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Last Updated: Tuesday, 27 April, 2004, 17:03 GMT 18:03 UK
Tax demands 'could finish Yukos'
Yukos headquarters
Yukos accuses Russia's government of persecution
Russian oil giant Yukos has admitted it could go under if the government presses ahead with a crackdown on its tax affairs.

"There's no way Yukos can win a pitched battle versus the government," Yukos finance chief Bruce Misamore told the BBC's World Business Report.

"If the government wants to put the company out of business, the government will put the company out of business."

The Russian authorities have sent Yukos a bill for $3.5bn in unpaid taxes.

Yukos, Russia's second biggest oil firm, says the tax claim is groundless, and is challenging it in court.

The company says it should be able to pay this bill, but , Mr Misamore worries that it will not be the last tax demand to come.

Political agenda

But the government's aggressive pursuit of the case has unnerved investors, and prompted a sharp downgrade in Yukos' credit rating.

The clampdown on the troubled oil company - which began last year with the arrest of former Yukos chief executive Mikhail Khodorkovsky on fraud and tax evasion charges - is seen by many as politically motivated.

Mr Khodorkovsky, Russia's richest man, had funded liberal opposition groups, breaking what analysts say was a tacit agreement to stay out of politics in return for avoiding scrutiny of his financial affairs.

"For the tax authorities to engage in an attack like this, I believe it has to have political support at other points in the Russian government," Mr Misamore said.

However, he stressed that the government's precise intentions remained unclear.

Unpredictable

"The government may try to kill the company, they may not - I don't think it's in the best interests of the country to try to do that, from any number of perspectives.

"There is some feeling both within the company as well as among various pundits and analysts around the country that this will not happen - on the other hand it could."

Mr Misamore added that the outcome of Yukos' legal challenge to the tax bill remained equally hard to predict.

"We're going to present the best legal case we can, and if the courts operate in accordance with the law, we feel quite confident that we would win," he said

"On the other hand, that may not be the situation."

As the Russian courts report to the government, they were susceptible to political influence, Mr Misamore said.

New chairman

On Tuesday, Yukos named a former governor of Russia's central bank as its new chairman in an apparent effort at healing the rift with the government.

Viktor Gerashchenko, who has served two terms as central bank chief, was a prominent figure in the Communist-era establishment, and is now a parliamentary deputy for the opposition Motherland party.

Mr Gerashchenko said he would abandon his seat in order to concentrate on the Yukos chairmanship.




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