Creditors Vote to Liquidate Yukos

Not all that long ago, Yukos was the largest privately owned oil company in Russia, and indeed, a major actor on the world petroleum stage. Yesterday, though, the company’s creditors voted to liquidate the firm. At a court hearing next Tuesday, a judge is likely to give the final OK to that plan. This affair, however, was never about money; it was always about power within Russia.

Yukos was the financial vehicle that made Mikhail Khodorkovsky a multi-billionaire. He was just one of many “oligarchs” who become massively rich when the Soviet Union went out of business. Men like him expropriated state property; since the state that owned the stuff didn’t exist anymore, they reasoned they could take it. When Comrade Vladimir Putin succeeded Boris Yeltsin as president of the Russian Federation, the new man more or less agreed to let them keep the money so long as they stayed out of politics (tacitly supporting his government).

Mr. Khodorkovsky got upset with state control of oil pipelines and stepped out of line. He began funding political parties that opposed Mr. Putin’s agenda. Shortly after that, Yukos was hit with a tax arrears bill of $27 billion. Mr. Khodorkovsky is now in a Siberian prison, and Yukos is a footnote in Russian business history.

There were efforts to save the company, led by Steven Theede, the caretaker boss of Yukos. No one listened to him, and he quit writing in his resignation letter, the creditors meeting would be “attended by those who are intent on destroying the rest of Yukos and taking its assets with no serious consideration being given to our financial restructuring plan.” He alleged that the court-appointed bankruptcy manager, Eduard Rebgun, had written a report for the creditors recommending liquidation because there was no chance for a restructuring.

Mr. Theede’s efforts, while noble, were misguided. Yukos was supposed to die to strengthen the hand of Mr. Putin and to ensure that those who are enjoying post-Soviet capital (which technically, they stole from the people) remember that politics is superior to economics in Russia. Anyone familiar with Russian history will see the parallel between today and the efforts of Peter the Great to reign in the boyar nobility three hundred years ago. Once again, the Tsar has reminded the boyars just who is boss.

© Copyright 2006 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

Home