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Russian Police Take Over Yukos Headquarters

3 July 2004 -- Russian special police forces arrived at the headquarters of Russia's oil giant Yukos today to take control of the building.

A court this week upheld a decision to freeze the company's assets and force it to pay a $3.4 billion tax bill for back taxes in 2000. Tax authorities then announced they are seeking an additional $3.4 billion in back taxes for 2001.

Tax authorities yesterday ordered Yukos to make the payment within five days, further depressing the company's spiraling share price.

Yukos Chairman Viktor Gerashchenko, who was named to head the company in June in part to help the company withstand authorities' pressure, said yesterday that the freeze might force the company to halt operations.

Yukos, once considered the most profitable company in Russia, has claimed it does not have the money to pay the taxes. Reports say the company has just $1 billion in its accounts.

The tax move marks only the latest development in the Yukos affair, which began in 2003 with the arrest of company founder Mikhail Khodorkovskii and another leading executive.

Khodorkovskii, still in jail but possessing a personal fortune estimated at $15 billion, faces a 10-year sentence if convicted on separate fraud and tax-evasion charges. These date from Russia's controversial privatization drive in the 1990s that put billions of dollars into the hands of businessmen like Khodorkovskii.

Russian President Vladimir Putin has said he does not want to destroy the company, but rather to protect the rights of ordinary citizens who failed to gain from the sale of state assets.