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Last Updated: Thursday, 27 May, 2004, 13:05 GMT 14:05 UK
Tax demand 'may bankrupt Yukos'
Former Yukos chief executive Mikhail Khodorkovsky
Khodorkovsky is still awaiting trial for fraud
Russian oil giant Yukos has said it could go bankrupt if it is forced to pay billions of roubles in back taxes.

"If the tax ministry actions continue, we can talk of the high likelihood of bankruptcy by the end of this year," Yukos said in a statement.

The firm was ordered to pay 99bn roubles ($3.5bn; 1.9bn) in back taxes by a Moscow court on Wednesday.

The firm has faced difficulties since last October when its former head, Mikhail Khodorkovsky, was arrested.

'Unable to pay'

Mr Khodorkovsky is still awaiting trial for fraud and tax evasion, charges his supporters say are politically driven.

The furore has seen a planned merger with rival Sibneft unwind, while banks have threatened to call in loans.

"At the moment there is a court order banning us from selling any property belonging to the company, including shares," the company said.

"While this order is in place, it is impossible for us to realise any assets in order to raise capital."

Yukos said that it had only $800m (438m) and is unable to meet the government's demands.

The firm also said it anticipated the tax authorities to press more charges with regards to taxes for 2001.

Frozen

The first hint of Yukos' troubles came with the arrest in July 2003 of Platon Lebedev, Mr Khodorkovsky's number two.

Three months later, on 25 October 2003, police arrested Mr Khodorkovsky at a remote Siberian airfield.

Since then, Mr Khodorkovsky's shares in Yukos, which are owned by Group Menatep - a holding company through which he and several colleagues control the oil firm - have been frozen.

Some of his colleagues have fled the country.

Yukos has a new set of executives, but the company is still under attack.

Critics of the government of President Vladimir Putin, recently re-elected with more than 70% of the vote, say Mr Khodorkovsky was seen as a political threat - and is being punished accordingly.

Some observers believe the aim is not only to use Mr Khodorkovsky as an example but to take Yukos into state control.


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