Russia » Economics
Author`s name Michael Simpson

Yukos Slipping Away?

Will Baron Rothschild give shares to President Putin?
It seems that the main problem is solved: oil oligarch, head of Yukos Mikhail Khodorkovsky is waiting for his attorney in a cosy chamber meant for four prisoners of the detention center #4. But according to the Russian tradition, as soon as people do something they start thinking why it has been done. As it turns out, this aspect of the problem has not been considered yet. The Russian mass media report that for fear to lose the control over Yukos, Russia's largest and one of the world largest oil companies, the authorities decided it would be better to detain Mikhail Khodorkovsky. This is particularly important now when the Tyumen Oil Company (TNK) after the merger with British Petroleum is controlled by the international finance. Does Russian authority actually control Yukos?

Alexander Shokhin, the Renaissance-Capital supervisory board chairman, former Duma deputy who occupied the position of labor minister in Yegor Gaidar's government was the first to sound the alarm. The day before yesterday, he said that the Group MENATEP international offshore company controlled Yukos shares. The shares may be thus handed over to somebody or sold and nobody would even learn of this fact.

Alexander Shokhin said that if an offshore organization sold shares to another offshore company representing the interests of a great customer, the change of the owner might go unnoticed. There is no person in Russia who might control the process.

MFO Menatep and Yukos deny that an extraordinary force majeur system of assets management has been introduced in the oil company. However, nowadays there are foreigners at head of the oil company controlled by the international offshore companies.

When head of the Yukos managing company Vasily Shakhnovsky became a member of the Federation Council representing the Evenkia autonomous district, his seat passed on to Yukos First Vice-premier American Steven Theede. Financial Director of the oil company, American Bruce Misamore is now responsible for Yukos financial issues. International relation are controlled by Norwegian Hugo Erikssen; his wife Yelena is known among Moscow journalists for her close friendship with former head of the Federal Guards Service Alexander Korzhakov. There is only one Russian who is now responsible for important issues: Yury Beilin oversees oil extraction. But if he is arrested or suddenly leaves for Israel, his responsibilities will be executed by American Joe Mach from US's Schlumberger.

Former British Foreign Secretary Lord Owen, now the head of Yukos International UK is in charge of Yukos relations with the European governments. Documents of Group MENATEP, the company controlling 61 per cent of Yukos shares, say that in case of Mikhail Khodorkovsky's death or non-ability 50 per cent of the Group shares that are currently in trust ownership may only go to one of the co-owners of a Gibraltar company who have been earlier appointed by Mr. Khodorkovsky himself. It is not clear if this may be Leonid Nevzlin who has escaped to Israel or somebody else. One thing is for sure is that Lord Jacob Rothschild, the prominent international financier, the head of Britain's Rothschild Family is on the list of those who are to have control over the Yukos assets. The British Family is known for its seriousness and solidity. 

Thus, Yukos is now safely covered with the participation of prominent figures from the international financial circles. To tell the truth, against the background of these titans Russia's Prosecutor General Vladimir Ustinov looks rather vague. Some time ago, when the USSR experienced even harder times, it still managed to subdue claims of the international capital and came to an agreement with foreign financiers. Many Russian experts believe that no matter that Russian law enforcement structures make much effort to ban operations with Yukos shares they do not have enough resources to see the plans fulfilled. Others seriously believe that very soon Yukos shares may be arrested. Analysts of the OFG investment group told the idea to Utro.Ru. The RF Prosecutor’s Office declared actions of Mikhail Khodorkovsky and Platon Lebedev illegal and stated the damage they caused to the country exceeded $1 billion. The sum is very big; and if the prosecution is sure that Yukos shares may go to somebody else it may impose an arrest upon them. At least, it may arrest the shares held by Mikhail Khodorkovsky, Platon Lebedev and senator Vasily Shakhnovsky who has been released. Their shares in the Menatep group make up transparent assets, and information about the assets was exposed by the holders. Analysts think that authorities may try to arrest the shares, but in fact it may turn to be a really hard task to do it.

In addition to the general distrust to the Russian justice system in the West, there is practically no precedent of execution of decisions passed by the Russian court abroad. On the contrary, foreign judges use every convenient opportunity to ignore or cancel these decisions passed by the Russian court. The Russian Federation has not yet signed important international juridical documents; as a result, the rights of Russian companies and the country itself are not protected abroad.

Does the Prosecutor's Office need to seek arrest of Yukos shares? The situation is perfectly clear today: all the parties involved in the scandal are anticipating open investigation at court and are not inclined to make any abrupt movements so far. If Yukos foreign investors are scared away, the shares may disappear once and for all. This is rather unfavorable for all the sides. That is why the government should keep up a dialogue with Yukos foreign shareholders. The very fact that recently Russia's President Vladimir Putin has met with Former US Secretary of State Henry Kissinger interested in Yukos affairs and with Lord Jacob Rothschild suggests that the parties of the conflict are in touch and can discuss measures that are to be taken.

On the other hand, no matter how owns Yukos shares and foreign assets, the riches of the company are Russian natural resources. In fact, Yukos is of no interest without oil extracted in Russia. The US's ExxonMobil is interested in the developed oil resources now controlled by Yukos. If Yukos loses the fields one day, the ExxonMobil president will come to Russian Primer Minister Mikhail Kasyanov to discuss the issue and will absolutely forget about Mikhail Khodorkovsky staying in prison. These are the rules of business.

It is difficult to suppose that the situation may develop according to a different scenario. But if figures of the international business and Russian authorities fail to come to an agreement, the operation of Russian enterprises controlled by Yukos and their bank accounts may be blocked in an instant. It means that people interested in Yukos profits will lose much more money that they have done on the panic day on the exchange on October 27.

Neither foreign shareholders nor Russian authorities are interested in this scenario of the situation development. That is why the Russian court will hardly impose arrest on Khodorkovsky's shares.

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