28 May 2004 00:00
Yukos shares fall following court`s tax charge ruling RUSSIA:
ByLine: By ANDREW JACK
Shares in Yukos slumped yesterday as the embattled Russian oil company warned
of a growing risk of bankruptcy after a Moscow court's ruling to uphold
a Dollars 3.4bn tax charge against it for 2000.
Yuri Beilin, one of the company's top executives, said Yukos could go
into bankruptcy by the end of this year as a result of Wednesday's
ruling in the commercial court and an existing order that forbids the company
from selling assets. His comments came against the background of growing
concerns of insolvency.
Russian authorities have intensified pressure on Yukos and its principal
shareholders in recent weeks and the company has warned of the risk of
further tax demands that would jeopardise the remaining value to private
investors, who hold a quarter of the company's shares.
Yukos said it would appeal and it denounced the court's judgment. It was
granted only three hours to defend itself after three days of presentations
by the tax ministry, and given just a few hours to review the 342 volumes
presented.
It said the court did not accept any evidence from Yukos, did not disclose
some evidence against it and did not open 255 of the volumes of charges used
against it.
Tax inspectors, government ministers and some analysts have argued that Yukos
was more aggressive than rival Russian oil companies in using tax avoidance
and minimisation schemes over the past few years.
The court judgment comes after a series of investigations widely seen as
politically motivated. The latest decision suggests growing pressure to reach
a settlement that would most likely wrest control from Mikhail Khodorkovsky,
Yukos's former chief executive and top shareholder.
A court hearing on a separate criminal charge against Mr Khodorkovsky for
Dollars 1bn fraud and tax evasion is set to begin today. His defence lawyers
have requested a combined trial with that of his principal business partner,
Platon Lebedev, who faces similar charges. A decision should be taken during
the day. Next week, a court is due to hear an appeal over the annulment of
Yukos's merger last year with the oil group Sibneft.
Standard & Poor's, the rating agency, said it was maintaining Yukos
on "negative watch" following the ruling. The company's shares
dropped - to close at Dollars 8.40, down 11.5 per cent - on the day. The
judgment came on the evening of the annual state of the nation address by
President Vladimir Putin, who made an opaque reference to the relationship
between big business and government by warning that "tax dodging"
should not be permitted.
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