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Since 1st March, 1999
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Fears linger as US citizen heads Yukos

Moscow, Nov. 4 (Reuters): A Russian-born US citizen took over Russian oil giant Yukos today committed to his jailed predecessor’s plans to build an international corporate power, but fears lingered of new confrontation with the Kremlin.

Questions remain whether the standoff with the Kremlin, which landed former chief executive Mikhail Khodorkovsky in jail on fraud and tax evasion charges, may threaten Yukos’ merger with smaller rival Sibneft. The merger would create the world’s fourth largest private oil company.

Khodorkovsky’s grand design for a linkup with a US oil giant — Exxon Mobil and ChevronTexaco have both been mentioned as suitors — also looks in grave danger.

Simon Kukes stepped up to chief executive from the chairmanship after Khodorkovsky, Yukos’ biggest shareholder and Russia’s richest man, quit yesterday, just over a week after he was arrested at gunpoint in Siberia. Kukes outlined plans for the company as President Vladimir Putin, who analysts say may fear possible political ambitions on Khodorkovsky’s part, headed to western Europe to calm foreign investor worries.

Many in the West and Russia see a blatant Kremlin attempt to curb the power of big business, though Putin denies this.

“We don’t plan any changes in company behaviour as the company is developing normally. Everything stays intact and we have a strong team,” Kukes told a news conference called to present the company’s new seven-member executive committee.

Russia’s financial markets appeared to stabilise after stocks jumped yesterday on news of Khodorkovsky’s resignation. But it was by no means sure the legal drive against Yukos would abate with Khodorkovsky’s resignation. Despite having had his shares frozen he can exercise voting rights on them and influence decisions by the board.

“Nobody understands what the powers-that-be really want from Yukos — more taxes or more kickbacks, just Khodorkovsky’s head or his entire business. Or is full-scale nationalisation going on in Russia'” said an industry analyst.

Yukos has said it would offer minority shareholders in Sibneft the same terms as majority holders, including Roman Abramovich, a tycoon who has bought London soccer club Chelsea.

But analysts said the deal would be difficult to pull off so long as Khodorkovky’s and his allies’ 44 per cent stake in the combined firm remained frozen.

A dire warning came from billionaire investor George Soros, whose private foundation poured millions into philanthropic works in Eastern Europe after the collapse of the Soviet Union. “Since practically everybody in Russia broke the law during the turbulent years following the collapse of the Soviet system, the Russian President can prosecute whoever he chooses,” Soros was quoted by Moscow News, which Khodorkovsky owns, as saying.

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