October 2005

October 28, 2005: Mass Media on the Lawsuit of YUKOS' Shareholders Against Russia: Mass media reported that on October 24, Minister of Industry and Science Khristenko and CEO of Gazprom Miller received a lawsuit of minority shareholders of YUKOS filed in the US with a demand to return the money lost in the course of "nationalization of YUKOS." Remarking that this was not the first time such lawsuit was filed, Vremya Novostey wrote that so far shareholders of YUKOS managed to achieve very little in international courts. Nonetheless, the present lawsuit regardless of its legal consequences may lead to a political scandal because two defendants, namely Khristenko and President of Rosneft Bogdanchikov, have been received by US President Bush. Kommersant wrote that handing over of the judicial documents was a much stronger PR action than all meetings and statements of the minister in Washington. Izvestia writes that the lawsuit may be painful for Russia and has already caused repercussions in American mass media. Thus, television channel NBC considers it a signal for other investment companies that have recently issued credits totaling almost $21 billion to Rosneft and Gazprom. According to one of the American lawyers, "The lawsuit is rather political and now the court needs to decide first of all if it has the right to hear a lawsuit from a company operating in the territory of a foreign country." Gazeta presumes that the new lawsuits can create trouble for Gazprom and Rosneft. For example, the IPO of Rosneft on Western markets may be postponed or abolished. Representatives of the plaintiffs also hope that in the course of legal disputes a question will arise if Rosneft has legal rights for assets of YUKOS. Biznes writes that American courts are remarkable because they spread their jurisdiction to all countries in a unilateral manner. (Source: Polit.ru)
Learn more about Russia's Bilateral Investment Treaties »
Learn more about the YUKOS ADR Holder Suit  »

October 27, 2005: U.S. YUKOS Shareholders Sue Russian Government for Investment Damages: The wide-ranging civil lawsuit on behalf of U.S. holders of YUKOS American Depositary Receipts (ADRs) claims that the Russian government violated U.S. securities laws by 'falsely assuring' investors that it had no intention of re-nationalising YUKOS. The filing of the lawsuit in a Washington (U.S.) district court, coinciding with the second anniversary of the arrest of former YUKOS head Mikhail Khodorkovsky as well as Russian Industry and Energy Minister Viktor Khristenko's visit to the U.S. for energy talks, represents yet another legal battlefront in the ever-more-litigious final chapter in the 'YUKOS affair'. The lawsuit appears unlikely to be successful, given its long-shot attempt to hold the Russian government accountable under U.S. securities laws in the absence of a precedent, but the lawsuit in itself will once again cast light on the actions of the government and the state-owned energy companies as the fight to divide up YUKOS's remaining assets kicks into a higher gear. (Source: Global Insight Daily Analyis)
Learn more about Russia's Bilateral Investment Treaties »
Learn more about the YUKOS ADR Holder Suit  »

October 26, 2005: YUKOS Minority Shareholders Take Legal Actions Against Russian Authorities: Legal experts have mixed opinions on the potential success of the recent lawsuit filed by American YUKOS investors against the Russian government over illegal and confiscatory tax levies. Sergei Sokolov, whose company Marks & Sokolov advises shareholders of YUKOS under the collective lawsuit against the company and Group Menatep, says that the lawsuit has very weak evidences that "YUKOS was nationalized." Valery Tutykhin, partner of John Tyner and Partners, says: "The Russian Federation cannot be a defendant in an American court. This lawsuit will probably be dismissed." However, a lawyer at the Russian branch of one international company has a different opinion. He explains, "Most countries, including the US, have some grievances against the Russian Federation. America follows the concept of functional immunity, which means that if a state engages in commercial activities it is possible to hold it accountable." (Source: Vedomosti)
Learn more about Russia's Bilateral Investment Treaties »
Learn more about the YUKOS ADR Holder Suit  »

October 26, 2005: Victor Khristenko - I West Suit Incident: Lawyer Thomas Johnson, representing the 12 YUKOS minority shareholders held a press conference yesterday saying Russian Energy Minister Victor Khristenko and Gazprom, on the board of which he sits should respond to suit no later than November 13, otherwise the court will rule in favour of the shareholders. There is no official response from Moscow. Press secretary for Victor Khristenko says no American court would confirm the notification has been delivered to Khristenko. (Source: Gazeta.ru) Learn more about the YUKOS ADR Holder Suit  »

October 26, 2005: It’s Some Kind of Comedy: Victor Khirstenko confirmed to Gazeta that he didn’t receive the court summons. Asked if he discussed the YUKOS case at his meetings with officials in Washington he said he didn’t not and thought this topic should not be discussed anymore on political level. (Source: Gazeta) Learn more about the YUKOS ADR Holder Suit  »

October 26, 2005: YUKOS Dogs Khristenko’s U.S. Visit: Industry and Energy Minister Viktor Khristenko has been caught up in a lawsuit by U.S. shareholders in YUKOS oil company. A spokesman for the plaintiffs said Khristenko was served with the lawsuit just after meeting with U.S. President George W. Bush on Monday - and hours after a speech asserting that Russia was not engaged in renationalizing its oil and gas sector. Twelve shareholders of YUKOS American Depositary Receipts filed suit against the Russian government, four state-owned energy giants and a host of high-ranking government officials on Monday, accusing them of securities fraud in the de facto renationalization of YUKOS. Putin was not named as a defendant because he is immune from prosecution as head of state, said Charles Krause, a spokesman for the plaintiffs' legal team. Krause said that YUKOS core shareholder Group Menatep was supporting the plaintiffs. Thomas Johnson, an attorney with Covington and Burling representing the plaintiffs, said Menatep was paying his firm, the Financial Times reported. (Source: The Moscow Times) Learn more about the YUKOS ADR Holder Suit  »

October 26, 2005: YUKOS Minority Shareholders Sue Moscow: Although American shareholders of foreign companies have almost never sued foreign governments in U.S. courts, YUKOS holders are sure that this lawsuit will set a legal precedent. "U.S. courts have been known to unilaterally spread their jurisdiction all over the world," said Yuri Borisenko, a lawyer at law firm Vegas Lex. In other words, Russian companies could face problems with their foreign assets if this lawsuit were upheld. Rosneft, which does not own any assets on U.S. territory, has no intention of buying some. Consequently, it will not be affected by the YUKOS claim. However, Gazprom has every reason to be worried. This Russian monopoly has wanted to invade U.S. markets for a long time. For example, Gazprom is interested in downstream assets, namely, gas refining, transportation, and sales, as this will make it possible to sell more liquefied natural gas in the United States. " (Source: Biznes)
Learn more about Russia's Bilateral Investment Treaties »
Learn more about the YUKOS ADR Holder Suit  »

October 26, 2005: Bad News for Mr. K: Viktor Khristenko did not enjoy his dinner on Monday. Khristenko was celebrating a surprise audience with US president George W. Bush over cocktails with Chevron chairman Dave O'Reilly and other business types in Washington when he was served an unexpected order: notification of a lawsuit. American minority shareholders in YUKOS launched a civil suit against the Russian government and Russian oil executives this week, claiming the groups conspired to renationalise the oil company accused of tax evasion without compensating its owners. (Source: Financial Times-Asia Edition) Learn more about the YUKOS ADR Holder Suit  »

October 26, 2005: YUKOS Shareholders Sue Russia in U.S. Court: Investors in US-listed shares of Russia's YUKOS have filed suit alleging securities fraud by Russian officials in auctioning off the oil giant without compensating shareholders, lawyers said Tuesday. The suit filed in Washington said holders of shares known as American Depository Receipts (ADRs), most of whom are US citizens, lost an estimated six billion dollars as a result of the "de facto renationalization" of the oil company. Named as defendants in the suit are the Russian Federation, the state-controlled firms Gazprom, Gazpromneft, Rosneft and Rosneftgaz as well as top officials of the companies, according to a statement from the Washington law firm Covington and Burling. (Source: Agence France Presse)
Learn more about Russia's Bilateral Investment Treaties »
Learn more about the YUKOS ADR Holder Suit  »

October 26, 2005: US-YUKOS Shareholders Sue Russian State Companies: YUKOS shareholders have filed a lawsuit against Russian companies and officials accusing them of the dismemberment of the formerly biggest Russian oil company. The bill of indictment says that the shareholders who are mainly from the US had lost 6 billion dollar and that, from 2003 on, companies such as Gazprom and Rosneft had worked on a plan for the re-nationalisation of YUKOS. Russia’s Minister for Energy Victor Christenko is called to comment on the accusations in front of the court. (Source: Basler Nachrichten, also in Agence France Presse, Aargauer Zeitung and LinksZeitung)
Learn more about Russia's Bilateral Investment Treaties »
Learn more about the YUKOS ADR Holder Suit  »

October 26, 2005: U.S. Lawyer Claims $6 Billion in Damages for YUKOS Shareholders: RIA Novosti reports an attorney in the United States representing minority shareholders in YUKOS has claimed that they are owed $6 billion in damages. Thomas Johnson, from Washington law office Covington and Burling, said that minority shareholders had bought 115,000 YUKOS shares at market price and had sustained losses of about $6 billion because of a conspiracy to effectively renationalize YUKOS without providing compensation for its owners. He said he was optimistic about winning a suit brought by 12 shareholders against the Russian Federation, state-owned energy companies and top executives, although he added the trial could be a long one. Johnson also said Russia's Industry and Energy Minister Viktor Khristenko had been served with a notification of a lawsuit while on a visit to the U.S. and had been told what the documents meant. He added that on Wednesday a court would receive a sworn statement from the person who gave Khristenko the documents, despite assertions made by a member of the minister's delegation, Stanislav Naumov, to the contrary. (Source: RIA Novosti.)
Learn more about Russia's Bilateral Investment Treaties »
Learn more about the YUKOS ADR Holder Suit  »

October 25, 2005: YUKOS ADR Shareholders Sue the Kremlin: The Financial Times of the UK reported that "US holders of shares in YUKOS yesterday filed a wide ranging civil lawsuit against the Russian government and a slew of Russian oil companies claiming the parties conspired to renationalise the oil giant without compensating its owners....Victor Khristenko, the Russian Minister of Energy and Industry who is in Washington this week to mend energy ties with the US, was expected to be served with the lawsuit late last night....Mr. Johnson [counsel to the plaintiffs] admitted that Covington [& Burling] was being paid by Group Menatep, YUKOS's largest shareholder, but said his only allegiance was to his clients, the ADR holders....YUKOS's assets were sold last year, in an opaque and controversial auction, to Rosneft. The auction was held for YUKOS to pay off a disputed $28bn back tax claim against the company....Mr. Johnson said the suit should ring warning bells to the four investment banks -- ABN Amro, JPMorgan Chase, Morgan Stanley, and Dresdner Kleinwort Wasserstein -- who in September loaned Rosneft $7.5bn. 'This [Rosneft's assets] is stolen property and we are hoping this lawsuit raises a question of whether they have good title to that asset', he said." (Source: Financial Times)
Learn more about Russia's Bilateral Investment Treaties »
Learn more about the YUKOS ADR Holder Suit  »