“We really didn’t have much of a choice, as one of the largest oil companies in the world, other than continuing to run it and implement our strategies.” Yukos was left reeling after their CEO was arrested. Putin’s Oil Heist is an insider’s account of the Yukos Affair. In this episode, host Loren Steffy follows up on the arrest of Mikhail Khodorkovsky and the theft of Yukos with first-person accounts from Bruce Misamore, former Chief Financial Treasurer.
Learn about:
- The incarnation of Misamore’s worst fear. In the months after the arrest, Vladimir Putin made his thoughts on foreign executives like Misamore running one of Russia’s biggest oil companies very clear. He levied large tax charges on Yukos, and despite being cleared by Russian tax authorities, they were under fire two months later from a random tax assessment that totaled some $30 billion. Khodorkovsky attempted to distance himself from Yukos after his arrest to avoid dragging the company down with him, disposing to his partners all his shares in an attempt to keep the Kremlin away from Yukos. Unfortunately, it did not work.
- Khodorkovsky’s threat to Putin. By 2003, Putin had viewed Khodorkovsky as a political rival. Taxes were Putin’s weapon of choice for eliminating political threats. Even before his arrest, Yukos was facing inquiries from Russian tax authorities about the state of its taxes.
- The fabrication of fraud. The government began assessing taxes on Yukos going back four years, and the numbers kept growing. In some of the years, the tax assessments exceeded the company’s gross revenue – it was all clearly fake. Still, trying to battle the tax claims in court proved futile, as the judges were quite literally told over the phone how to rule.
- Misamore’s efforts to save Yukos. Thwarted at every turn, Misamore decided to go on the offensive as much as he could. He called one of Yukos’ international lawyers asking how to protect their rights in Russia, and they came up with the European Court of Human Rights. They hired a specialist attorney and filed a case against Russia in April 2004, which they ended up winning. Despite this, however, Yukos’ assets were frozen, and the company was drained of resources by the repeated tax levies and penalties. The final blow came from Rosneft,the state-controlled oil giant. Rosneft used a syndicate of lenders to force Yukos into bankruptcy using the loans that the banks had made to Yukos for oil export contracts. Misamore, though, wasn’t about to give up.
Resources
Loren Steffy on LinkedIn
Stoney Creek Publishing