Russian oil giant YUKOS said Wednesday that it was unable to meet a Wednesday midnight deadline to pay a $3.4 billion back-tax bill and said bailiffs could begin taking control of its assets within hours.
A YUKOS official made the admission hours before the deadline at the close of a day dominated by reports the company was in last-minute talks to stave off bankruptcy. Its detained chief shareholder, billionaire Mikhail Khodorkovsky, was said by his lawyer to be ready to give up control of the firm.
“We are not in a position to pay and we have not paid,” the official told Reuters.
“This means bailiffs could start writing off funds from our accounts from Thursday and begin evaluating our assets to offer them at tenders or in direct purchase deals.”
The affair is widely seen as being driven by President Vladimir Putin in a resolve to end Khodorkovsky’s political ambitions and demonstrate to other wealthy businessmen that they should not work against the Kremlin.
Khodorkovsky’s trial on fraud and tax evasion resumes next Monday. He has been in jail since last October.
Putin has pledged not to destroy YUKOS but gave no comment on Wednesday, appearing at a news conference with Bulgaria’s president but leaving before anyone could ask about the affair.
With YUKOS hoping for a reprieve, police raided the office where its list of shareholders was kept. The Justice Ministry said the registrar had failed to cooperate with bailiffs.
YUKOS continues to pump nearly a fifth of Russia’s oil but its shares have lost more than half their value since April as authorities landed successive legal blows against the firm.
A high-level YUKOS source said the company was in talks with the government on how to reach an amicable agreement and avoid bankruptcy. “This is a very limited group of (YUKOS) people who are in talks at all government levels,” the source said.
Official denies talks
But a YUKOS official denied any talks were going on and said the government had not responded to attempts to strike a deal.
“The only signs that we know are the ones you know as well, made in the form of comments by government officials,” said Hugo Erikssen, head of international information for YUKOS.
“Unless the government gives us more time to pay back what we owe ... we will be, technically speaking, insolvent,” he said.
YUKOS had no inkling of what would happen after the deadline expired, he said, but operations — pumping about two percent of the world’s oil — were running as normal. He said the question of whether the firm would go bust was “a political decision.”
YUKOS shares rose as much as 20 percent during the day on reports of a possible deal. At close, the stock was up 13.7 percent at 227.91 rubles on Moscow’s MICEX exchange.
On Tuesday a finance ministry official said YUKOS might be given more time to pay the bill, which the firm says it cannot honor while its assets are frozen. But Prosecutor-General Vladimir Ustinov then threatened to hit YUKOS with more back-tax charges on top of the total of $7 billion it already owes.
“(Khodorkovsky) has repeatedly said he was ready for talks,” Khodorkovsky’s lawyer Anton Drel told Reuters. “He has repeatedly said he is ready for financial losses ... including those related to shares.”
The Financial Times quoted sources close to the discussions as saying that Khodorkovsky, in letters to the government, had offered to give up his 44 percent stake in YUKOS to save his firm, one of Russia’s most profitable.
Lawyer Drel denied Khodorkovsky, 41, had written any letter, as he is banned from doing so in jail.
Some analysts have questioned whether the tighter squeeze on YUKOS is part of government tactics in a game of brinkmanship with Khodorkovsky, who faces up to 10 years in a labor camp.
But many analysts have also said the protracted legal battle threatens to damage Russia’s image among investors.
