News / Europe

Hague Court: Russia Must Pay Yukos Shareholders $50 Billion

Freed Russian former oil tycoon Mikhail Khodorkovsky speaks during his news conference in the Museum Haus am Checkpoint Charlie in Berlin, December 22, 2013.
Freed Russian former oil tycoon Mikhail Khodorkovsky speaks during his news conference in the Museum Haus am Checkpoint Charlie in Berlin, December 22, 2013.
Reuters

The Hague's arbitration court ruled on Monday that Russia must pay a group of shareholders in defunct oil giant Yukos around $50 billion for expropriating its assets, a big hit for a country teetering on the brink of recession.

The Hague court said it had awarded shareholders in the GML group just under half of their $114 billion claim, going some way to covering the money they lost when the Kremlin seized Yukos, once controlled by Mikhail Khodorkovsky.

GML said the Permanent Court of Arbitration ruled that the Russian Federation sought to bankrupt Yukos and appropriate its assets and that it was determined to do whatever was necessary to achieve this purpose.

Tim Osborne, director of GML, welcomed the award, which he said was the largest ever, as “very favorable.”

Russia likely to appeal

But Foreign Minister Sergey Lavrov said Moscow would most likely appeal the decision, underlining that the shareholders, who have battled through the courts for a decade, will have to fight further to receive the compensation.

“The Russian side, those agencies which represent Russia in this process, will no doubt use all available legal possibilities to defend its position,” he said when news of the award leaked ahead of the official announcement.

The ruling hits Russia at a time when it faces international sanctions about its role in Ukraine and anger over the downing of a Malaysian airliner over eastern Ukraine, where Moscow-backed rebels are fighting a separatist campaign. The country is also grappling with slowing economic growth.

The court in the Hague announced that Russia must pay the compensation to subsidiaries of Gibraltar-based Group Menatep, a company through which Khodorkovsky, once Russia's richest man, controlled Yukos.

Group Menatep now exists as holding company GML, and Khodorkovsky is no longer a shareholder in GML or Yukos.

Khodorkovsky is not a party to the action.

His company, once worth $40 billion, was broken up and nationalized, with most assets handed to Rosneft, a company run by Igor Sechin, an ally of President Vladimir Putin.

Rosneft was not immediately available for comment.

Its shares were down 0.6 percent at 0830 GMT, while the RTS index of Russian shares was down 1.8 percent.

Human rights court case

Separately, The European Court of Human Rights (ECHR) in Strasbourg is expected on Thursday to announce a decision on Yukos's multibillion-dollar claim against Russia, ruling on 'just satisfaction' or compensation, a Yukos spokeswoman said.

Yukos's application in the ECHR, which is on behalf of all Yukos shareholders, argued that Yukos was unlawfully deprived of its possessions by the imposition of bogus taxes and a sham auction of its main asset.

In a case that Kremlin critics said offered a stark example of Putin's increasingly autocratic rule, Khodorkovsky was arrested at gunpoint in 2003 and convicted of theft and tax evasion in 2005.

Putin justified the move by saying: “A thief must be in jail,” quoting a popular Soviet blockbuster.

Putin pardoned Khodorkovsky in December after he had spent 10 years in jail. He now lives in Switzerland.

The newspaper Kommersant, which earlier reported the Hague ruling, said the court ruled that Russia had infringed an international energy charter, adopted in 1991, that envisaged legal issues for investments in energy sectors.

Russia will have 180 days, until January 15 2015, to start paying the $50 billion awarded by the Hague's arbitration court to a group of Yukos shareholders, a lawyer for the shareholder group said on Monday.

After that period, interest will start being accrued, said Emmanuel Gaillard, Lead counsel, Shearman and Sterling LLP.

The newspaper cited GML director Osborne as saying GML will force Russia to pay out the compensation “if it wouldn't make payments within the court-defined timeframe."

Any funds won will be shared amongst the shareholders.

Business partner

The biggest ultimate beneficial owner is Russian-born Leonid Nevzlin, a business partner who had fled to Israel to avoid prosecution. He has a stake of around 70 percent.

A spokesperson for Nevzlin declined to comment.

The other four ultimate beneficial owners, each of whom owns an equal stake, are Platon Lebedev, Mikhail Brudno, Vladimir Dubov and Vasilly Shaknovski.

After he was jailed, Khodorkovsky ceded his controlling interest in Menatep, which owned 60 to 70 percent of Yukos, to Nevzlin.

GML shareholders are not expecting to claim twice, so if they receive monies pursuant to one case it would reduce their claim under the other, Osborne had previously told Reuters.

You May Like

WHO: Anti-Ebola Efforts Should Focus on West Africa

Official says WHO is 'reasonably confident' countries bordering those hardest hit by the Ebola outbreak are not seeing the virus crossing their borders More

South Sudan Crisis Threatens Development

Economic costs and lost development opportunities in South Sudan have erased what little progress the country has made since independence in 2011 More

Ukrainian PM Warns: Russia May Try to Disrupt Sunday Poll

Arseniy Yatsenyuk orders full security mobilization for parliamentary election to prevent ‘terrorist acts’ from being carried out More

This forum has been closed.
Comment Sorting
Comments
     
by: DellStator from: US
July 28, 2014 9:16 PM
Finally, someone with a memory pointing out that the "oligarchs" in Russia do not control Putin, Putin controls them. Any who annoy him the state seized their assests, their business (and if I recall in this instance, arrest them, try them and convict them).
As to Russia paying this fine, yeah right, the world can trust them to do that just like we could trust them not to invade the Crimea or send troops and arms into the Ukraine.
On the bright side, Russia raised it's interest rate, ahh, the good old days, when Russia was paying what 20%, 25% interest on it's bonds, until it defaulted.
Anyone who does business with Russia now and forever is either shilling for the Russian gov't and hoping Putin will make you an "Oligarch" or a fool about to be parted from your money.


by: Marios
July 28, 2014 2:51 PM
In whose world will Russia pay out, unlikely - if they can get away with the downing of the Malaysia airliner, what is a Court judgement? Watch this space,


by: Mario from: Italy
July 28, 2014 5:56 AM
We must punish Russia! It's nest of the evil in Europe!


by: Igor from: Russia
July 28, 2014 5:42 AM
You will see that the rulle of such western court is worthless to Russia because the court itself is manipulated by the West.


by: Andrew from: UA
July 28, 2014 5:22 AM
VOA could you pls provide more sources for this news

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
After Decades of Pressure, Luxembourg Drops Bank Secrecy Rulesi
X
October 21, 2014 12:20 AM
European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.
Video

Video Young Nairobi Tech Innovator on 'Track' in Security Business

A 24-year-old technology innovator in Nairobi has invented a tracking device that monitors and secures cars. He has also come up with what he claims is the most robust audio-visual surveillance system yet. As Lenny Ruvaga reports from the Kenyan capital, his innovations are offering alternative security solutions.
Video

Video Latinas Converting to Islam for Identity, Structure

Latinos are one of the fastest growing groups in the Muslim religion. According to the Pew Research Center, about 6 percent of American Muslims are Latino. And a little more than half of new converts are female. VOA’s Carolyn Presutti travelled to Miami, Florida -- where two out of every three residents is Hispanic -- to learn more.
Video

Video Exclusive: American Joins Kurds' Anti-IS Fight

The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video South Korea Confronts Violence Within Military Ranks

Every able-bodied South Korean male between 18 and 35 must serve for 21 to 36 months in the country’s armed forces, depending upon the specific branch. For many, service is a rite of passage to manhood. But there are growing concerns that bullying and violence come along with the tradition. Reporter Jason Strother has more from Seoul.
Video

Video North Carolina Emerges as Key Election Battleground

U.S. congressional midterm elections will be held on November 4th and most political analysts give Republicans an excellent chance to win a majority in the U.S. Senate, which Democrats now control. So what are the issues driving voters in this congressional election year? VOA National Correspondent Jim Malone traveled to North Carolina, one of the most politically competitive states in the country, to find out.
Video

Video Comanche People Maintain Pride in Their Heritage

The Comanche (Indian nation) once were called the “Lords of the Plains,” with an empire that included half the land area of current day Texas, large parts of Oklahoma, New Mexico, Kansas and Colorado.The fierceness and battle prowess of these warriors on horseback delayed the settlement of most of West Texas for four decades. VOA’s Greg Flakus reports from Lawton, Oklahoma, that while their warrior days are over, the 15,000 members of the Comanche Nation remain a proud people.
Video

Video Turkey Campus Attacks Raise Islamic Radicalization Fears

Concerns are growing in Turkey of Islamic radicalization at some universities, after clashes between supporters of the jihadist group Islamic State (IS) or ISIS, and those opposed to the extremists. Pro-jihadist literature is on sale openly on the streets of Istanbul. Critics accuse the government of turning a blind eye to radicalism at home, while Kurds accuse the president of supporting IS - a charge strongly denied. Henry Ridgwell reports from London.

All About America

AppleAndroid