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Last Updated: Wednesday, 26 May, 2004, 17:27 GMT 18:27 UK
Massive tax bill threatens Yukos
Mikhail Khodorkovsky testifies by closed circuit TV from behind bars
Khodorkovsky has been in jail for seven months
Russian oil giant Yukos has been ordered to pay 99bn roubles ($3.5bn) in back taxes by a Moscow court.

The ruling could bankrupt the firm, which ran into trouble last October when its former chief executive, Mikhail Khodorkovsky, was arrested.

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.

Frozen

Yukos' troubles began 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 the colleagues have fled the country.

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

Taking over

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 threat - and is being punished accordingly.

The theory is that Russia's "oligarchs", the men who became rich through bargain-basement privatisations in the 1990s, agreed to stay out of politics.

Mr Khodorkovsky crossed that line.

Sibneft's main shareholder, Roman Abramovich - the man who now owns the UK's Chelsea football club and is the governor of a remote Russian state of Chukotka - is reportedly also under investigation on tax grounds.

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

"We sadly do not believe the government's purpose is to obtain tax receipts per se, but rather to extract producing assets from Menatep's control," Renaissance Capital wrote in a research note.


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