Russian authorities raid homes of Yukos employees

Moscow (Platts)--22Nov2004

Russia's authorities have launched wide-scale searches of offices and homes of
Yukos management, adding to the company's fears that the government is on the
verge of increasing still further the ferocity of its assault on the oil
producer with a spate of personal criminal charges against its staff. The
Interfax news agency quoted a "foreign member of Yukos' board of directors" as
saying that "dozens" of Yukos staff are considered suspects, or have been
arrested or put on a wanted list on criminal charges. A handful of Yukos
managers, as well as several shareholders in Group Menatep, which is in turn
the major shareholder in Yukos, are already facing charges. Sources close to
the situation suggested that information about the latest searches may in any
case have been leaked by the country's law enforcement authorities. The
authorities' move appeared to support comments made by President Vladimir
Putin, who insisted Saturday that the charges against Yukos were essentially
criminal.

Putin told Brazilian journalists ahead of a visit to the country that
Mikhail Khodorkovsky--the Menatep shareholder and former Yukos chief executive
already in jail on fraud and embezzlement charges--"was never involved in
politics," AFP reported. "So it is wrong to cast the criminal side of this
case as political," Putin said. The assault on Yukos was widely thought to
have been initiated in response to an increasingly open anti-Kremlin stance on
the part of Khodorkovsky. "Everyone must be equal before the law," Putin said.
Putin and other government officials said earlier this month that all
companies faced the same responsibilities and could face the same tax checks
as Yukos-but observers say claims of even-handedness hold little water. TNK-BP
has been presented with a tax claim of $87-mil, and Sibneft has received a
claim for around $730-mil, according to local reports about which the firm has
declined to comment. Those figures pale into insignificance next to the claims
against Yukos, which for 2001 and 2002 exceed the firm's US GAAP revenues.

Meanwhile, Khodorkovsky's investment vehicle Group Menatep, the major
shareholder in Yukos, said it had filed complaints under the international
Energy Charter in an effort to block the sale of Yuganskneftegaz. Interfax
quoted Menatep executive director Tim Osborne as saying the auction would
amount to expropriation of the 1-mil b/d producer, AFP reported. Russia is a
signatory to the Energy Charter but has not ratified it. Menatep's comments
echo those of Yukos, whose chief executive Steven Theede said Friday that the
sell-off amounted to "theft" by the government of the company's assets.

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