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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (193624)	7/8/2004 3:28:12 PM
From: tejek	Respond to of 1577586

<font color=brown>This is not good news. Things are starting to stink badly in Russia. Additionally, the Russian gov't cut bank reserve requirements in half yesterday......not a good sign.<font color=black> ****************************************************** A hard rain falls on the house that Yukos built By Andrew Jack Published: July 8 2004 18:55 In the corridors of Russia's White House, the seat of government, a proposal is circulating that few officials want to touch. It offers a resolution to the stand-off between the authorities and Yukos, the stricken oil group and victim of what is widely seen as a politically-motivated attack. Neither Yukos nor Menatep, the vehicle through which the imprisoned tycoon Mikhail Khodorkovsky holds his controlling stake, claim to have sent any document themselves. But an individual close to the negotiations reiterated on Thursday that a "global settlement" offer had been put forward and was endorsed by both parties. However, Russian officials are unwilling to acknowledge its receipt - let alone to respond to its terms - as the endgame approaches in a conflict pitting high domestic political stakes against the risks of pushing an extremely profitable and rich company into a contrived bankruptcy unjustified by commercial logic. Yukos and Menatep have been publicly outspoken in defending their interests and expressing a willingness to talk to the authorities, suggesting an ordered sale of assets and a surrender of Mr Khodorkovsky's shares to pay off back-tax bills that could reach $10bn, even though they consider the assessments retroactive and selective. Yet there have been few remarks from the government, and a reluctance - even in private - to respond. One problem appears to be a fear of decision-making in the cabinet of Mikhail Fradkov, the prime minister appointed by President Vladimir Putin in March. His ministers have fallen victim to what the rating agency Standard & Poor's dubbed "policy paralysis". No issue could be more sensitive, even in better times, than the feud that surrounds Yukos. It has escalated into a bitter vendetta against Mr Khodorkovsky, whom his critics accuse not only of past crimes during Russia's wild capitalist 1990s, but of trying to destabilise Mr Putin's regime through bribery and meddling in geopolitics. In the responsibility-shirking climate that has developed, a number of intermediaries claiming to represent the Kremlin have made approaches to Menatep to settle the stand-off. Yet they have been rebuffed, because they have been unwilling or unable to arrange even a brief meeting between Menatep and top administration officials. A second issue hobbling negotiations is lack of trust. While some Kremlin officials are sensitive to international political and corporate fall-out from the affair, others are prickly since Mr Putin's battle against another oligarch, the media tycoon Vladimir Gusinsky. The authorities agreed to drop criminal charges against Mr Gusinsky in exchange for the sale of his media empire, Media Most. But the pledge was put on paper, signed by Mikhail Lesi (then press minister) and, when the document was made public, it embarrassed the Kremlin. It is likely government officials want no similar written trail, or even indications of any deal that might later be interpreted as political, let alone attacked by shareholders or banks litigating abroad. Furthermore, as one adviser to Mr Gusinsky argues: "There will be no deal because the government doesn't believe Khodorkovsky would ever agree to one. At least Lesin could try to guarantee Gusinsky's actions. No-one can vouch for Khodorkovsky." Much of the brokerage community is hoping that a pragmatic settlement and a pre-bankruptcy agreement are possible. Many Russians see the inevitable destruction of Yukos as part of a process leading to the creation of a state-controlled energy group. The reality may be in the middle, with protracted court-supervised asset sales, leaving a diminished Yukos stripped of Mr Khodorkovsky's influence. Compensatory signals could still be sent to western investors, with a sale - at least of a stake in its former merger partner Sibneft - to a foreign group, and a mechanism to support Yukos's bankers and minority shareholders. "Whatever happens, the end is clearly coming one way or another," said one person with knowledge of the discussions. "If the current proposals are turned down, there is not much room left." news.ft.com