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Court orders Russia to pay $50bn to Yukos shareholders

28 July
2014
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Admin
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A court in the Hague has awarded shareholders in the defunct Russian oil company Yukos the largest compensation package to date.

The Court of Arbitration said Russia should pay $50bn (£29.5bn) in damages.

It said Russian officials, under President Putin, had manipulated the legal system to bankrupt Yukos, and jail its boss, Mikhail Khodorkovsky for fraud and tax evasion.

Russia’s Foreign Minister said Russia would most likely appeal the decision.

Yukos was once the country’s largest oil producer.

‘Major step’

Foreign Minister Sergei Lavrov said: “The Russian side, those agencies which represent Russia in this process, will no doubt use all available legal possibilities to defend its position.”

The claim was filed by a subsidiary for the financial holding company GML, once the biggest shareholder in Yukos Oil Co.

GML Executive Director Tim Osborne said: “The majority shareholders of Yukos Oil were left without compensation for the loss of their investment when Russia illegally expropriated Yukos.”

“It is a major step forward for the majority shareholders, who have been battling for over 10 years for this decision.”

‘Historic’

In addition to forcing the company into bankruptcy, Russia also sold Yukos’ assets to state-owned businesses for political purposes, according to the claimant’s lawyer Emmanuel Gaillard.

Mr Gaillard said: “This is an historic award. It is now judicially established that the Russian Federation’s actions were not a legitimate exercise in tax collection but, rather, were aimed at destroying Yukos and illegally expropriating its assets for the benefit of State instrumentalities Rosneft and Gazprom.”

Yukos was disbanded in 2007 after filing for bankruptcy in 2006.

The company was formerly controlled by Mikhail Khodorkovsky, who was at one point Russia’s richest man.

Mr Khodorkovsky built Yukos into Russia’s largest investor-owned oil company after the fall of the Soviet Union.

He was arrested in 2003 and spent ten years in jail after being convicted of fraud and tax evasion but was pardoned last December.

The state-owned Rosneft bought the bulk of Yukos assets though auctions after the company was declared bankrupt. It says all the deals were legal.

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