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US Judge Deals Blow To Yukos.

The Houston Bankruptcy Judge Letitia Clark last week dealt a blow to Yukos' case, ruling that the company cannot seek information about whether Gazprom illegally took part in the Dec. 19 sale of YNG. In this, Clark backed Gazprom's former unit Gazpromneft and said Yukos' fact-finding must be limited to issues related to whether the US court had jurisdiction in the case. (Yukos made its surprise bankruptcy filing in Houston last month in a bid to halt the sale of YNG, in Russian authorities' efforts to recoup part of more than $20 bn in outstanding taxes the government said Yukos owed). Clark will listen to arguments in a two-day hearing, beginning on Feb. 16, on whether to continue the bankruptcy proceedings or throw the case out of the US court.

Yukos lawyer Zack Clement had argued that Gazpromneft violated the court's rulings by taking part in the Dec. 19 auction. He told the judge: "This court has inherent authority to inquire into people who violate your orders". Gazpromneft lawyer Michael Goldberg said Yukos had wrongly brought the case to the US and that the court must rule on the jurisdictional issues before considering the merits of Yukos' claims against Gazpromneft, its consortium of banks and the Russian government. Yukos had previously argued in court that Russian authorities illegally levied the tax bill against the company.

Gazpromneft was tipped to win YNG in the auction before the US court barred it and its banks from participating in the sale. YNG was bought for $9.4 bn by an obscure Russian entity, BaikalFinansGroup, which was in turn bought by Rosneft. Yukos contended that by putting up a $1.2 bn deposit and attending the auction on Dec. 19 in Moscow, Gazpromneft violated the US court's orders, even though it did not bid. Yukos planned to seek $20 bn in damages from Gazpromneft, which Clement said was being directed by Gazprom. The motion to dismiss the case was filed by Deutsche Bank, which said in its filing that Yukos had no operations or employees in Houston before the December arrival of chief financial officer Bruce Misamore.

The Yukos owners are to sue the Russian government for damages. Leonid Nevzlin, who now has the controlling stake in Menatep, a holding firm with a majority share of Yukos, on Jan. 20 said: "As shareholders we intend to demand compensation for damages in all available international courts in Europe and America". Nevzlin, now living in Israel, said the damages were huge.
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Publication:APS Diplomat News Service
Geographic Code:1USA
Date:Jan 31, 2005
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