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Spanish investors in jailed former billionaire Mikhail Khodorkovsky’s Yukos Oil Co. won an arbitration award from Russia, which nationalized the company, the plaintiff’s lawyers said.
Covington & Burling LLP, which represented the Spanish investors, said in a statement late yesterday that the Stockholm Chamber of Commerce’s arbitration arm ruled that Russia used “illegitimate” tax bills to bankrupt and nationalize Yukos, which it valued at $60 billion.
“This ruling vindicates the rights of Spanish investors, and indeed, all investors in Yukos,” said Marney Cheek, a partner at Covington & Burling, in the statement. The law firm last year estimated that claims against Russia related to Yukos by minority investors were about $10 billion.
Yukos was dismantled and sold at auction, mostly to state- run OAO Rosneft (ROSN), to cover billions of dollars in back taxes after Khodorkovsky was arrested in 2003. Khodorkovsky, once the richest man in the country, is serving 13 years in prison for two separate convictions for fraud and tax evasion. He says he was targeted by President Vladimir Putin for financing opposition parties, an accusation the Kremlin denies.
Suvi Lappalainen, a spokeswoman for the Swedish tribunal, said confidentiality rules prevent the body from commenting on individual cases. All rulings are “enforceable,” she said by phone today. The case was filed under a bilateral investment treaty between Russia and Spain.
“There is nothing to comment on here,” Sergei Storchak, the Russian deputy finance minister who oversees foreign debt, said in an e-mail today. “The press release is empty and doesn’t even give the compensation amount. Most of the text is dated.”
The U.S. and European Union criticized Khodorkovsky’s latest conviction in December 2010, saying it showed a failure to respect the rule of law that was harmful to the investment climate.
The Dutch remnant of Yukos, run by former management of the company, received $425 million from Rosneft in August 2010 after a Dutch court ordered it to repay loans granted before nationalization.
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