Russia ordered to pay record compensation to Yukos shareholders

Now Reading:

Russia ordered to pay record compensation to Yukos shareholders

Russia ordered to pay record compensation to Yukos shareholders
Text size Aa Aa

Shareholders in the now defunct Russian oil company Yukos have been awarded 50 billion dollars in damages, the largest compensation to date.

Yukos was formally controlled by Mikhail Khodorkovsky who was arrested in 2003 on fraud and tax evasion charges and released last year.

He responded to the news saying it was, “fantastic” though having sold his stake in the company he will not benefit from Monday’s ruling by a court in the Hague

The claim was filed by a subsidiary for the financial holding company GML which was once the biggest shareholder in Yukos. The battle for compensation has been going on for over 10 years. Shareholders had claimed for 114 billion dollars.

“The tribunal, in the final awards, specifically and unanimously confirm that, in their view, that the primary objective of the Russian Federation was not to collect taxes but rather to bankrupt Yukos and expropriate its underlying assets for the benefit of the state in the guise of Rosneft,” Tim Osborne, GML Executive Director told reporters.

State owned Rosneft which swept up Yukos assets after it was declared bankrupt in a series of auctions says all the deals were legal. Its shares were down two percent on Monday.

The company is run by an ally of Russian President Vladimir Putin. The ruling puts further pressure on him at a time the state faces international sanctions over its role in Ukraine and amid anger at the downing of flight MH17.

“Payments to Yukos shareholders are not sanctions, but, at the same time, from a financial point of view they unexpectedly double the financial weight that has been put on Russia at the time of this geopolitical conflict,” opined Valery Mironov from the National Research University Higher School of Economics.

In Moscow Russia’s Finance Ministry called the ruling, “flawed” and said it would appeal the decision. The court set a deadline of January for the payments to be made.

The 50 billion dollars represents about 2.5 percent of Russia’s total GDP worth. The ruling hit Russian stocks. The RTS index of shares was down 3.1 percent my mid-afternoon on Monday.