Battered lately in the worldwide court of public opinion over its strong-arming of Ukraine, Russia last month sustained two blows in international courts over a power move 10 years earlier.
The Permanent Court of Arbitration in The Hague ordered Moscow to pay former shareholders of the gutted oil and gas giant Yukos $50 billion for infractions of the Energy Charter Treaty. Russian officials in 2004 commandeered Yukos and engineered transfer of the assets to state-owned companies.
Just days after the arbitration court ruled, the European Court of Human Rights, Strasbourg, ordered Russia to pay the former Yukos shareholders $2.5 billion for judicial violations during the takeover.
Russia began its siege of Yukos in 2002 with a series of tax audits and proceedings. In October 2003, officials arrested founder and Chief Executive Officer Mikhail Khodorkovsky on charges of tax evasion. Khodorkovsky had been chairman of Bank Menatep, which controversially acquired state-owned oil and gas properties that became Yukos at bargain prices during Russia's economic malaise of the 1990s. Group Menatep Ltd., comprising former Yukos shareholders, was the arbitration action's main plaintiff.
Khodorkovsky will receive none of the newly awarded compensation, if any ever is paid. He sold his Yukos interest to Group Menatep in 2005, the year he began a prison term that ended last December. While incarcerated, he also was convicted of embezzlement.
Before his jailing, Khodorkovsky had become Russia's wealthiest individual and an outspoken critic of Russian President Vladimir Putin.
The government says it will fight the new claims on Russian treasure, which aren't the first related to Yukos. Appeal options, however, are quite limited. They're destined to take years if Moscow chooses to pursue them.
But will it?
The twin hallmarks of Putin's presidency have been power consolidation and expansionism. He responded to international sanctions imposed for his bullying of Ukraine with sanctions of his own.
To the judgments for his bullying of Yukos, Putin might simply respond, "Want the money? Come and get it."
Bob Tippee | Editor
Bob Tippee has been chief editor of Oil & Gas Journal since January 1999 and a member of the Journal staff since October 1977. Before joining the magazine, he worked as a reporter at the Tulsa World and served for four years as an officer in the US Air Force. A native of St. Louis, he holds a degree in journalism from the University of Tulsa.
