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Thursday, August 24, 2006

Not Content with Jailing Citizens, Neo-Soviet Russia Now Goes After Foreigners

A Step at a Time reports that the Neo-Soviet Kremlin is not satisfied with destroying YUKOS and jailing its Russian CEO in Siberia, as well as attacking his Russian staff and putting his wife and children out on the street. Now, it is moving against foreigners who were associated with the company, putting the final nail in the coffin of foreign investment and bringing Iron Curtain II all the way down. Clearly, "President" Putin knows that his dictatorship cannot survive if subjected to the prying eyes of foreigners, just as did the USSR before him. SAAT points to a Beeb report on a criminal investigation of YUKOS replacement CEO Steven Theede (pictured), who resigned in protest over what he called "sham" tax proceedings against the company following his appointment to guide the company in the wake of former CEO Mikhail Khodorkovsky's arrest. SAAT provides a transcript of a Beeb interview with Theede as follows:

THEEDE: We're just appalled at these accusations. First of all, they announced last Thursday that they were going to initiate an investigation into our international assets. The fact of the matter is that company management did set up a foundation in early 2005 to protect our international assets from expropriation by the Russian Federation. And that came on the heels of the expropriation of our largest Russian asset Yukosneftegaz, in late 2004, and it was after that that we concluded there was absolutely nothing we could do to save our Russian assets if the Russian authorities wanted to take them. But we felt we had a strong fiduciary responsibility to take steps to protect the assets that we could protect, and that was our international assets. And so using a long known technique in the Netherlands, we set up a foundation to protect these assets from unfriendly hands.

BBC: What about the criminal case that's actually being brought against you? Are you going to fight it, or are you simply going to ignore it?

THEEDE: We're not going to sit on our hands. This is just an amazing move that the Russian authorities have taken, to open an investigation against individuals who are not residents of Russia. They are trying to impose their will on those of us who have spent the last two years doing nothing but trying to do the right thing in protecting the interests of the company. And it brings up, I think, an important point of what I've discovered in the time I've been in Russia, and that is that even though my principles have always been to always do the right thing, time after time, but in Russia today the key to success is more doing what the authorities want you to do rather than doing the right thing.

BBC: Do you feel extremely bruised by this whole process?

THEEDE: I just feel angry about this whole process. What complicates it for me personally is I see things that go on in Russia that would be considered illegal in any country in the West, and the results of these illegal activities are then in essence exported to Western countries and the actions that were taken in Russia seem to be forgiven and ignored and overlooked. It's just creating a Russia that is becoming more and more confident that they don't need to comply with Western standards in order to be accepted and get along in the West. And I think it's creating a much harder Russia, I think it's creating a Russia that's going to be increasingly more difficult to deal with - where does it all stop?

BBC: You resigned last month as chief executive of Yukos. What do you see your role being now?

THEEDE: Well, I resigned all of my responsibilities with Yukos as president as well as on the board of directors of Yukos Oil Company. I want my role to be reduced substantially to the point where I can put the Yukos saga behind me and move on, with my life. It would appear that the Russian authorities are going to make it difficult for me to do that, at least for a while. The fact that they've announced an investigation may or may not allow them to invoke certain extradition treaties that are in place with a number of European countries. I don't know how serious a threat extradition might be - just my motto here is going to be for a while better safe than sorry, so my travels will be restricted mainly just to the UK and the US. Outside of that I will probably be very. very careful.

The only question now is: Who's next? If Russia will try to prosecute a wealthy foreign businessman, what about heads of NGOs that dare to question the Kremlin's human rights record? How long before we see the barbed wire of the gulags rise again to darken Russia's somber skies?

The Moscow Times has more:

Former Yukos president Steven Theede on Thursday decried a Russian criminal investigation against him and three other foreign executives as "pressure and intimidation" aimed at disrupting the $1.5 billion sale of Yukos' stake in the Mazeikiu refinery in Lithuania.

"I think this is an attempt to frustrate the sale of Mazeikiu Nafta," he said by telephone from London. "This is pressure and intimidation. And the reason it seems significant is that it is [against] non-Russian citizens who are not living in Russia and running an organization that is not Russian."

The Prosecutor General's Office said it was investigating whether $10 billion worth of Yukos assets, including its foreign holdings, were transferred out of the company via a Dutch-registered foundation. It said Theede, former Yukos CFO Bruce Misamore, the company's former legal counsel David Godfrey and Tim Osborne, director of Yukos majority shareholder GML, had appointed themselves directors of the foundation in April 2005 and then transferred foreign assets owned by a Yukos subsidiary into it.

Theede said Tuesday that the foundation had been set up as a way of protecting its foreign holdings, including Mazeikiu, from attack by the Russian state after the management team had exhausted its attempts to reach an amicable agreement. "The foundation was created ... for the benefit of the legitimate creditors of the company," he said.

The foundation has voting rights over assets still owned by Yukos' foreign subsidiaries -- in Mazeikiu Nafta and Slovakian pipeline operator Transpetrol -- that have a combined value of less than $2 billion, far less than $10 billion, Theede said.

"All companies in the foundation are still 100 percent owned ultimately by Yukos Finance," he said, referring to Yukos' Dutch-based subsidiary.

Following a ruling by a New York bankruptcy court, 100 percent of the proceeds from the sale of Mazeikiu and Transpetrol by Yukos Finance are to be transferred to Dutch court-appointed bailiffs and disbursed to Yukos' foreign creditors, GML's Moravel and state-controlled oil firm Rosneft.

"The whole process is really quite transparent," Theede said. " We would be insane to play games when we're being watched by everybody."

He noted that the prosecutors' statement had come just hours after a Dutch court declined to grant Yukos' Russian receiver Eduard Rebgun the right to prevent the sale of the company's foreign assets.

Theede stepped down as Yukos president ahead of a creditors vote last month to liquidate the company, but remained head of Yukos Finance.

Poland's PKN Orlen agreed to buy Yukos' 53 percent stake in Mazeikiu in May. Earlier this month, Russia shut down the pipeline supplying Mazeikiu after a small oil spill in what many have seen as an attempt to reverse the sale.

Theede said Thursday that Orlen had not transferred its payment for the refinery, but had given no indication it wanted to pull out of the deal as a result of the pressure. The probe looks like another tactic to impede the sale as executives could face arrest if they travel, Theede said.

The Houston Chronicle has more detail.


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