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8/17/04 - U.S. CONCERNED ABOUT YUKOS - 2004-08-18

U.S. officials have expressed concern about the fate of Yukos, the Russian oil company. Yukos shares have dropped sharply in value since the Russian government demanded it pay nearly three and a half billion dollars in back taxes. Russian authorities accuse Yukos of using illegal schemes to avoid taxes. But the oil company says its practices were legal and widely used by other Russian businesses. The Russian government has frozen company bank accounts and assets, a move that Yukos officials say could force the company to halt day-to-day operations.

Meanwhile, Yukos’s former chief executive officer, Mikhail Khodorkovsky, and another key Yukos shareholder, Platon Lebedev, have been jailed and put on trial for various alleged crimes, including large-scale fraud and tax evasion.

U.S. State Department deputy spokesman Adam Ereli says that the Yukos case should be resolved “in accordance with the rule of law and due process” and “without influence from political considerations”:

“The appearance of a lack of due process and a threat to private property rights have resulted in both the Russian and the international business communities being on their guard. The way the case has been handled also raises questions about respect for investment rights in Russia and has led to increased capital flight and a decline in new investment that is certainly having an impact on the Russian economy.”

Observers are now waiting to see the manner in which the Yukos case is ultimately resolved.