Yukos not required to pay $233 million fine

/ Source: The Associated Press

A Moscow court ruled Monday that the Yukos oil company does not have to pay a $223 million penalty to bailiffs trying to collect an enormous back taxes bill owed by Russia’s largest oil producer, news reports said.

The fee was levied on July 9 after Yukos failed to meet the deadline for payment of a $3.4 billion tax bill for the year 2000. Russian law allows bailiffs to levy fines of 7 percent of the amount they are collecting if payment is not made within the prescribed time.

But Yukos lawyers argued the bill was so enormous that it could not be paid within the period, the ITAR-Tass news agency reported.

Yukos says it does not have enough cash to pay the bill and a court order prevents it from selling assets to raise cash. The company has warned that the bill could drive it into bankruptcy unless other payment arrangements can be made.

Yukos officials said last week that it might have to cut production within weeks, leaving it unable to fulfill export contracts.

However, the bailiffs’ service last week said Yukos would have another month to pay the bill, an indication that the company’s demise was not imminent.

Yukos has repeatedly sought to talk the government into allowing it to pay its debt over a period of several years, but the government has not responded publicly to the proposals.

Many analysts say the government’s unyielding stance on Yukos indicates that its goal is to sell pieces of the company to Kremlin-compliant enterprises.

Former Yukos chief Mikhail Khodorkovsky had funded opposition parties and the legal actions against Yukos are widely seen as a Kremlin-led drive to punish him for his political positions.

Khodorkovsky has been jailed since October on charges of forgery, fraud and tax evasion in a case involving the 1994 acquisition of a fertilizer company. He resigned as Yukos CEO after his arrest.

The actions against Yukos and Khodorkovsky have raised wide concern from business circles and foreign governments about Russia’s commitment to rule of law and protection of shareholder and investor rights.