At the same time, the Appeals Chamber of the Arbitration Court changed an earlier court decision in respect to RUR 22.939m in tax debts and a fine of RUR 10.334m. The tax claim against YUKOS was reduced by this amount.

Over the past 8 working days, the Moscow Arbitration Court has heard three appeals filed by YUKOS Moscow, the Tax Ministry and YUKOS against the Arbitration Court’s decision of May 26, which upheld the Tax Ministry’s RUR 99.4bn tax claim against YUKOS. The court ruled that the managing company YUKOS Moscow was responsible for the implementation of the court ruling. YUKOS Moscow and YUKOS Oil Company appealed this decision. For its part, the Tax Ministry claimed another RUR 400,000 from YUKOS.

Earlier on Tuesday, YUKOS expressed readiness for an out-of-court settlement of the RUR 99.4bn claim. YUKOS lawyer Sergey Pepelyayev said he had asked the Moscow Arbitration Court to postpone the hearing until July 5. According to the lawyer, YUKOS and the tax authorities were in talks to settle the dispute. Mr. Pepelyayev referred to President Vladimir Putin’s statement that the government was not interested in the bankruptcy of YUKOS. He also quoted Finance Minister Alexey Kudrin as saying that the government was ready to settle the conflict.

Mr. Pepelyayev said YUKOS had sent a letter to the Finance Ministry on June 22 offering to solve the dispute in accordance with the law, and submitted a draft settlement agreement to the court.

However, Yelena Alexandrova, a representative of the Tax Ministry, said the tax authorities were not ready for an out-of-court settlement, and they had no proof that YUKOS was pursuing a settlement. In view of this, the Tax Ministry insisted that YUKOS pay the tax claim in full.

The Arbitration Court rejected YUKOS’s request to postpone the hearing. The court said there was no official confirmation that YUKOS was in settlement talks with the tax authorities. “A court decision is not expected today. If official documents are filed with the court before the end of hearings, we will reconsider the possibility of an out-of-court settlement,” Judge Valery Korotenko said.

On Monday, YUKOS lawyers said the amount of tax claims against the oil company was higher compared with tax inspection documents. In particular, Denis Shchekin YUKOS’s tax debt was overstated by RUR 140m in tax inspection documents, and it was overstated by RUR 26m in a court decision, due to calculation mistakes by tax officials. “This casts shadow on the Tax Ministry’s decision as a whole,” he stressed. For his part, a representative of the Tax Ministry admitted that there were some technical mistakes.

The conflict between the Tax Ministry and YUKOS began at the end of last year, when the Tax Ministry completed the inspection of YUKOS’s tax payments for 2000. YUKOS is accused of evading taxes through artificially created companies registered in Russian regions and cities unlawfully offering additional tax breaks. On December 29, the company received the results of the inspection, saying that it was guilty of wrongdoing and owed the state more than RUR 98bn in unpaid taxes and interest. Later, it raised the claim to RUR 99.3bn. On May 26, 2004, the Moscow Arbitration Court ruled that YUKOS should pay the money.