- The Washington Times - Friday, August 6, 2004

MOSCOW (AP) — A Moscow court ruled yesterday that the government acted illegally when it seized stock shares of a key subsidiary of the Yukos oil company, handing the company a significant victory in its battle with the state over a $3.4 billion back-taxes bill.

The subsidiary, Yuganskneftegaz, which accounts for about 60 percent of Yukos’ oil production, was seized in July after Yukos failed to meet the deadline for paying the bill.

After the seizure, bailiffs said Yuganskneftegaz was being prepared for potential sale, a statement that appeared to support analyst speculation that the Russian government aims to dismantle Russia’s largest oil company and sell the pieces into Kremlin-friendly hands.

However, a Moscow Arbitration Court judge ruled yesterday that bailiffs had violated legislation in the seizure, according to the Itar-Tass news agency. Yukos lawyers argued that such an action could not take place before property not related to oil production had been used to satisfy the tax claim.

Yukos spokesman Alexander Shadrin said the company was satisfied with the decision, but would reserve further comment until seeing the ruling.

The tax claim against Yukos and the jailing of former Chief Executive Officer Mikhail Khodorkovsky are part of a web of legal actions that many observers consider a campaign to punish the billionaire for his growing political clout and his funding of opposition parties.

Yukos has said it does not have enough ready cash to pay its tax bill, and a court order prevents it from selling assets to raise funds. The company has warned that the tax bill could drive it into bankruptcy unless other payment arrangements can be made.

Yukos has suggested it would sell its 56 percent stake in Rospan International, a joint venture with Anglo-Russian oil company TNK-BP. It has asked for permission to sell its stake in Rospan, but has not received a response from the government.

A group of Russian investment banks yesterday offered Yukos $450 million for its stake in Rospan. Alfa Services, which said it was already owed $35 million by Rospan, said it would pay the money from the sale directly to bailiffs trying to collect the back taxes. The group also offered to buy two of Yukos’ smaller gas subsidiaries.

TNK-BP earlier said it was willing to buy out Yukos’ stake in Rospan for $357 million. Alfa Services has no relation to Alfa Group, which co-owns TNK-BP, Dow Jones NewsWires reported.

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