Russian Oil Billionaire Wanted For Tax Evasion

by Tatiana Smolenskaya, Tax-News.com, Moscow

29 August 2007

Russian oil firm, Russneft and its former chief executive Mikhail Gutseriyev have been accused of major tax evasion, in a case that has strong parallels with the Yukos affair.

Gutseriyev, who says that political pressure forced him out of the company he founded in 2002, has been accused by the Russian authorities of "illegal entrepreneurship" by exceeding oil sale quotas, and of evading US$800 million in taxes.

According to the Moscow Times, the Russian Federal Tax Service has brought a total of eight lawsuits against 11 companies that are or have been shareholders in Russneft, and some of its shares and all of its assets have been frozen.

In late July, a Moscow court upheld a 3.4 billion ruble ($134 million) lawsuit against the firm on tax evasion charges, and earlier this month a Moscow arbitration court upheld a further 17 billion ruble ($665 million) tax evasion lawsuit. Then, on July 31, Moscow's Lefortovsky District Court issued a ruling blocking Gutseriyev's from selling or transfering his stake of approximately 70% of the company.

The arbitration court was due to hear a further two lawsuits on Wednesday brought by the Federal Tax Service over invalid share transactions.

A warrant is now out for Gutseriyev's arrest, after reports indicated that he has fled the country, breaching the terms of an order that he remain within Moscow while the tax evasion charges were being investigated.

In an attack on the government of President Vladimir Putin, Gutseriyev published a letter shortly before he left Russneft which claimed he was "bullied" by the Kremlin to sell his share in the company to a businessman with strong links to the Putin administration.

"I was invited to leave the oil business 'on good terms.' I refused. Then, to make me more compliant, the company was subjected to unprecedented hounding," Gutseriyev wrote.

The case has echoes of Yukos's downfall from Russia's largest private oil firm to bankruptcy last year. Yukos's jailed former chief executive Mikhail Khodorkovsky was also said to have evaded taxes, while Yukos itself was crippled after being saddled with almost $30 billion in back tax debts. It is said that this was punishment for Khodorkovsky's funding of opposition parties in parliamentary elections, but Gutseriyev reportedly kept a low political profile. Other observers suggest that the Kremlin is using such tactics to exert more state control over the key oil sector, and consolidate it into one state-run company. Russneft's purchase of Yukos assets at auction may also have been a factor, it has been suggested.

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