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Russia Vows to Defy U.S. and Force Auction of Yukos Oil Assets
Russian authorities vowed Friday to press ahead with the auction of Yukos Oil Co. assets in defiance of a U.S. court order. But banks showed signs of shying away from financing a deal that would plunder Russia's biggest oil exporter and put the company's major production unit under state control.
Clearly irritated at the U.S. bankruptcy court's last-minute intervention in the Kremlin's long-running tax war with the Russian company, officials in Moscow asserted the ruling has no legal force in their country.
A federal property fund spokesman said the auction Sunday "will go ahead as planned."
"You must understand that we are talking about the auction of an arrested property, which will be sold in strict accordance with the decisions of the Justice Ministry," said fund spokesman Alexander Komarov.
The decision by U.S. Bankruptcy Judge Letitia Clark "has nothing to do with us," he said.
Clark's decision barred Russia's state-owned natural gas giant Gazprom, expected to be the leading bidder, from participating in the auction.
A Gazprom spokesman said the company still planned to take part but was vague on whether Western banks also named in the temporary restraining order would defy the court and put up the $10-billion credit line that Gazprom is seeking to finance the deal.
The upshot was a dramatic international standoff between the legal authorities of Russia and the United States over a oil company that pumps the biggest share of Russian production, controls reserves the size of Libya's and exports a million barrels of oil a day. Nearly two-thirds of Yukos' production comes from Yuganskneftegaz, the Siberian oil unit slated for sale to relieve a Russian tax claim that has reached $27 billion.
"You take out Yuganskneftegaz, and you've ripped out the heart of the organization," Yukos spokeswoman Claire Davidson said. "If you're all about destroying Yukos, Yuganskneftegaz is the first step."
Yukos argued that U.S. courts had jurisdiction due to the company's limited business interests in the United States and because Americans were among the investors hurt by the Russian government's moves.
Russian officials responded with thinly disguised contempt to the order that followed the petition of Yukos for Chapter 11 bankruptcy protection from Russian tax authorities and other creditors in the American court system.
"Yukos doesn't have an office here. Yukos is not involved in any business activity here. The (bank) accounts which were presented here as opened in U.S. banks were opened only several days ago," Nikolay Sofinskiy, the Russian consul-general in Houston who attended the bankruptcy court hearing, said in a telephone interview.
"With all respect for the American legal system, the court in Houston simply doesn't have the jurisdiction to pass decisions . . . connected with actions of the Russian state toward its own problems," he said.
However, analysts said Gazprom's assets outside Russia could be vulnerable if the company defies the U.S. order.
The judge's decree also prohibits a consortium of banks, led by Deutsche Bank, from financing any disposal of Yukos assets. Bank officials did not comment, but Interfax and Itar-Tass reported that the group had decided to freeze financing on the Yuganskneftegaz bid until after the U.S. court proceedings.
Still, Russian analysts said Gazprom could turn to banks in Asia or Russia -- or even to the Russian treasury -- to finance a deal the Kremlin clearly believes is in Russia's interest.
The tax claims began last year, at the time of the arrest of former Yukos chief executive Mikhail Khodorkovsky. The young entrepreneur, now on trial on charges of fraud and tax evasion, was a wealthy financier of political opposition parties who had earned many allies in the United States with his effort to run Yukos as a model of liberal corporate transparency.
Yukos officials believe the tax claims are an attempt to punish Khodorkovsky for his political activism and strip him of his wealth. They said they sought refuge in the U.S. bankruptcy courts because the Russian court system lacks justice and independence.
The U.S. bankruptcy judge's order banning the Deutsche-led consortium from participating pending a further review of the case in 10 days will do nothing to prevent other banks from stepping in, said Eric Kraus, chief strategist at Sovlink Securities in Moscow.
On Friday, Gazprom officials held talks with China National Petroleum Corp., which earlier reportedly had expressed interest in Yuganskneftegaz but had been ruled out as a potential bidder because of the Kremlin's concern about China getting a toehold in Russia's oil industry.
The talks Friday were one of several overtures Russia has made to China, India and other Asian powerbrokers in the last few weeks as Russia's relations with the United States have worsened.
"If the West continues to bait the bear, the bear turns east," Kraus said.
Times staff writer Sergei L. Loiko contributed to this report.