Yukos warns of bankruptcy within a month

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The Independent Online

Once Russia's wealthiest and most powerful oligarch, Mikhail Khodorkovsky appeared to admit defeat in his long-running battle with the Kremlin yesterday as his former company Yukos warned it would go bankrupt in less than a month.

Once Russia's wealthiest and most powerful oligarch, Mikhail Khodorkovsky appeared to admit defeat in his long-running battle with the Kremlin yesterday as his former company Yukos warned it would go bankrupt in less than a month.

With the company facing a $3.4bn (£1.8bn) tax bill it cannot pay, Mr Khodorkovsky said a senior government official should take over the firm's management. His comments, relayed by a senior shareholder, amounted to an open invitation for the state to renationalise Russia's largest private oil firm.

But as with all of Mr Khodorkovsky's previous offers to find an amicable solution, the Kremlin maintained an icy silence, watching the firm, controlled by a man it thought to have become overly powerful, disintegrate. Mr Khodorkovsky's comments show how desperate he has become as his trial for fraud and embezzlement, which he claims is politically motivated, drags on. Yukos admitted yesterday it was in trouble, sending its shares - which have lost $7bn in the past three days - to their lowest level since 2001.

Bailiffs have said they would sell off the firm's largest production unit, Yugankneftgaz, or Yugansk, as it is also called, for a fraction of its real value in order to recoup the unpaid tax. But that, said Yukos, would herald the end of a company that pumps a fifth of Russia's oil. Yugansk pumps 60 per cent of Yukos' oil, has reserves worth more than £30bn and produces more oil than Iraq. It is known as the crown jewels of Yukos.

Steve Theede, the chief executive of the company, said yesterday it would run out of cash by mid-August but was making every effort to raise extra funds, a task complicated by the fact that its accounts and assets have been frozen.

A statement from Yukos said: "Should these efforts prove unsuccessful and Yugankneftgaz is sold, the management of the company would be compelled to announce the bankruptcy of Russia's largest oil company."

Eleven letters begging the government for a friendly solution have been sent, including several offers from Mr Khodorkovsky to give up his stake in the firm, but all have gone unanswered as speculation mounts that the Kremlin will allow the rump of Yukos to be sold to a government-friendly rival.

Mr Khodorkovsky now has the unpalatable prospect of watching as the company he helped create is torn apart and sold off in a stage-managed reversal of a privatisation, which many feel was daylight robbery.

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