The Hague court orders Russia to pay 50 billion to ex-Yukos owners

[Syt]

http://uk.reuters.com/article/2014/07/28/uk-russia-yukos-idUKKBN0FX08M20140728

Hague court orders Russia to pay $50 billion in Yukos case

(Reuters) - The Hague's arbitration court ruled on Monday that Russia must pay a group of shareholders in defunct oil giant Yukos around $50 billion (29.45 billion pounds) for expropriating its assets, a big hit for a country teetering on the brink of recession.

The Hague court said it had awarded shareholders in the GML group just under half of their $114 billion claim, going some way to covering the money they lost when the Kremlin seized Yukos, once controlled by Mikhail Khodorkovsky.

Tim Osborne, director of GML, welcomed the award, which he said was the largest ever, as "very favourable".

But Foreign Minister Sergei Lavrov said Moscow would most likely appeal the decision, underlining that the shareholders, who have battled through the courts for a decade, will have to fight further to receive the compensation.

"The Russian side, those agencies which represent Russia in this process, will no doubt use all available legal possibilities to defend its position," he said when news of the award leaked ahead of the official announcement.

The ruling hits Russia at a time when it faces international sanctions about its role in Ukraine and anger over the downing of a Malaysian airliner over eastern Ukraine, where Moscow-backed rebels are fighting a separatist campaign. The country is also grappling with slowing economic growth.

The Permanent Court of Arbitration in the Hague announced that Russia must pay the compensation to subsidiaries of Gibraltar-based Group Menatep, a company through which Khodorkovsky, once Russia's richest man, controlled Yukos.

Group Menatep now exists as holding company GML, and Khodorkovsky is no longer a shareholder in GML or Yukos.

Khodorkovsky, who is not a party to the action, was arrested at gunpoint in 2003 and convicted of theft and tax evasion in 2005. His company, once worth $40 billion, was broken up and nationalised, with most assets handed to Rosneft (ROSN.MM), a company run by Igor Sechin, an ally of President Vladimir Putin.

Rosneft was not immediately available for comment.

Its shares were down 0.6 percent at 0830 GMT (9.30 a.m. BST), while the RTS index .IRTS of Russian shares was down 1.8 percent.

Separately, The European Court of Human Rights (ECHR) in Strasbourg is expected on Thursday to announce a decision on Yukos's multi-billion-dollar claim against Russia, ruling on 'just satisfaction' or compensation, a Yukos spokeswoman said.

Yukos's application in the ECHR, which is on behalf of all Yukos shareholders, argued that Yukos was unlawfully deprived of its possessions by the imposition of bogus taxes and a sham auction of its main asset.

KREMLIN JUSTICE

In a case that Kremlin critics said offered a stark example of Putin's increasingly autocratic rule, Khodorkovsky was arrested at gunpoint in 2003 and convicted of theft and tax evasion in 2005. Putin justified the move by saying: "A thief must be in jail," quoting a popular Soviet blockbuster.

Putin pardoned Khodorkovsky in December after he had spent 10 years in jail. He now lives in Switzerland.

The newspaper Kommersant, which earlier reported the Hague ruling, said the court ruled that Russia had infringed an international energy charter, adopted in 1991, that envisaged legal issues for investments in energy sectors.

The court also ruled, according to the newspaper, that Russia had to start paying the compensation by Jan. 2 next year, or face growing interest on the fine.

It cited GML director Osborne as saying GML will force Russia to pay out the compensation "if it wouldn't make payments within the court-defined timeframe".

Any funds won will be shared amongst the shareholders. The biggest ultimate beneficial owner is Russian-born Leonid Nevzlin, a business partner who had fled to Israel to avoid prosecution. He has a stake of around 70 percent.

A spokesperson for Nevzlin declined to comment.

The other four ultimate beneficial owners, each of whom owns an equal stake, are Platon Lebedev, Mikhail Brudno, Vladimir Dubov and Vasilly Shaknovski.

After he was jailed, Khodorkovsky ceded his controlling interest in Menatep, which owned 60 to 70 percent of Yukos, to Nevzlin.

GML shareholders are not expecting to claim twice, so if they receive monies pursuant to one case it would reduce their claim under the other, Osborne has previously told Reuters.

[Ideologue]

Fuck them.  The Hague has made its decision, now let them enforce it.

[The Minsky Moment]

Perhaps Ideologue has forgotten the context of that statement?

[Ideologue]

No, but it's a good general purpose statement.

[Syt]

http://online.wsj.com/articles/russia-must-compensate-yukos-shareholders-says-european-court-1406797417

Russia Must Compensate Yukos Shareholders, Says European Court

Russia Must Pay $2.51 Billion for Unfair Tax Proceedings

Russia has to pay the former owners of now defunct Russian oil company Yukos €1.87 billion ($2.51 billion) in compensation for unfair tax proceedings, the European Court of Human Rights said Thursday.

The ruling on compensation is the ECHR's biggest award to date and comes three years after the Strasbourg-based court first found that Moscow had violated Yukos's rights to a fair trial and protection of property.

Russia has to pay €1.87 billion in compensation for the direct financial damage that Yukos's owners suffered from the unlawful proceeding, which the court said should go to Yukos's former shareholders and their heirs.
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    Court Decides Yukos Is Liable For $3.41 Billion in Back Taxes (06/30/04)

Moscow also has to reimburse an extra €300,000 in legal costs to the Yukos International Foundation, a Netherlands-based company that now houses some of Yukos's remaining assets.

In a blow to Yukos's former owners, however, the court rejected its claim that the unfair tax proceedings led to its liquidation in 2007. "There was insufficient proof of a causal link between the violation found and the pecuniary damage allegedly sustained by Yukos," the court said.

It is because of this assessment that the €1.87 billion award falls well short of the €37.98 billion in damages Yukos had asked for. It is also significantly less than the $50 billion in damages that its former owners were awarded by a Netherlands-based tribunal earlier this week.

The court said Russia must draw up a plan within six months for how it will pay the damages and costs.

In a statement, Russia's Justice Ministry noted that the court had already cut the damages requested from €100 billion to €37.98 billion and awarded only €1.86 billion. Even so, the ministry complained that it "does not view this ruling as an example of a fair and unbiased approach to the legal and factual circumstances of the case."

Criticizing elements of the decision as "inexplicable from a legal point of view," the ministry said the decision ordered compensation for Yukos's former controlling shareholders, even though they were found to have used "illegal tax schemes." The ministry noted that the decision can be appealed, though it didn't specify whether or not it will do so.

Yukos's former management, which brought the lawsuit, didn't immediately respond to a request for comment.

The ECHR was created in 1953 by the Council of Europe, an intergovernmental organization that counts Russia among its 47 member states. It is one of the world's most respected courts.