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Articles: Russian tycoon's trial resumes

Posted by admin on Monday, July 12, 2004 - 06:24 AM

The fraud trial of Russian oil magnate Mikhail Khodorkovsky has resumed as YUKOS, the oil giant of which he is the main owner, comes up with a new offer to stop the state seizing its assets for unpaid taxes.
Khodorkovsky, earlier this year ranked as one of the world's richest men, was led in handcuffed to a prison guard and stood behind the bars of a metal cage in the Moscow courtroom on Monday. Judges almost immediately began considering an appeal by Khodorkovsky's co-defendant, Platon Lebedev, to be released from jail during the trial on the grounds of ill-health. YUKOS's new chief executive, Stephen Theede, was reported to have offered the government $7.5 billion (4 billion pounds) over three years to cover the tax arrears. But the government was said to be cool to the idea. "We in the government don't see much sense (in this proposal)," Vedomosti newspaper quoted a government source as saying, echoing earlier comments by Finance Minister Alexei Kudrin that YUKOS had enough cash and assets to meet its bills. The fraud and tax evasion trial of Khodorkovsky, 41, who was once Russia's richest man, is a watershed in the Kremlin's relations with the billionaire entrepreneurs who made their fortunes in the chaotic collapse of the Soviet Union. The so-called "oligarchs" carved off huge slices of Russian industry in shady privatisations, and exercised considerable political influence in the late 1990s. But President Vladimir Putin has reined them in. YUKOS missed a deadline for repayment of $3.4 billion in arrears on July 7 and analysts said the total bill could rise to $10 billion. In keeping with Russian practice, Khodorkovsky and Lebedev watched the court proceedings from inside a metal cage. Lebedev, 44, who was arrested a full year ago, looked pale and drawn. His defence counsel, asking for the court to release Lebedev from prison during his trial, said medical examinations had shown he was suffering from liver disease. DOWNFALL Khodorkovsky's funding of liberal opposition parties is widely assumed to have caused his downfall and led to his arrest in October. As the trial resumed, confusion surrounds YUKOS, the company Khodorkovsky turned into Russia's largest oil firm, after it missed Wednesday's payment deadline saying it could not meet it while its assets were frozen by the state. YUKOS's tax bill now totals nearly $7 billion and it faces a possible rapid sell-off of its assets. Its future depends on whether Khodorkovsky and a small core of shareholders can strike a deal that would almost certainly see them relinquish control. "The government is going to take control over YUKOS in one way or another, directly or indirectly. What's important is the fate of the company after the government takes control," said investment bank Renaissance Capital in a research note. One international energy watchdog said there would be no impact on Russian oil production from the legal turmoil involving YUKOS, the country's biggest oil exporter. "Today it's not a worry because so far YUKOS output has not been seriously diminished and, if it is, it will be replaced by other Russian companies," International Energy Agency head Claude Mandil told reporters. The uncertainty around YUKOS and recent bank failures have tarnished Putin's image as the architect of Russia's economic stability after the tumultuous 1990s, and could threaten future foreign investment. Putin has pledged to try to prevent YUKOS's collapse but the firm has continued to come under attack.

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