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04/12/2016

France, Belgium seize Russian assets to compensate Yukos shareholders

Europe's East

France, Belgium seize Russian assets to compensate Yukos shareholders

Mikhail Khodorkovsky

[Khodorkovsky.com]

Russian government assets in France and Belgium including bank accounts have been frozen in a row over compensation for shareholders of defunct oil giant Yukos, officials and a claimant representative said yesterday (18 June).

In France, accounts in around 40 banks were frozen along with eight or nine buildings, Tim Osborne, executive director of the main shareholder GML, told AFP.

“It’s bank accounts and real estate,” Osborne explained.

There was no immediate confirmation from officials in Moscow or Paris.

In Belgium, the Russian embassy in Brussels and representative offices at the European Union and NATO headquarters were among those affected, the Russian foreign ministry said.

Russia also threatened to take “reciprocal measures targeting Belgian assets in Russia”.

It added that the Belgian ambassador to Moscow was summoned to the ministry to explain the move and “was told that Russia considers such action by the Belgian authorities as an openly hostile act”.

>>Read: EU extends Russia sanctions

Yukos was once Russia’s biggest oil company but was broken up after the arrest of its owner, Kremlin critic Mikhail Khodorkovsky, in 2003.

That came shortly after President Vladimir Putin warned Russia’s growing class of oligarchs against meddling in politics.

Khodorkovsky was granted residency in Switzerland after being released in 2013 following a decade in prison after a presidential pardon from Putin.

Last year, the Permanent Court of Arbitration in The Hague ruled that Moscow had forced Yukos into bankruptcy with excessive tax claims before selling its assets to state-owned firms.

Record fine

It ordered Russia to pay Yukos shareholders a record $50 billion (€44 billion) in compensation.

Russia was told to pay compensation to shareholders to subsidiaries of Gibraltar-based Group Menatep, through which Khodorkovsky ran Yukos.

The group exists today as holding company GML, although Khodorkovsky is no longer involved and is not a party to the compensation claim.

‘Actions could spread’

While the precise value of the assets seized is unclear, Russian economy minister Alexei Ulyukayev said it was so far “insignificant” but voiced concern that similar steps could be taken elsewhere.

“The fact itself is of course very unpleasant. We can expect the spread of these actions,” he told Russian agencies, while adding that Russia is appealing the arbitration court decision and has no plans to comply with it.

>>Read: G7 leaders get tough on Russia

GML’s Osborne said that proceedings were “already underway in Britain and the United States and further countries will follow”.

He explained that legislation in Belgium and France made it easier to freeze assets pending the outcome of the Yukos compensation dispute.

Despite not being involved, Khodorkovsky welcomed the move in relation to the Russian assets in Belgium.

“I am happy about the freezing of our bureaucratic assets in Belgium,” he wrote on Twitter. “I expect that the money will go to projects helping Russian society.”

His former company — which had a market capitalisation of some $21 billion in 2003 — was sold off in a series of opaque auctions between 2004 and 2006, with state-owned Rosneft buying up most of its operations.

The Belgian foreign ministry said the seizures had been conducted by bailiffs without the involvement of the Belgian government.

“It’s a legal decision which was executed by bailiffs. We were not informed by the bailiffs’ office, we do not intervene,” ministry spokesman Hendrik Van de Velde told AFP.

The Permanent Court of Arbitration declined to comment on the issue.

Russian media reported that the move in Belgium also affected state-owned media, including the Russia Today channel and TASS news agency.

TASS spokesman Dmitry Pertsev told AFP that the agency’s property “belongs to Russia, therefore the current situation concerns us.”

Background

Mikhail Khodorkovsky is a former Russian oligarch and was the wealthiest man in Russia at the helm of petrol company Yukos before his arrest on charges of tax fraud in October 2003. Prior to his arrest, Khodorkovsky funded several opposition parties and was openly critical of what he called "managed democracy" in Russia.

On 30 May 2005, Khodorkovsky was sentenced to nine years in jail. A recent second sentence put him in jail until 2017. Upon being pardoned by Vladimir Putin and released from prison at the end of 2013, he immediately left Russia and has since lived in Switzerland where he was granted residency.