Press Room

The following is a letter from Bruce Misamore, Former Chief Financial Officer of Yukos Oil Company, that was published in the Financial Times.

Sir,

I have remained silent about the upcoming initial public offering of Rosneft, but after reading George Soros' excellent commentary "Rosneft flotation would spur Putin on" (April 26) I believe it is appropriate to re-emphasise the moral and ethical issues raised by the Rosneft IPO.

It is generally understood in western countries what has occurred with respect to the Russian government and administration's attack on Yukos Oil Company. Yuganskneftegas (YNG) was sold to Rosneft through a rigged auction, which utilised a front company by the name of Baikal Finance based in a small storefront in Tver (formerly Kalinin), and completely unknown to anyone except those perpetuating the fraud. The Russian government has acknowledged that Baikal Finance obtained its financing through state-controlled or influenced banks. The auction was supposedly conducted in order to pay huge tax assessments on Yukos, which were based upon retroactive re-interpretations of the then existing law and applied on a selective basis, and then sanitised through the non-independent, Kremlin-controlled Russian judiciary system.

YNG now comprises 70 per cent of the assets of Rosneft. Rosneft now wants western and Russian institutional investors and private investors to refinance its purchase price of YNG and future development costs of YNG and its other assets through the proceeds of the IPO. This must be the hypothetical moral and ethical equivalent of Nazi Germany conducting an IPO of the shares of a company which invested in assets taken pursuant to its nazification laws designed to take property from the prior Jewish owners.

Rosneft is also trying to con western investors by promising the addition of three western directors on its board (a clear minority of directors who will have no real say), and it has hired a former Morgan Stanley investment banker in a financial position to supposedly give it some credibility.

The likelihood is that none of the westerners will have any substantial influence whatsoever on the actual governance of the enterprise. The institutional investors and their constituencies who are considering participating in the Rosneft IPO should be questioning whether or not they have a moral and ethical basis to ever be investing in companies that have, as their principal business, assets that have been expropriated.

Further, the directors and shareholders of JPMorgan Chase and Morgan Stanley, the apparent principal advisers, should be questioning the management of those institutions as to why, apart from the extremely lucrative fees they will receive, they are supporting an IPO based on expropriated assets. Would these same institutions invest in and underwrite an IPO of an enterprise whose principal business was investments in stolen art?

Bruce K. Misamore,
Former Chief Financial Officer,
Yukos Oil Company,
Houston, TX, U.S.

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