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Russia: Khodorkovskii's Future Uncertain, But Yukos Assures Investors That For Firm, It's 'Business As Usual'

  • Sophie Lambroschini

Semen Kukes, an experienced oil manager, is the new head of the Russian oil giant Yukos following CEO Mikhail Khodorkovskii's resignation yesterday. The new Yukos leadership was introduced today, in an apparent attempt to reassure investors that it's "business as usual" despite the legal maelstrom surrounding Khodorkovskii.

Moscow, 4 November 2003 (RFE/RL) -� The wide marble hallway of the Moscow headquarters of the Yukos oil firm is plastered with bright posters of Mikhail Khodorkovskii, alternately showing the founding father of Russia�s No. 1 oil company laughing, making speeches, and posing with his twin sons.

It is unclear when and if Khodorkovskii himself will next appear at Yukos. The billionaire oil chief �- often referred to as Russia's richest man �- yesterday offered his resignation from the Moscow jail cell where he has spent more than a week after being arrested on charges of fraud and tax evasion. His replacement, Semen Kukes, called the posters of Khodorkovskii a "mark of respect" at a news conference today introducing the new Yukos team. But aside from the pictorial tribute to Khodorkovskii, the Yukos officials made clear that it's business as usual at the massive oil firm.

Kukes is an experienced oil manager who has worked off and on with Yukos since 1996. Most recently, he served as the head of Russia's TNK oil company, and assisted in its merger with BP's Russian operations.

A Russian-born U.S. citizen, Kukes moves from chairman of the board at Yukos to its CEO. "No changes are planned in the company�s strategy line because I think that the company developed well, so we have to safeguard what [it] was, and continue the collegial leadership of the company," he said.

Steven Theede, executive director for Yukos-Moscow, insisted that there was almost total "consistency and continuity" in Yukos's leadership.

Bruce Misamore, the Yukos vice president for economics and finances, said that despite the market and political turmoil spawned by Khodorkovskii's arrest, the company is doing fine. "There's been a general sell-off on the Russian stock market as a result [of the crisis], so Yukos and every other Russian company has been impacted by this situation, but it has no impact whatsoever on the day-to-day operations of the company," he said. "And with Mikhail gone from our ranks, it's hard to say 'business as usual,' but it really is 'business as usual' for the company."

Over the past week, Yukos shares plunged 15 percent but appeared to rebound today with the news of Khodorkovskii's exit.

The former CEO appears to still hold a major stake in the company through offshore companies, but a number of his shares were frozen last week. Yukos officials refused to comment on the ownership and fate of the shares.

Some observers allege Khodorkovskii's arrest is the work of political advisers close to Russian President Vladimir Putin who are intent on gaining control over big business. The Yukos CEO's open disregard for Kremlin interests and his political lobbying are said to have spurred the Putin aides in their legal actions against him.

According to Mikhail Trushin, the vice president of Yukos-Moscow, Khodorkovskii is hoping his departure will free the company from the scrutiny of federal prosecutors. "In his statement [issued yesterday, Khodorkovskii] says he believes the accusations brought against him and his partners will divert the blow away from the company and its employees. Let's hope this will be the case," Trushin said.

Yukos leaders also confirmed they will proceed with a number of earmarked projects, including a merger with the smaller oil company Sibneft.

Kukes also said Yukos would not abandon plans to attract foreign partners. But he avoided any specifics about Yukos's alleged negotiations with foreign giants ExxonMobil and ChevronTexaco, saying only that "several negotiations" are under way. "A company this size has to have partners in different projects, different countries, so of course it's all under consideration," he said. "I don't know of a single company that doesn't have some joint venture or [international] corporation. Russia is unique in the fact that when we get an oil well that we do everything ourselves from beginning to end. So the trend is moving toward some kind of [partnership] anyhow."

The Yukos managers at today's news conference insisted on distinguishing between Khodorkovskii as an individual and the company he created. Kukes stressed that Khodorkovskii will pay for his own legal defense since the accusations are leveled at him personally, and not Yukos.

The officials declined to comment on the former CEO's guilt or innocence in the prosecutors' case against him. But Vice President Bruce Misamore dismissed allegations of corporate tax evasion, saying, "Everyone has a constitutional right to try to minimize taxes within the law."

The Kremlin rift over the Yukos crisis, which has already prompted the resignation of Putin's chief of staff and spurred criticism from top cabinet members, is far from over. On Sunday (2 November) evening, Putin's new chief of staff, Dmitrii Medvedev, criticized the prosecutors' decision to freeze the Yukos shares in two separate television interviews.

Yukos-Moscow Executive Director Steven Theede said the foreign investment community will be "watching very closely" to gauge developments in Russia over the next two or three months. Only then, he said, will they decide whether Russia still fits in their long-term strategies.