would affect the planned auction. Yukos claims it requires chapter 11 protection as the auction will leave it with no option but to file for bankruptcy, as then it will be unable to pay off what remains of the US$27.8 billion in disputed tax claims filed against it.

A Yukos spokeswoman said: "The general feeling is that Yukos has not had a fair and equitable dealing in the Russian courts and that we have to do all we can to protect the shareholders, the assets and the staff."

She said US jurisdiction was recognized in this case by "international law" but did not go into specifics, beyond referring to the court complaint.

The injunction, filed with the US bankruptcy court for the Southern District of Texas, said: "If the auction is consummated, Yukos will be permanently, severely and irreparably damaged."

In order for US courts to have jurisdiction, Yukos will have to prove that it has a "nexus" in the state of Texas -- that a crucial part of its business is located there.

An emergency court hearing was scheduled in Texas for Tuesday afternoon in an attempt to immediately address the chapter 11 claim addressed. A source in Moscow's arbitration court told Interfax that international law barred foreign courts from hearing a case until it had been heard domestically.

Fadel Gheit, an oil analyst with Oppenheimer & Co brokerage in New York, said he could not recall a foreign firm initially filing for bankruptcy in the US where it had few assets.

"I think they are clearly trying to take advantage of discord between the Kremlin and White House over the Ukrainian elections, though I don't think the Kremlin will blink," he said.

This story has been viewed 2331 times.
TOP top