| Yukos Oil Company | |
| Native Name: | Нефтяна́я Компа́ния Ю́КОС |
| Fate: | Bankrupted |
| Foundation: | Moscow, Russia |
| Location City: | Moscow |
| Location Country: | Russia |
| Num Employees: | 31,565 |
OJSC "Yukos Oil Company" (Russian: [[Joint-stock company#Russia|ОАО]] Нефтяна́я Компа́ния Ю́КОС|links=no, pronounced as /ru/) was an oil and gas company based in Moscow, Russia. Yukos was acquired from the Russian government by Russian oligarch Mikhail Khodorkovsky's Bank Menatep during the controversial "loans for shares" auctions of the mid 1990s.[1] Between 1996 and 2003, Yukos became one of the largest and most successful Russian companies, producing 20% of Russia's oil output. In the 2004 Fortune 500, Yukos was ranked as the 359th largest company in the world.[2] In October 2003, Khodorkovsky—by then the richest person in Russia and 16th richest person in the world—was arrested, and the company was forcibly broken up for alleged unpaid taxes shortly after and declared bankrupt in August 2006.[3] Courts in several countries later ruled that the real intent was to destroy Yukos and obtain its assets for the government, and act politically against Khodorkovsky. In 2014, the largest arbitration award in history, $50 billion (€37.2 billion), was won by Yukos' former owners against Russia.[4] This $50 billion award by the Permanent Court of Arbitration was ruled invalid by the District court in The Hague in 2016,[5] but reinstated by the Court of Appeal of the Hague in 2020.[6]
From 2003 to 2004 onwards, the Russian government presented Yukos with a series of tax claims totaling US$27 billion (€20,1 billion). As the government froze Yukos' assets at the same time, and alternative attempts to settle by Yukos were refused, the company was unable to pay these tax demands.[7] Between 2004 and 2007, most of Yukos's assets were seized and transferred for a fraction of their value to state-owned oil companies.[8]
The Parliamentary Assembly of the Council of Europe condemned Russia's campaign against Yukos and its owners as manufactured for political reasons and a violation of human rights.[9] Between 2011 and 2014 several court cases were won by the former company's management and investors against Russia or against the companies that acquired Yukos assets. The European Court of Human Rights ruled that there had been unfair use of the legal and tax system; the Arbitration Institute of the Stockholm Chamber of Commerce, an established neutral body used by Russia and the West since the 1970s for trade disputes,[10] concluded that the government's action was an "unlawful expropriation" using "illegitimate" tax bills, whose effect was intended to "destroy Yukos and gain control over its assets".
The Permanent Court of Arbitration in The Hague ruled unanimously upon awarding compensation of $50 billion for the company's assets, that Yukos was the target of a series of politically motivated attacks by Russian authorities that eventually led to its destruction, and that Russia had expropriated Yukos' assets in breach of the Energy Charter Treaty.[11] [12] The treaty does not prohibit governments seizing or nationalizing commercial assets, but requires investors to be fairly compensated. Though Russia never ratified the full treaty, these clauses were still legally binding under both the treaty and Russian law until 2029.[13] [14] According to the Permanent Court of Arbitration's ruling, the primary objective of the Russian Federation was not to collect taxes but rather to bankrupt Yukos, appropriate its assets for the sole benefit of the Russian state and state-owned companies Rosneft and Gazprom, and remove Khodorkovsky from the political arena.[15] [16]
The company was created on April 15, 1993 by Resolution No. 354 of the Russian government, following Presidential Decree No. 1403 (November 17, 1992), which had directed the government to transfer its directly owned oil and gas operations into separate companies, in preparation for privatization, with the aim of developing the oil and gas sector in Russia.
OAO Yukos Oil Company, known as Yukos (ЮКОС) was one of the companies so formed, on 12 May 1993. Its initial assets included:
The company was named after these assets, "Yuganskneftegaz" + "KuybyshevnefteOrgSintez". The Samaraneftegaz ("Samara Oil and Gas") refinery was added to Yukos in 1995 under decree No. 864, and it later incorporated eight distribution companies in Central Russia and Siberia and assorted technical businesses.[17]
The first chairman and president appointed to lead Yukos, then still a government owned business, was Sergei Muravlenko (Russian: link=no|Сергей Муравленко), the former General Director of Yuganskneftegaz and son of Viktor Muravlenko, a former head of the oil and gas sector during the Soviet regime.
During 1995 and 1996, with Russia in economic difficulty, many large state-owned industrial businesses were privatized in a second round of reorganization ("Loans for shares"), in which major state assets were sold off through – and often to – Russian commercial banks in a series of rigged auctions whose participants were limited to favored bidders with political connections.[18] This acquisition of valuable state industrial enterprises for far less than their open market value[19] also marked the emergence of a wave of Russian oligarchs – immensely wealthy Russian businessmen with powerful political connections, who held a dominant position in Russian business and politics for some time. (The first wave of wealthy individuals was banking[20] and export[21] driven following perestroika in the 1980s.)