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Yukos In $1 Billion Default, But Banks Back Off

Trouble at Yukos headquarters (file photo) 5 July 2004 -- Russian oil giant Yukos, which had its bank assets frozen after an unsuccessful appeal of an adverse tax judgment on 2 July, says it has received notice from a group of creditors that it is in default on a $1 billion loan.

A group of 10 international banks meanwhile announced that it does not intend to press Yukos to repay its $1 billion loan soon.

A spokesman for French bank Societe Generale said today that the group notified Yukos it was in default on 2 July but told the Russian company it would not demand repayment at the time.

Russian tax authorities froze Yukos's assets in order to force the company to pay back taxes. The Moscow Arbitration Court had rejected an appeal by Yukos against a 1 July action by court bailiffs to freeze all of the company's domestic bank accounts as collateral against a $3.4 billion tax debt from 2000, a blow compounded by a prior announcement that tax authorities would be seeking another $3.4 billion in taxes allegedly owed for 2001.

Yukos, Russia's biggest oil company, denies it owes the taxes and says it cannot meet its obligations if its bank accounts remain frozen.

Russian special police forces arrived at Yukos headquarters on 3 July for what turned out to be an eight-hour raid. News reports subsequently suggested that the authorities removed documents and computer disks they claimed are related to the case against Yukos.

The Yukos affair has drawn international attention for seemingly pitting Russian President Vladimir Putin against Yukos founder Mikhail Khodorkovskii, believed to be Russia's richest man. Khodorkovskii was arrested on 31 October on charges of fraud and tax evasion.

The value of Yukos shares has fallen as investors sell their shares to reject what they see as unwarranted political influence in the economy.