WASHINGTON, 16 December 2004 — Lawyers for the Russian oil giant Yukos made their first appearance in a US court yesterday, as the company made a last-ditch effort to avert a weekend auction of its major asset.
The hearing in US district court in Houston was expected to be largely procedural in nature, with attorneys for the embattled oil concern making the case that US courts have jurisdiction in the matter, experts said.
Yukos filed for bankruptcy under Chapter 11 of the US bankruptcy code Tuesday, and requested a temporary restraining order and preliminary injunction preventing the Russian government from proceeding with the fire-sale auction of Yukos’ main oil-production subsidiary.
The move blindsided many in business circles who had been following the titan’s fight for survival, but Yukos spokesman Mike Lake noted that US shareholders hold in excess of 10 percent of Yukos stock. “This gives us the (grounds) for jurisdiction,” he said, adding “whether the Russian government acknowledges it, remains to be seen.”
“The company obviously hopes that everyone involved respects the authority of the US court system.”
The Russian government has been dismantling Yukos, the nation’s largest oil company, for more than a year now, raiding company offices, arresting its billionaire founder at gunpoint, and slapping the firm with gargantuan tax bills, totaling $26 billion.
Sunday, the government was due to auction off 76.8 percent of Yukos’ Yuganskneftegaz unit, raising an estimated $9 billion that will be used to pay down some of that debt.
Some US observers see this week’s moves as a daring public relations gamble aimed at embarrassing the Russian government by internationalizing Yukos struggle with the Kremlin at a difficult time in US-Russian diplomatic relations.
“It’s hard to say what the Bush administration will do ... but the administration has already made statements expressing concern about Yukos and they will probably be forced to do that again,” said Fiona Hill, an analyst with the Brookings Institution in Washington.
“It’s a very clever strategy. It will certainly push the issue back to the top of the diplomatic, or international, agenda again in the press and elsewhere.”
The Yukos saga, combined with Russia’s heavy-handed attempts to influence the recent presidential election in Ukraine, has created what a senior US diplomat said was “certainly a rough patch” in US-Russian relations.
“We’ve been watching the Yukos affair with concern about what it means for property rights and the rule of law in Russia,” the diplomat said on condition of anonymity.
“The outcome is becoming increasingly clear. As Secretary (of State Colin) Powell says, they’re not heading back to totalitarianism ... But certainly the trends are negative on many fronts.”
