Tax police raid Yukos to serve $3bn ultimatum

Armed tax police swooped on the Moscow headquarters of the embattled oil giant Yukos yesterday and told the company it had just five days to organise payment of a potentially crippling $3.4bn (£1.9bn) tax bill.

Armed tax police swooped on the Moscow headquarters of the embattled oil giant Yukos yesterday and told the company it had just five days to organise payment of a potentially crippling $3.4bn (£1.9bn) tax bill.

The move appeared to signal a fresh escalation of a dispute which most observers feel is a thinly veiled attempt to punish Mikhail Khodorkovsky, Russia's richest man and the company's former head, for his unsanctioned foray into anti-Kremlin politics. Mr Khodorkovsky is currently standing trial on a range of fraud and embezzlement charges and is due to reappear in court later this month. The raids were unannounced.

Bailiffs from Russia's powerful tax inspectorate turned up at the company's glass-panelled headquarters flanked by camouflaged bodyguards and spent an hour serving the payment order which relates to unpaid taxes for the year 2000. They also ordered an inventory of the company's property to be drawn up and for it to be frozen.

Hours later the tax ministry said it was looking for a further $3.3bn for unpaid taxes for the year 2001, sparking gloomy speculation that it would seek similar amounts for 2002 and 2003.

The news sent shockwaves through the market; by the end of the day Yukos shares had plunged more than 10 per cent on the Micex exchange.

Analysts were divided on the day's developments but could agree on one thing: Yukos was being squeezed until it squeaked and was about to be forced into either bankruptcy or a massive asset sell-off.

The company is currently prevented from selling off assets by a court order but that ban is expected to be lifted today, paving the way for a huge fire sale. Adam Landis of Renaissance Capital said the moment of truth for Yukos was close at hand. "Nobody can raise that kind of money in five days," he said. "The clock has been started. They have one month to settle and failing that bankruptcy proceedings will be started. Once all the years are examined a figure of some $9bn would likely arise."

Yukos said it was willing to meet its obligations in part but pleaded for its tax payments to be staggered over a period of years rather than months. Andrew Neff, an analyst at World Markets Research Centre, said: "The government is going to get its money either way; through an asset sale or through cash. Time is winding down for Yukos."