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The rise and fall of Yukos.


CookieMonster

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Joined
Feb 19, 2005
Messages
34,801
Having failed to generate any intelligent comments on another board I'll try again here. Perhaps you're all above childish ego posturing... though I doubt it! :D

It's a subject I've been following for a while, perhaps it's my residual soviet fascination, the power, the money or all of the above. But I think it speaks volumes about the troubles developing on Russia's political cold front (excuse the pun).


April 1993

As part of a sweeping restructuring of the oil industry, Yukos is created by merger of two state companies - Siberian oil producer Yuganskneftegas and Volga refining company Kuibyshevnefteorgsintez.

End-1995

Still in state hands, Yukos comes close to bankruptcy amid falling output and rising debt; it owes the government alone $3.5bn.

1995-96

Through a series of share offers, Yukos becomes the first fully privatised integrated oil company in Russia. Mikhail Khodorkovsky, a billionaire whose main fortune is in banking, acquires the firm for a sum variously put at between $200m and $1.5bn.

1998

Mr Khodorkovsky launches a major restructuring and modernisation programme, with the aim of making Yukos one of the few large Russian to match international standards for corporate behaviour and financial stability. The idea is first mooted of merging with Sibneft, another large producer then controlled by billionaire Boris Berezovsky.

2000

Yukos launches a corporate governance charter, and publishes its accounts to international standards. In 1999, the company had been punished by regulators after neglecting to file its quarterly results.

At the same time, newly-elected President Vladimir Putin strikes a deal with 20 of the "oligarchs" of the 1990s, including Mr Khodorkovsky. According to Moscow rumour, tycoons are told their business interests will be allowed to flourish, as long as they stay out of politics.

2001

Yukos shares are listed in New York, London, Frankfurt, Berlin and Munich. Yukos becomes a major supplier to China after the acquisition of a refinery and other assets in the Russian Far East.

2002

The company's global ambitions step up a gear, with the acquisition of Lithuania's main oil company, a move into Slovakia, and plans to develop an pipeline to China.

2003 When the trouble starts

Mr Khodorkovsky gets into his first public row with the Kremlin, disagreeing over state control of the pipeline industry. He complains publicly about corruption, and begins openly funding various opposition parties, including the communists.

2 July, 2003

Platon Lebedev, a major Yukos shareholder, is arrested and accused of having illegally acquired shares in Apatit, a fertiliser company, in 1994. Mr Khodorkovsky is questioned and released two days later.

16 July, 2003

Russian tax authorities say they are to audit Yukos's books, as the investigation into the Apatit deal is dramatically widened. Yukos's offices are raided and records taken away.

25 October, 2003

Mr Khodorkovsky is arrested, flown to Moscow and charged with various counts of fraud of tax evasion.

30 October, 2003

The Russian authorities freeze the 44% stake in Yukos owned by Menatep Bank, Mr Khodorkovsky's main investment vehicle. Previously, Yukos had announced a $2bn dividend to shareholders - an attempt to extract money from the firm ahead of any possible confiscation.

3 November, 2003

Mr Khodorkovsky resigns as chief executive of Yukos in favour of Simon Kukes, and is reported to have handed his interest in the company over to associates outside Russia. Mr Kukes tries to distance Yukos from Mr Khodorkovsky, pouring cold water on previous plans to sell the company to a foreign investor.

30 December, 2003

Yukos is hit with a bill for $3.5bn, representing tax allegedly unpaid in 2000.

11 March, 2004

More than $5bn belonging to Yukos shareholders is frozen in Switzerland, after Moscow argues that the money has been stolen. Arrest warrants are issued for another 10 of the company's senior associates.

27 May, 2004

Yukos warns it will have to file for bankruptcy if the $3.5bn tax demand is pushed through.

16 June, 2004

Mr Khodorkovsky's trial finally begins, with the threat of up to 10 years in prison. The case is immediately adjourned.

6 July, 2004

Yukos gets more time to pay its tax bill, but is hit by a fresh demand for $3.4bn in unpaid taxes from 2001.

12 July, 2004

The trial resumes. Prosecutors argue that Mr Khodorkovsky and Mr Lebedev ran an "organised criminal group". Mr Khodorkovsky says the charges are "absurd".

20 July, 2004

Russian bailiffs say they will sell off Yuganskneftegas, Yukos's main production unit, to pay off its back taxes.

2 August, 2004

Tax inspectors begin looking at Yukos's 2002 accounts, raising fears of a third multi-billion-dollar demand.

1 November, 2004

Yukos is reportedly hit with another $10bn tax bill, this time relating to 2002. Doubts remain over the fate of Yuganskneftegas, which is rumoured to be on the point of a sale. Yukos says its production will imminently come to a halt unless the situation surrounding any sale can be clarified.

25 November, 2004

All Yukos's top executives are reported to have left Russia, apparently fearing arrest.

10 December, 2004

Three firms, including dominant gas producer Gazprom, submit bids for the 19 December auction of Yuganskneftegas.

15 December, 2004

Yukos files for bankruptcy in the US, in an attempt to derail the Yuganskneftegas sale.

16 December, 2004

A US bankruptcy judge grants a temporary injunction blocking the Yuganskneftegas sale. But Russian officials say the Houston court has no jurisdiction in the case and call the ploy a "nonsense".

19 December, 2004

Auction of Yuganskneftegas in Moscow, which is sold to little-known firm Baikalfinansgroup for $9.35bn.

23 December, 2004

State-owned oil firm Rosneft - itself preparing for a merger with state-controlled gas group Gazprom - buys Baikal, thus acquiring Yuganskneftegas. The unit is effectively renationalised.

12 January, 2005

Mikhail Khodorkovsky hands over controlling stake in Yukos parent firm Menatep to fellow shareholder Leonid Nevslin, by now resident in Israel.

9 February, 2005

Menatep says it plans to sue Russian government for $28bn. Experts doubt it can succeed.

14 February, 2005

Yukos sues Rosneft, Baikal, and Gazpromand one of its units, claiming damages of $20bn for their alleged role in the Yuganskneftegas sale.

25 February, 2005

US court dismisses Yukos' bankruptcy petition.

15 March, 2005

Rosneft sues Yukos over an $11bn back tax bill allegedly owed by Yuganskneftegas.

25 March, 2005

Ex-Yukos security chief Alexei Pichugin convicted of murder and attempted murder.

19 April, 2005

Russian court freezes more of Yukos' assets as its own former unit Yuganskneftegas accuses it of having paid below-market prices for its oil and demands $6bn in compensation.

27 April, 2005

Judges postpone their verdict on Mikhail Khodorkovsky till 16 May.

31 May, 2005

After 12 days of summing up the trial, the judges find Mikhail Khodorkovsky, Russias' richest man and Platon Lebedev guilty of six charges including tax evasion and sentence them to nine years in prison each and ordered to pay 17 billion Roubles ($600m). George W Bush expresses concerns about the cast to the Kremlin.

October 2003

Khodorkovsky begins his nine year jail term in Siberia.

Yukos offices in Russia and the Netherlands are raided as part of an inquiry into allegations that up to $7bn was laundered.

23 December, 2005

Aleksander Temerko, Associate of Khodorkovsky and former Vice-President of Yukos escapes extradition from the UK back to Russia.

18 January, 2006

Having been ordered by the Kremlin to pay $28 billion covering back taxes from 2000 to 2003, Yukos is now being ordered to pay a further $3.79 billion covering unpaid taxes and fines for 2004.
 

FutureTaoiseach

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Website
greatdearleader.blogspot.com
Obviously this is part and parcel of the creeping totalitarianism of Putin's Russia, on which Western govts have sadly been all too silence, especially on the worst part of all, Chechnya. The courts in Ingushetia have just banned NGO's operating there for Chechen refugees. Until the West can wrest itself from overdependence on Russian gas and oil, I suspect this will continue.
 

CookieMonster

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Joined
Feb 19, 2005
Messages
34,801
I was just off trying to find that story in the paper and add it an an addendum.

I had hoped - and perhaps in my naive young eyes it did seem - that Putin was a step towards a more liberal (perhaps a bit too strong) Russian government. Though this quickly appeared not to be the case.
 

SPN

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Feb 2, 2004
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:roll:
 

karldaly

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Feb 26, 2009
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465
.
.

This case provides all the evidence required that present day Russia is a kleptocracy which is avoided by all investors with an ounce of sense.
The country's vast reserves of natural resources are being plundered by Putin and his pals from the St. Petersburg mafia.

On 20 October 2005, Khodorkovsky was delivered to the labor camp YaG-14/10 (Исправительное учреждение общего режима ЯГ-14/10) of the town of Krasnokamensk near Chita.
The labor camp is attached to a uranium mining and processing plant and during Soviet times had a reputation as a place from which nobody returned alive.

27 Dec 2010
Today a Moscow court found Mikhail Khodorkovsky and Platon Lebedev guilty yet again.

Khodorkovsky & Lebedev Communications Center
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.
 

bokuden

Well-known member
Joined
Sep 23, 2010
Messages
11,349
.
.

This case provides all the evidence required that present day Russia is a kleptocracy which is avoided by all investors with an ounce of sense.
The country's vast reserves of natural resources are being plundered by Putin and his pals from the St. Petersburg mafia.

On 20 October 2005, Khodorkovsky was delivered to the labor camp YaG-14/10 (Исправительное учреждение общего режима ЯГ-14/10) of the town of Krasnokamensk near Chita.
The labor camp is attached to a uranium mining and processing plant and during Soviet times had a reputation as a place from which nobody returned alive.

27 Dec 2010
Today a Moscow court found Mikhail Khodorkovsky and Platon Lebedev guilty yet again.

Khodorkovsky & Lebedev Communications Center
.
.
Jesus, labour camps... nothing changes, does it? Maybe the Russians were better off under Gorbachev style communism. At least their natural resources weren't being plundered so brazenly, and ordinary citizens had a modicum of safety.
 

McDave

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Khodorkovsky should have played it smart like Abramovich. Instead he went up against a state which was intent on clawing back the enormous resources handed over by Yeltsin to the oligarchs. Whatever about Russia's institutional corruption, it's effectively renationalising resources that shouldn't really have been vested in such a small group of private individuals. Khodorkovsky decided to go into politics, and stirred up a hornets nets. He's now paying an admittedly excessive price for his poor judgement.
 

Catalpa

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10,301
Khodorkovsky should have played it smart like Abramovich. Instead he went up against a state which was intent on clawing back the enormous resources handed over by Yeltsin to the oligarchs. Whatever about Russia's institutional corruption, it's effectively renationalising resources that shouldn't really have been vested in such a small group of private individuals. Khodorkovsky decided to go into politics, and stirred up a hornets nets. He's now paying an admittedly excessive price for his poor judgement.
Well put

- he played with Fire - & got burnt.

That being said these are turning into show trials now.:?
 

On_The_Far_Right

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May 4, 2010
Messages
328
Todays sentencing is not good at all. Whatever about the personal ramifications, the damage it is doing to democracy is worse. Political interference in the judiciary is still rife in Russia and in every other walk of life.

The run up to the Presidential elections in 2012 will throw up a few interesting candidates, well funded and well positioned to challenge Putin.
 

karldaly

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@ McDave - "Khodorkovsky should have played it smart like Abramovich. Instead he went up against a state which was intent on clawing back the enormous resources handed over by Yeltsin to the oligarchs. Whatever about Russia's institutional corruption, it's effectively renationalising resources that shouldn't really have been vested in such a small group of private individuals."

Really?

In 1995, Abramovich acquired a controlling interest in the giant Soviet oil company Sibneft.
Affiliates of Abramovich purchased Sibneft for $100.3 million (the company was worth $2.7 billion at that time). Sibneft produces around $3 billion worth of oil annually.
Abramovich established several subsidiary firms and used them to acquire the stock of Sibneft (It has never been clear who financed him in this venture, but the usual suspects are mentioned).
As a result, Abramovich managed to pay for the company 25 times less than the market price.

After Sibneft, Abramovich's next target was the aluminium industry.
After privatisation the 'aluminium wars' lead to murders of smelting plant managers, metals traders and journalists as groups battled for control of the industry.
Abramovich emerged winner in the aluminium wars.
.
Power to the people how-are-ye.
.
.
 

Breadan O'Connor

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Jun 3, 2007
Messages
1,242
In 2005 the BBC showed a fascinating documentary on the Yukos case. I don't expect anyone to watch all of it but the first video alone is quite interesting.

Yukos controlled I think up to half of all Russian oil at it's height(that would equate to 10% of known world reserves). It seems unlikely that the Russian government would have allowed that situation to continue


[ame=http://www.youtube.com/watch?v=fGWkwcazhHM]YouTube - Russian Godfathers 2 The Prisoner (Part 1-6)[/ame]

[ame=http://www.youtube.com/watch?v=4QpUaCMClvg]YouTube - Russian Godfathers 2 The Prisoner (Part 2-6)[/ame]

[ame=http://www.youtube.com/watch?v=sg83hryiLUM]YouTube - Russian Godfathers 2 The Prisoner (Part 3-6)[/ame]

[ame=http://www.youtube.com/watch?v=LjqRtS8oyoQ]YouTube - Russian Godfathers 2 The Prisoner (Part 4-6)[/ame]

[ame=http://www.youtube.com/watch?v=Yl1DJuLCXaw]YouTube - Russian Godfathers 2 The Prisoner (Part 5-6)[/ame]

[ame=http://www.youtube.com/watch?v=5G8B_C4gYnk]YouTube - Russian Godfathers 2 The Prisoner (Part 6-6)[/ame]
 

Bally Mac

Member
Joined
May 16, 2007
Messages
39
Amazing story (thanks for video links). I'm embarrassed to say I knew nothing about till now. "For corruption to prosper all it takes is for good men to say nothing " - Why is our media not reporting this type of story instead of the banal rubbish they dish out?
 

Libero

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Joined
May 22, 2004
Messages
3,000
It all comes back to Dublin, believe it or not.

In December 2004, with Khodorkovsky facing charges, Yukos was on the chopping block, seized by Russian state bailiffs and told it faced an massive tax bill.

December 19th was the date set for the auction of Yuganskneftgaz, the main production subsidiary of Yukos.

On December 4th, a new company called Baikalfinansgrup was incorporated in at an address in the city of Tver that housed "a vodka bar, a mobile phone shop, a tour operator agency and the offices of several small local companies, but no office of Baikalfinansgrup" Baikalfinansgrup - Wikipedia, the free encyclopedia

That company and energy giant Gazprom were the only participants in the auction, with the new mystery company being the only bidder.

Eventually, Rosneft took over: BBC NEWS | Business | Yukos oil boosts Rosneft profits

And for a quite a while now, Rosneft has been using a holding company for many of its diverse energy interests, registered at Blackhall Place, Dublin 7.
The Irish Times - Thu, Sep 04, 2008 - Russian oil giant Rosneft has holding company in Dublin

Good girls go to Dublin; bad girls go to Chita.
 

McDave

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Joined
Jul 10, 2008
Messages
13,557
.
.

@ McDave - "Khodorkovsky should have played it smart like Abramovich. Instead he went up against a state which was intent on clawing back the enormous resources handed over by Yeltsin to the oligarchs. Whatever about Russia's institutional corruption, it's effectively renationalising resources that shouldn't really have been vested in such a small group of private individuals."

Really?

In 1995, Abramovich acquired a controlling interest in the giant Soviet oil company Sibneft.
Affiliates of Abramovich purchased Sibneft for $100.3 million (the company was worth $2.7 billion at that time). Sibneft produces around $3 billion worth of oil annually.
Abramovich established several subsidiary firms and used them to acquire the stock of Sibneft (It has never been clear who financed him in this venture, but the usual suspects are mentioned).
As a result, Abramovich managed to pay for the company 25 times less than the market price.

After Sibneft, Abramovich's next target was the aluminium industry.
After privatisation the 'aluminium wars' lead to murders of smelting plant managers, metals traders and journalists as groups battled for control of the industry.
Abramovich emerged winner in the aluminium wars.
Like I said, Abramovich played it smart. Khodorkovsky has been poking some very powerful and cynical politicians in the eye.

You're raising a a couple of very interesting questions. I guess there's a story to be told (if it hasn't been already) about the nexus between Yeltsin's award of concessions to a small number of people and the provision of the purchase prices (albeit at knock-down prices, but still for significant amounts). I'd be particularly interested to know what funding came from interests based in the US. I'm fairly sure there must be substantial US-based/fronted interests in Russian resources and industries as one of the Wall Street commercial banks seemed to act as a conduit for attempted legal action against Russian authorities for the expropriation of Khodorkovsky's (effectively Russia's) companies.
 

Breadan O'Connor

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Joined
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Messages
1,242
I'd be particularly interested to know what funding came from interests based in the US. I'm fairly sure there must be substantial US-based/fronted interests in Russian resources and industries as one of the Wall Street commercial banks seemed to act as a conduit for attempted legal action against Russian authorities for the expropriation of Khodorkovsky's (effectively Russia's) companies.

At the time Khodorkovsky was sent to jail there was a campaign by US politicians such as Tom Lantos, John McCain and others to have Russia thrown out of the G8 because of what happened to Yukos and Khodorkovsky. One wonders on whose behalf they were acting. Watch the video at about 6:30


[ame=http://www.youtube.com/watch?v=5G8B_C4gYnk&feature=player_embedded]YouTube - Russian Godfathers 2 The Prisoner (Part 6-6)[/ame]
 

deirdrem

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Joined
Nov 1, 2009
Messages
921
Jesus, labour camps... nothing changes, does it? Maybe the Russians were better off under Gorbachev style communism. At least their natural resources weren't being plundered so brazenly, and ordinary citizens had a modicum of safety.
By way of comparison, I think you could look into prisons in the US, where most inmates would be either black or hispanic; and that forced labour is very much part of the regime. I understand that the prisoners' labour is hired out to private interests, too.
An interesting situation when compared to Russia.
In Ireland, of course, mr. Khodorkovsky would have been provided with the freedom of Dublin, and a seat in the Seanad.
 

deirdrem

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Joined
Nov 1, 2009
Messages
921
In 1995, Abramovich acquired a controlling interest in the giant Soviet oil company Sibneft.
Affiliates of Abramovich purchased Sibneft for $100.3 million (the company was worth $2.7 billion at that time). Sibneft produces around $3 billion worth of oil annually.
Abramovich established several subsidiary firms and used them to acquire the stock of Sibneft (It has never been clear who financed him in this venture, but the usual suspects are mentioned).
As a result, Abramovich managed to pay for the company 25 times less than the market price.

After Sibneft, Abramovich's next target was the aluminium industry.
After privatisation the 'aluminium wars' lead to murders of smelting plant managers, metals traders and journalists as groups battled for control of the industry.
Abramovich emerged winner in the aluminium wars.
I wonder what the IMF's role was in all of this? Weren't they involved in Russia at that period?
 

McDave

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Joined
Jul 10, 2008
Messages
13,557
At the time Khodorkovsky was sent to jail there was a campaign by US politicians such as Tom Lantos, John McCain and others to have Russia thrown out of the G8 because of what happened to Yukos and Khodorkovsky. One wonders on whose behalf they were acting. Watch the video at about 6:30


YouTube - Russian Godfathers 2 The Prisoner (Part 6-6)
Lieberman was also mentioned in dispatches in that video. Senators for sale? So much for the idea of freedom. More like the imposition of new masters. This time in Wall Street.

The chess master Kasparov appears at the beginning of the segment. For some reason, that guy makes my skin crawl.

The key phrase in the whole video as I see it is the political decision to "sort out the oligarchs". There's no doubt in my mind that the endowment of the oligarchs was a disproportionate act of munificence on Yeltsin's part. The rebalancing has also been heavy-handed. But there are huge economic assets at stake.
 
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