Yukos Probe Widens To Include Westerners

Steven M. Theede, an American, is former chief executive of Russia's bankrupt Yukos oil company.
Steven M. Theede, an American, is former chief executive of Russia's bankrupt Yukos oil company. (Peter Baker - Peter Baker)
By Peter Finn
Washington Post Foreign Service
Friday, August 18, 2006

MOSCOW, Aug. 17 -- The Russian prosecutor's office announced Thursday that it had opened a criminal probe into allegations of money laundering and embezzlement by Steven M. Theede, the American former chief executive of the embattled Yukos oil company, and three other expatriate executives.

The case is the first time the sprawling and politically charged investigation of Yukos and its founder, imprisoned tycoon Mikhail Khodorkovsky, has targeted the company's Western managers. They were resisting an effort by the state-controlled oil company Rosneft to drive Yukos into bankruptcy and secure the bulk of its assets.

Prosecutors allege that Theede and the other managers used a foundation based in the Netherlands to illegally gain control of $10 billion in company assets. Also under investigation are Bruce Misamore, a former manager of the subsidiary Yukos Finance; David Godfrey, Yukos's former managing adviser; and Tim Osborne, a director of Group Menatep, the largest shareholder in Yukos.

The four "took advantage of their official positions to steal and legalize property that had been trusted to them, which caused considerable damage to the owner . . . the Yukos oil company," the prosecutor's office said in a statement posted on its Web site Thursday evening.

The announcement of the probe came immediately after a court-appointed administrator lost an effort in a Dutch court to prevent the sale of any of Yukos's foreign assets to satisfy creditors without his approval. Among those seeking redress in the Dutch court is an arm of Group Menatep, the Yukos shareholder, as well as Rosneft.

The foundation, which was set up with the approval of the Dutch court, held Yukos assets that were beyond the reach of the Russian authorities. The foundation was designed to protect the interests of creditors, including Group Menatep.

In their statement, Russian prosecutors alleged that the foundation was little more than a scam designed to enrich the four executives, who appointed themselves foundation directors. The foundation, however, has a number of non-Yukos executives who were not targeted by the Russian authorities. The foundation's activities continue to be scrutinized by the Dutch courts.

"Yukos under the stewardship of Steven Theede and his team has always been managed with integrity and in full compliance with national and international laws on good governance," said Claire Davidson, a spokeswoman for Yukos's former managers. "To assert otherwise is wrong."

A Moscow court declared Yukos bankrupt this month and ordered it liquidated over the objections of managers who said the company -- battered by Russia's demand for $30 billion in back taxes -- could be salvaged. Yukos lawyers said they would appeal the decision.

Rosneft and other creditors had rejected a plan to save the company and called for it to be dismantled. The court-appointed administrator also confirmed Thursday that Misamore and Godfrey had been sacked in the wake of the bankruptcy.

Last month Theede resigned from Yukos after London courts refused to stop a huge stock offering by Rosneft, which had earlier acquired Yukos's prime oil assets at auction. Yukos said the auction amounted to state-sanctioned theft. Theede also said Yukos had been grossly undervalued by the court-appointed administrator in an effort to hasten its liquidation.

Yukos still pumps nearly half a million barrels of oil a day and employs 70,000 workers.

Theede and the other managers had run the company from exile in London, and Russian prosecutors would have to seek their extradition. British courts have previously refused to honor Russian extradition requests for Russian executives of Yukos living in London, accepting the argument of their lawyers that the case against the company is politically tainted and that they are unlikely to receive a fair trial in Moscow.

Khodorkovsky, the company's founder, is serving an eight-year prison sentence for fraud and tax evasion following a prosecution that supporters said was politically motivated because his political ambitions represented a threat to President Vladimir Putin's authority.

Earlier Thursday, another Moscow court sentenced Yukos's former head of security to 24 years in prison for a series of alleged contract killings. Alexei Pichugin was already serving a 20-year sentence for a double murder.

"We are going to appeal," said Georgy Kaganer, Pichugin's attorney. "We believe this ruling is unjust and unlawful."

Pichugin was accused of the contract killing of a mayor in Siberia and a businesswoman as well as several assassination attempts. Another Khodorkovsky associate, Leonid Nevzlin, who lives in Israel, is also wanted in the killings. He denies the charges.

© 2006 The Washington Post Company