Hague court to order Russia to pay $62b in Yukos case: Paper

Hague court to order Russia to pay $62b in Yukos case: Paper

MOSCOW - Shareholders in defunct oil giant Yukos won a court battle against Russia in one of the largest-ever commercial legal cases, in which Moscow must pay US$50 billion (S$62 billion) for expropriating the assets, Kommersant daily said, citing unnamed sources.

It said the Permanent Court of Arbitration in the Hague would announce later on Monday that Russia must pay the compensation - half of the original $100 billion claim - to former shareholders in the company, once Russia's largest oil producer.

The verdict on the case, which has lasted for almost a decade, is due to be announced against the background of the deepest West-East rift since the end of the Cold War, over Moscow's role in turmoil in Ukraine.

The newspaper said Russia was expected to appeal against the ruling.

The claim in the Hague was made by subsidiaries of Gibraltar-based Group Menatep, a company through which Mikhail Khodorkovsky, once Russia's richest man, controlled Yukos.

Group Menatep now exists as holding company GML and Khodorkovsky is no longer a shareholder in GML or Yukos.

Khodorkovsky, who is not fighting the action, was arrested at gunpoint in 2003 and convicted of theft and tax evasion in 2005. His company, once worth $40 billion, was broken up and nationalised, with most assets handed to Rosneft, a company run by Igor Sechin, a close ally of President Vladimir Putin.

In a case which Kremlin critics said offered a stark example of Putin's increasingly autocratic rule, Khodorkovsky was arrested at gunpoint in 2003 and convicted of theft and tax evasion in 2005. Putin justified the move by saying: "A thief must be in jail," quoting a popular Soviet blockbuster.

The newspaper said the court ruled that Russia had infringed an international energy charter, adopted in 1991, that envisaged legal issues for investments in energy sectors.

The court also ruled, according to the newspaper, that Russia had to start paying the compensation by Jan. 2 next year, or face growing interest on the fine.

FORCEFUL PAYMENT

Rosneft and Yukos shareholders were not immediately available for comment in early business hours on Monday. Kommersant said the parties had declined to comment on the outcome, but it cites GML director Tim Osborne as saying GML will force Russia to pay out the compensation "if it wouldn't make payments within the court-defined timeframe".

The Russian leader pardoned Khodorkovsky in December after he had spent 10 years in jail. Khodorkovsky is no longer a shareholder in Yukos.

Any funds won will be shared amongst the shareholders. The biggest ultimate beneficial owner is Russian-born Leonid Nevzlin, a business partner who had fled to Israel to avoid prosecution, who has a stake of around 70 per cent.

The other four ultimate beneficial owners, each of whom owns an equal stake, are Platon Lebedev, Mikhail Brudno, Vladimir Dubov and Vasilly Shaknovski.

After he was jailed, Khodorkovsky ceded his controlling interest in Menatep, which owned 60 to 70 per cent of Yukos, to Nevzlin.

Other shareholders have been pursuing separate actions.

A case is being brought by former Yukos managers at the European Court of Human Rights in Strasbourg. An interim ruling by the ECHR in 2011 found partly in favour of the Russian Federation.

GML shareholders are not expecting to claim twice, so if they receive monies pursuant to one case it would reduce their claim under the other, Osborne has previously told Reuters.

Purchase this article for republication.

BRANDINSIDER

SPONSORED

Most Read

Your daily good stuff - AsiaOne stories delivered straight to your inbox
By signing up, you agree to our Privacy policy and Terms and Conditions.