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Russia: Yukos Shareholders Offer To Sell Shares To Free Jailed Executives

  • Sergei Danilochkin

Major Yukos shareholders have made a bold offer, saying they would considering selling their shares in Russia's biggest oil company in exchange for freeing top executives in prison. Yesterday's offer made big news, but authorities in Russia appear to be giving it a pass. RFE/RL's Sergei Danilochkin reports that officials are unlikely to accept any offer that -- on its face -- looks like a ransom payment.

Prague, 17 February 2004 (RFE/RL) -- Russian officials say they have not yet seen a widely publicized proposal by major shareholders of the Yukos oil company to negotiate exchanging Yukos shares for the release of company executives from jail, including former CEO Mikhail Khodorkovskii.

Leonid Nevzlin, a major shareholder in Yukos, made the offer yesterday from Israel. He said the chief owners would consider selling a majority stake in Russia's biggest oil company in exchange for the release on bail of three former senior executives. The other two are Platon Lebedev and Aleksei Pichugin.

"I do not offer to swap freedom for property.”
Nevzlin said the offer was not a bribe, but the start of a possible compromise to free Khodorkovskii and the others, who were arrested last year on charges of tax evasion and fraud.

"I do not offer to swap freedom for property,” he said. “I suggest that these people would be set free, released on bail, and then we move onto a normal dialogue where all of Khodorkovskii's partners may be able, at least, to talk over the phone and discuss a joint position. After that we can talk about property. Maybe we will never come to an agreement. But I -- for example -- do not feel like an owner [or an] investor when I cannot come to Russia, when Yukos management is specifically told from the Kremlin to talk to me."

The arrests were widely viewed as politically motivated, as Khodorkovskii and the others had backed political parties opposed to President Vladimir Putin. The arrests made big news -- souring U.S.-Russian relations, creating fear among foreign investors, and resulting in the cancellation of a number of deals and mergers involving Yukos.

Nevzlin and the others form the core of the MENATEP group, which owns about 44 percent of Yukos. Nevzlin's personal share of Yukos is worth more than $1.2 billion. Khodorkovskii's holdings are worth at least $4 billion.

Nevzlin said the shareholders were willing to do whatever was necessary to make the transfer of ownership work.

"The first step, in my opinion, should be setting people free according to the laws," Nevzlin said. "The second step, I say, if it is necessary that we were not present there not only physically but also legally, in the form of owners and investors, we are ready to yield and not to start any scandal or any problem. We are ready to help them do everything legally because without us they won't be able to do anything legally and will always look as stupid as they used to trying to [confiscate the shares] and recalling licenses."

Nevzlin's precise motives were not entirely clear, but analysts said the offer suggests the owners are backing down in their dispute with the Kremlin over the arrests.

Dmitrii Tsaregorodtsev, an analyst at Prospect investment company in Moscow, says Yukos's former executives had angered the Kremlin for trying to expand their political influence.

"A team of law-enforcement-related officials from St. Petersburg was absolutely unhappy with economic and political activities of Yukos. In political terms, it was an active influence in the Duma, sponsoring [the] right-wing parties. Yukos invested a lot in regional elections."

But Tsaregorodstev says Russian officials are unlikely to accept any kind of offer that appears to swap money for freedom.

"In the eyes of the world it would look like the owners were paying ransom to free a hostage," he said. "Probably, that is not in the plans of the 'attackers' on Yukos. Most probably, the deal would be disguised as a sale. Most probably, the buyer will be an intermediary whose actions would not appear odd or inconsistent."

Tsaregorodstev says there may be room for a more secretive type of deal -- through intermediaries or third parties -- since Yukos remains a valuable asset. The company has the world's fifth-largest supply of oil reserves. The new management has tried to avoid any further conflict with the authorities and has distanced itself from the core shareholders.

Nevzlin and two other big Yukos owners, Vladimir Dubov and Mikhail Brudno, fled to Israel to avoid prosecution. Russian authorities have put them on Interpol's wanted list. Another key shareholder, Vasilii Shakhnovsky, was given a suspended sentence two weeks ago after he paid $1.8 million in overdue taxes.