The Telegraph
Since 1st March, 1999
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Yukos owes $5 billion in back taxes

Moscow, Dec. 2 (Reuters): Russian oil giant Yukos’ problems appeared to deepen today with a report that tax authorities accused the company, struggling to save its merger with rival Sibneft, of owing some $5 billion in back taxes.

Russia’s Interfax news agency said the tax ministry made the allegation in a letter to the public prosecutor’s office but Yukos immediately denied that it had been evading tax payments.

“We consider the claim of 150 billion roubles ($5.05 billion) of tax arrears absolutely improper,” Yukos’ spokesman Alexander Shadrin said.

Yukos, whose former chief executive Mikhail Khodorkovsky was arrested in October, has been subjected to relentless pressure from prosecutors in recent weeks.

The Kremlin is believed to have orchestrated the assault on the politically ambitious Khodorkovsky and his interests. Neither the tax authorities nor the prosecutor’s office would comment on the Interfax report but Yukos, which has repeatedly denied it has cut corners in paying tax, said it would issue a statement on the matter later in the day.

Economy minister German Gref said that Russian companies must stop exploiting tax “loopholes”, but added that he was not singling out Yukos.

Analysts said Yukos’ tax woes may have been a reason why Sibneft, which agreed in April to merge with Yukos to create the world’s fourth biggest oil company, abruptly announced on Friday it was suspending the deal.

Shareholders in Yukos say they are fiercely resisting calls from Sibneft’s main shareholders, led by Roman Abramovich, the owner of London soccer club Chelsea, to surrender management control in the merged company as the price of saving the deal.

“I would be surprised if they (Sibneft) did not have a sense Yukos would be facing a big tax bill. It’s hard to fault them for wanting to renegotiate,” said Paul Collison, an analyst in Moscow with UBS Brunswick.

Sibneft’s owners have by suspending the merger put huge pressure on Yukos core shareholders including Khodorkovsky, whose arrest in October overshadowed the deal, which was all but completed.

A source close to Yukos shareholders denied a report in the Wall Street Journal today they were willing to give top management jobs in the merged company to Sibneft.

“We are currently continuing negotiations, but I don’t think that anything material will happen this week”, the source said.

Another source close to the negotiations said the possibility of Yukos’ making concessions to Sibneft in order to save the deal could not be completely ruled out.

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