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Playing roulette with Russians
[August 23, 2006]

Playing roulette with Russians

(Houston Chronicle (KRT) Via Thomson Dialog NewsEdge) Aug. 23--The key to deciphering last week's announcement that Russian authorities are investigating former Yukos executives is all in the timing, said a former Yukos president and sometime-Houstonian, Steven Theede.

Last Thursday, just after a Dutch court refused a Russian bankruptcy receiver's motion to block the sale of a Yukos refinery in Lithuania, Russian prosecutors announced the investigation of Theede and three others.

The government claims the men were trying to strip the bankrupt oil company of its foreign assets.

Theede said that's hardly the case and that the men have been trying to protect the company from a government that is looking to punish any opponents of Russia's president, Vladimir Putin.

"We're the targets of a political vendetta," Theede said in a phone interview from London on Tuesday.

Theede said he and the other former executives with Yukos connections have been very open about all their actions with the company in recent years, knowing Russian officials were watching them closely ever since Yukos founder Mikhail Khodorkovsky was jailed on tax charges in 2003.

"Unfortunately, what I've discovered in Russia is that what matters is not doing the right thing but doing what the Russian authorities want you to do," Theede said.

"Essentially they wanted us to toss them the keys to the company and let them have their way with it. Instead we've chosen to defend the company against the Russian authorities."

Also under investigation by Russian authorities are former Yukos financial director Bruce Misamore, who also has a Houston home; former Yukos special adviser David Godfrey; and Tim Osborne, a director with holding company GML, which controls 60 percent of the company's shares.

Theft or protection?

According to a statement made by the Russian prosecutor general's office last week, the men are accused of organizing the transfer -- without compensation -- of $10 billion worth of Yukos' foreign assets to two Dutch-registered companies where they were directors.

The four men, who all work outside Russia, "took advantage of their official positions to steal and legalize property that had been trusted to them, which caused considerable damage to the owner ... the Yukos oil company," prosecutors said in a prepared statement.

Theede denies the men are stealing anything. He said they created a special business entity in the Netherlands, referred to as a foundation, to control and sell off Yukos' international assets. He notes the foundation structure is commonly used by companies to protect assets from hostile takeovers, as he feels is the case with the Russian efforts to seize Yukos assets through claims of unpaid taxes.

When the assets are sold, they must be handed over to a Dutch court for distribution to approved creditors. The Dutch court has recognized claims of $750 million filed by the Dutch subsidiary of GML, Yukos' core shareholder, and a $500 million held by Russian state-controlled oil company OAO Rosneft.

Theede questioned how Russian prosecutors came up with a $10 billion figure for the foreign assets.

The two foreign assets in question, the Lithuanian refinery and a Slovakian pipeline company, are worth closer to $1.7 billion.

The Slovak Republic is interested in buying Yukos' stake in the pipeline, while Polish refining and marketing company PKM is close to purchasing the refinery for about $1.5 billion.

Another tie to Houston

Yukos has another tie to Houston other than Theede and Misamore. In late 2004, the company tried unsuccessfully to file for bankruptcy protection here to block Russian authorities from auctioning off its biggest unit, Yuganskneftegaz.

After much wrangling, U.S. Bankruptcy Judge Letitia Clark threw out Yukos' bankruptcy case in February 2005, saying there is no precedent for a foreign corporation so central to another nation's economy to pursue Chapter 11 protection in the U.S.

When U.S. District Judge Nancy Atlas refused to reinstitute the company's automatic stay pending the appeal of Clark's decision a month later, the company decided to drop the appeal and continue the fight in European courts.

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