BY Matt Atkins
Shareholders of the now defunct oil giant Yukos celebrated on Monday after an international arbitration panel ordered Russia to pay $50bn in damages for bankrupting the company.
The Hague court said Russian officials had manipulated the legal system to bankrupt Yukos, and jail its founder, Mikhail Khodorkovsky, for 10 years.
The court of arbitration rejected the Kremlin’s argument that the asset seizure was due to unpaid taxes, and described Russia’s actions as “devious and calculated expropriation". The Russian finance ministry has hit back, saying said the ruling was "flawed", "one-sided" and "politically biased". The ministry added that the Permanent Court for Arbitration in The Hague "had no jurisdiction to consider the questions it was given". The country is expected to appeal against the ruling.
The claim against the state was filed by a subsidiary for the financial holding company GML, once the biggest shareholder in Yukos Oil Co. "The majority shareholders of Yukos Oil were left without compensation for the loss of their investment when Russia illegally expropriated Yukos," said GML's Executive Director Tim Osborne. "It is a major step forward for the majority shareholders, who have been battling for over 10 years for this decision."
Responding to the news, Mr Khordorkovsky, who was at one point Russia's richest man, said it was "fantastic" that shareholders were "being given chance to recover assets". Mr Khodorkovsky forged Yukos into Russia's largest investor-owned oil company following the collapse of the Soviet Union. He was arrested in 2003 and spent a decade in jail after being convicted of fraud and tax evasion but was pardoned last December. At the time of his arrest, he had been seen as a potential political rival to Vladamir Putin.
The question now is whether Russia will pay up. The Kremlin denies any wrongdoing, and payment of the fine under the ruling would prove an acceptance of defeat. Even if the state does not voluntarily accept the ruling, it can be enforced by shareholders seizing assets abroad. Shareholders of GML, however, have said that they are prepared to discuss the matter with Russia, according to a company spokesman.