Yukos Shareholders Launch Lawsuit Against Russian Government

by Tatiana Smolenskaya, Tax-News.com, Moscow

08 February 2006

A dozen mainly American shareholders in the beleaguered Russian oil company Yukos, which continues to reel from a succession of back tax claims, have launched a civil lawsuit against the Russian Federation and state-owned companies for their part in wiping millions of dollars off the value of the company’s shares.

The group of twelve investors, holders of American Depository Receipts in Yukos, claim to have lost millions of dollars as a result of the "de facto re-nationalisation" of the company, parts of which were sold off in a state-organised auction to help pay back tax debts which reached approximately $28 billion.

According to a report by the German weekly Der Spiegel, holders of ADRs make up 15% of Yukos's shareholding. Before the arrest and subsequent imprisonment of former Yukos chief executive Mikhail Khodorkovsky for crimes ranging from tax evasion to money laundering, this holding was said to be worth some $6 billion.

The plaintiffs are being represented by Washington D.C.-based law firm Covington and Burling, which has named the defendants in the lawsuit as the Russian Federation, the state-controlled firms Gazprom, Gazpromneft, Rosneft and Rosneftgaz and top officials of the companies, including Gazprom chairman Dmitry Medvedev and Rosneft chairman Igor Sechin.

The defendants have each been accused of playing a part in violating US securities law by "falsely assuring" the public that the Putin administration did not intend to re-nationalise Yukos.

So far, only energy minister Viktor Khristenko and finance minister Alexei Kudrin have been served papers, according to a report by The Lawyer.com.

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