- I would like to ask Mr. Yasin to explain what is going on with the YUKOS-Sibneft deal. Nothing makes any sense. First the companies announce that they are merging, then that the deal is suspended, and then finally that the merger is off. What is behind all this and what does it all mean?
- I would say that the entire YUKOS Affair, which began about five months ago with the arrest of P. Lebedev, is a complete mystery. Many have made their guesses about it, but the official version states that YUKOS is the least transparent company in Russia and guilty of serious crimes related to privatization, which later became serious tax violations and personal tax evasion on the part of the major shareholders, and so on. No one bought this version. I have to say that the longer this continues and the more the General Prosecutor digs around in various areas in its attempt to come to court with enough evidence, the more this version and the entire campaign looks suspicious. Other versions of the story, of course, revolve around the fact that the government didn’t need a company that was so independent, big, and wealthy. YUKOS also began to annoy the bureaucrats, in particular those in the law enforcement and security clique, and was seen as a threat to those in power. Everyone knows the version in which Khodorkovsky is accused of political ambitions and of wanting to turn the president into something like the King of England and himself into prime minister. For this reason, so the story goes, he wanted a majority in the Duma. This story, to be completely honest, reeks of provocation and resembles the kind of story that the secret service usually cooks up, because I can’t imagine that with our current legislation it would be possible to change the Constitution, even with a Duma majority. And Khodorkovsky didn’t have a chance of getting even a gross majority. For this reason, this version of events is on the edge…to put it plainly, it’s just stupid. Now, the idea that the bureaucrats aren’t wild about big money having so much independence is closer to the truth. And of course, the third version that says certain people were aiming to redistribute property, including those representatives of the business community who felt that they needed to use their connections to the powers that be, their political resources, that won’t last forever, as we know from the examples of other oligarchs and businessmen. They felt that their time had come because despite all its extensive connections, YUKOS wasn’t part of the Old Kremlin “Family,” nor was it part of the security clique from St. Petersburg. It had a kind of independence. It’s well known that the YUKOS-Sibneft deal, which would have made the company number four in the world, also made a lot of people anxious. Let’s not forget that M. Kasyanov greeted this merger with enthusiasm and believed that it would be an important step for Russian business. Then there was also the likelihood of Western business interest at least, that the major oil companies would invest major funds in this united company and turn it into a transnational company, which would be even more independent from the government. This seems completely reasonable to me. Now several other events have occurred. The deal was in the works for a long time. As far as I know, the Kremlin approved the merger, and it didn’t cause any public or open outcry. The same thing happened with the deals with foreign oil companies, meaning they went to ask permission from the authorities. Nonetheless, again, they didn’t protest directly but they were very unhappy. What did the events reveal when the Sibneft-YUKOS deal fell apart and the merger process stopped short? First of all, it became clear that the state authorities were not really interested in the deal. On the contrary, they were wary of business gaining a great amount of power, including the major companies which were turning into power centers with a lot of money and potential and which were not completely under state control. Or, at least, the authorities were concerned that they would not be able to apply the necessary pressure when they needed to. The directors at YUKOS were fairly flexible people, and when they understood the government’s mood, they tried to compromise and come to an agreement, and they backed down. Probably less than others. The desire to become independent, to work independently and even to influence state policy by sponsoring various kinds of projects to develop civil society in Russia could have provoked the state’s ire. What else have recent events demonstrated? They have also shown that the issue of redistributing property is actually relevant and that the state wants to go through with it. I wouldn’t say that it will involve the direct confiscation of property, or in other words, nationalization, but what are we really talking about? At the moment, the deal is structured so that 92%, I believe, of Sibneft stock will go to YUKOS. 26% of YUKOS shares will go to Sibneft shareholders and thus the shareholders will have a key role in both the company’s management and property, which is currently either under investigation or on the run…
- But here two questions come to mind. Who opened up the champagne when the deal fell apart and what was Abramovich’s role?
- What I am about to say is merely my own guesswork and opinion. Because I don’t have any more information than what the media reported. I can only estimate how events will develop based on my knowledge of how things stand, of what I would call the customs of the Russian political and economic world, and use it to make a few conjectures…
- Projections based on insufficient information and commentary based on personal experience…
- Precisely, more or less. So, I first of all would like to note that Roman Abramovich has always been on good terms with the authorities and the powerful of this world. And he was always more than willing to do something to benefit these authorities or to do their bidding. At the same time, he understood that his political resources wouldn’t last forever and that the moment was approaching when he would end up with zero, which is why he became governor of Chukotka, in order to protect himself from the inordinate pressures of the possible. He also began to get rid of his assets in Russia. However, even though he did all this, every time he let the powers that be know, probably, that they could count on him. Then the issue arose and they needed the property or at least control over the company, over the people who owned it. I don’t know why there is no official information about it, but I assume that they simply asked Roman Abramovich to try and get control. The same way he got a hold of ORT from Berezovsky in order to hand it over to the state. Anyway, in order to take part in this operation that would result in both Khodorkovsky and the other major YUKOS shareholders losing their ability to run the company or at least somehow control its managers and that would afterwards turn LUKoil—oh, excuse the Freudian slip—YUKOS-Sibneft into a company resembling LUKoil, in that the company’s executives know ahead of time and can guess what the president and the government want…they could do all this without a single official order. I am recalling the story of TV-6, which is instructive in this sense. That’s the way it was supposed to be…that is how our authorities see Russian business and they want any link in the chain that acts up to be put in its place. At the same time they also have a chance to redistribute property. The thing is that an open redistribution would be, as they say, simply extreme. The public could understand Khodorkovsky’s arrest, who will be accused of being part of the mafia with murders under his belt and so on and so forth—because the opinion about Russian business’ past everywhere, here and aboard--fits the bill, for this reason people could start to doubt. If however he didn’t pay his taxes he won’t find sympathy anywhere. True, they still have to prove it. But if they start confiscating property, no one will understand. I would like to remind you of Kasyanov’s strong reaction when the Prosecutor froze assets due to debts because that road leads directly to nationalization. Something similar was involved in the fact that the accused violations were of laws that allow for the confiscation of possessions, and so the possibility for taking away property was created. But everyone understands perfectly what kind of impression this makes around the world, and most importantly, in Russian business, because it establishes a precedent which already has nothing to do with the direct intervention of oligarchs like Berezovsky or Gusinsky in politics and in trying to dictate political decisions, etc. YUKOS has nothing to do with that. That will make it clear that this is all really a signal that the Russian government is not willing to protect private property rights. No one will invest in Russia. That’s why they’re trying to find a way to make things look good. If somehow the version that even the press is speculating about, because the negotiations are closed and no one knows what is being discussed at them, and there are no other facts that allow us to make any final conclusions. So, if what the press is saying is true, that means that they have found a way to make things look nice by gaining control over the company and turning YUKOS-Sibneft into something like LUKoil.
- And now that the deal is off….
- The deal is off simply because the YUKOS shareholders weren’t willing to be robbed blind. Let’s not forget that back in the day, when they let Gusinsky out of jail and out of the country under the condition that he give up his property. He took off, and he valued his personal freedom more than his property. It seems he still has a 14% share in Ekho Moskvy Radio, but it’s frozen. I think that other shareholders wouldn’t have agreed to this. Also this is a more complicated conflict, one that is more than just economic in nature. There is also a serious political subtext because if a person says, “Go ahead and throw me in jail, but I won’t leave the country,” that’s a challenge to the authorities and a stronger demonstration of independence than to agree to give up your property and go abroad, where you sit and say, “You know, actually, they made me do it.” That is already a different story. This is something new in Russian history; this is the first time we’ve seen this version of imprisonment that is already taking on a political flavor. That’s why it turned out that though the issue of breaking off the agreement carries with it rather serious financial obligations running in the billions of dollars, the way I see it, with the proposal that would make Alexander Stalyevich Voloshin CEO and Abramovich Chairman of the Board, the YUKOS shareholders would completely lose control over the company’s management and they didn’t like that at all. That’s why the deal fell through. I think that this will continue, and seriously. I think that this turn of events bears witness to the fact that the authorities want everyone to calm down and find a solution that would satisfy, if not the YUKOS shareholders, then at least Western public opinion and Russian business. In other words, to turn the affair into a squabble between economic organizations or something like that. The fact that the deal fell apart is evidence that this approach won’t work.

Ekho Moskvy radio
interviewed by host Olga Bychkova.