State (Russia) Has to Answer for Yukos in U.S.

Thomas Johnson Jr. of the Washington-based law firm Covington & Burling said the U.S. State Department informed him by telephone Tuesday that the Russian government had been served the summons on March 14 as part of a lawsuit brought by 12 holders of Yukos' American Depositary Receipts against the government, a group of senior government officials and four state energy companies.

The suit -- which Yukos' parent company is funding -- accuses the government of securities fraud in the de facto renationalization of Yukos and was filed in the United States last fall.

Under U.S. law, foreign governments have 60 days to respond to a summons, which is delivered to the respective foreign ministry by the State Department, giving Russia a May 15 deadline, Johnson said.

"The State Department had to serve the summons," Johnson said. "It's not a sign that the State Department is happy or unhappy with Russia. It's their legal duty."

The Foreign Ministry could not confirm whether it had received the summons because it does not comment on documents received through diplomatic channels, said a ministry spokesman, who declined to give his name.

Johnson said he expected to receive documents from the State Department confirming the summons Wednesday afternoon in Washington.

The summons follows a series of legal papers served to Russian officials in connection with the lawsuit, which was filed in a U.S. District Court in Washington in October.

The minority shareholders say Industry and Energy Minister Viktor Khristenko and Finance Minister Alexei Kudrin were served while visiting Washington in October and January, respectively, although Kudrin has denied receiving the papers. Khristenko also initially denied being served, but several weeks later confirmed that he had received them.

The minority shareholders also say they served a summons to Sergei Bogdanchikov, president of state-owned oil producer Rosneft, while he was attending an energy conference in London last month. Bogdanchikov has denied receiving the papers.

Other defendants include Gazprom chairman and First Deputy Prime Minister Dmitry Medvedev, Rosneft chairman and deputy presidential administration head Igor Sechin, and Gazprom CEO Alexei Miller. Also named in the suit are Rosneft, Rosneftegaz, Gazprom and Gazpromneft.

President Vladimir Putin cannot be named as a defendant because he is immune from prosecution as head of state.

The lawsuit states that the 12 plaintiffs, who include former U.S. National Security Adviser Richard Allen, lost a total of $3 million due to the drop in market value of the 115,000 Yukos American Depositary Receipts they had purchased over a three-year period.

Johnson said that the plaintiffs could claim up to $9 million in damages under the U.S. Racketeer Influenced and Corrupt Organizations Act, which contains a civil component that allows plaintiffs to sue for triple damages if the defendants are found guilty of racketeering.

Johnson said he would be "surprised" if the Russian government did not respond to the lawsuit by May 15, but that he would expect his clients to receive a default judgment in their favor if it did not.

However, Yevgeny Volk, director of the Heritage Foundation's Moscow office, said the Russian government would probably ignore the summons or insist that the issue was beyond U.S. jurisdiction. Rosneft could pay back some of the money that the plaintiffs said they lost, but only under extreme pressure, he said.

Sergei Markov, a Kremlin-connected political analyst, said a ruling in favor of the plaintiffs could allow them to seize the property of Russia's state-owned companies in the United States, as was the case with the Swiss firm Noga, which has fought with the Russian state for years.

Claiming Moscow owed it millions of dollars, Noga obtained court orders freezing bank accounts held by the Russian Embassy in Paris and attempted to have Russian fighter jets at the Paris Air Show confiscated in 2003.

The Russian government, however, has successfully disputed Noga's attempted seizures and could do the same with the American plaintiffs.

Johnson said the shareholders would "go anywhere to find assets and attempt to seize them" should Russia refuse to honor a ruling in their favor.

Markov said the plaintiffs' complaint was a result of "a war between Yukos majority owners and the Kremlin" for control of the company.

Tim Osborne, a director of GML Ltd., formerly known as Group Menatep, the main shareholder of Yukos, said lawyers for the minority shareholders had informed him of the summons, but that GML was not involved in serving it.

Osborne said, however, that GML had been paying most of the legal fees for the shareholders in the suit and that he did not "envisage that changing in the near future."

"We believe the minority shareholders have been treated very badly and therefore are paying substantially all of the fees," Osborne said.

A government spokeswoman referred requests for comment to the head of the Cabinet's press service, Yevgeny Revenko. Calls to his office went unanswered on Wednesday afternoon.

Jailed Yukos founder Mikhail Khodorkovsky lodged an appeal against his fraud conviction with the European Court of Human Rights in Strasbourg, France, on Tuesday, Interfax reported.

Khodorkovsky's lawyers say it could take three years before the court begins hearing the appeal. He will have served enough of his eight-year prison sentence to apply for early release next year.

Prosecutors said Wednesday that they have charged three former employees of Yukos, one of them a Spanish passport-holder, with money laundering and theft, The Associated Press reported.

A statement posted on the web site of the Prosecutor General's Office said that Antonio Valdes Garcia, who has dual Spanish and Russia citizenship, had siphoned $13 billion from the firm by organizing fictional oil sales along with two other Yukos managers, who are in detention.

A total of $8.5 billion of that sum had subsequently been laundered, the statement said.

Garcia, who is currently prohibited from leaving the country, was general manager of Yukos subsidiary Fargoil until 2004 and was arrested in June 2005.

Yukos has said in the past that the allegations against him and other managers are unfounded and part of a web of investigations and charges against employees of the oil firm.

The Russian government has been served with a lawsuit by U.S.-based shareholders of Yukos through diplomatic channels and will have until mid-May to respond or face a possible default judgment ordering the payment of up to $9 million in damages, a lawyer for the shareholders said Wednesday. ==

How about judicial principle: "par in parem imperium non habet" (an equal cannot exercise power and jurisdiction over an equal)?
United States court cann't judge the foreign state which is judicially equal to United States. Such judgement will not have judicial effect.

I still have no idea what this is about.
As close as I can figure, some bozos invested in unstable foreign governments run by their versions of the Mafia, and promised large returns in interest, and then the "assets" are appropriated by the government.

Do I have that right?

To the moron investors...
Tough noogies!

yeah, i thought about that too (whether Americans to go Russian courts, international courts). Anyone knows how cases like that are handled?

I still have no idea what this is about. As close as I can figure, some bozos invested in unstable foreign governments run by their versions of the Mafia, and promised large returns in interest, and then the "assets" are appropriated by the government. Do I have that right?

yeah.
The trial of the head of Yukos and nationalization of the company- an oil giant producing something like a quarter of Russian oil- was a fairly big deal couple of years ago. Russia, at least, should return the initial investments of these foreign businesspeople, rather than pi-ing of the Americans.

Russia, at least, should return the initial investments of these foreign businesspeople, rather than pi-ing of the Americans.==

I agree if there were any.

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