Russia ordered to compensate for bankrupting Yukos

(Transcript from SBS World News Radio)

Russia has been ordered to pay billions of dollars in compensation over the expropriation of now defunct oil producer Yukos.


The court ruling is another blow to the government’s finances, as Russia faces increased sanctions over its actions in Ukraine.

Abby Dinham.

(Click on the audio tab above to hear the full report)

It’s one of the largest arbitration cases ever.

GML Limited – once the biggest shareholder in the Yukos Oil Company – has been awarded $54.1 billion.

Their lawyer, Emmanuel Gaillard, called the ruling a major victory.

“Today is a great day for the rule of law. A superpower like Russia has been unanimously held accountable for its violation of international law by an independent arbitral tribunal of the highest possible repute.”

In 2003, President Vladimir Putin levelled massive tax claims against the country’s largest oil company – then owned by the country’s richest man, Mikhail Khodorkovsky.

Unable to pay, Mr Khodorkovsky was imprisoned and his company’s assets seized.

The move was widely seen as retaliation for the businessman’s support for opposition political parties.

GML executive director Tim Osborne says Russia’s motives were never about taxes.

“The attacks by the Russian Federation on Yukos Oil Company, its founders – including Mikhail Khodorkovsky – and its employees, were politically motivated, and that the primary objective of the Russian Federation was not to collect taxes but rather to bankrupt Yukos and appropriate its underlying assets for benefit of the state.”

Mikhail Khodorkovsky spent ten years in prison before he was pardoned by President Putin in December last year.

He’s released a statement, saying “From beginning to end, the Yukos case has been an instance of unabashed plundering of a successful company by a mafia with links to the State.”

Russian Foreign Minister Sergey Lavrov says the government will appeal the decision, claiming it was merely seeking payment for back taxes.

“You said it yourselves that the trial is not over yet and appeals are to follow. The Russian side and the government departments representing Russia at this trial will certainly use all possible legal means to defend their position.”

The ruling further damages Russia’s international standing at a time when relations are at their lowest ebb since the end of the Cold War.