Kremlin link likelyin £4.8bn Yukos bid

Published on Monday 20 December 2004 12:03

THE previously unknown Baikal Finance Group has won the auction for Russian oil company Yukos’ main production unit with a £4.8 billion bid that is believed to have the approval of the Kremlin.

Gazprom had been favoured, but was outbid yesterday. It said it had no links to Baikal, but analysts said they still believed the state- controlled gas giant or other state interests may have had a hand in the winning bid.

Yukos is widely seen as the victim of a Kremlin campaign to crush its politically ambitious owner, Mikhail Khodorkovsky, and seize back control of strategic sectors of the economy sold off in the chaotic privatisations of the 1990s.

Khodorkovsky is now on trial for fraud and tax evasion and faces ten years in jail if convicted.

The sale of Yuganskneftegaz, which pumps more oil than Opec member Qatar, went ahead despite a US court order barring Gazprom and its foreign bankers from bidding, pending further proceedings in Yukos’ application for US Chapter 11 bankruptcy protection.

Baikal, which was not one of three originally registered bidders, may have been a hastily-assembled vehicle allowing Russian state interests to get around the US court order, one analyst said.

"The political signal from the government was they would go ahead and they have found a way to go ahead that minimises legal risk," said Chris Granville of investment bank UFG. "There were three registered bidders and all three were named in the restraining order. Now the surprise is that a new entity emerges. The Russian state was not named in the restraining order, nor was this entity."

Russian news agency Itar-Tass said one of its reporters had checked the address given by Baikal in the town of Tver, 125 miles outside Moscow, and had found a building housing a mobile phone shop and a food store.

Under Russian law, the government can order a new auction or seize Yugansk in lieu of unpaid taxes if Baikal fails to pay the full amount it has bid within 14 days.

A Yukos spokesman said that whoever was behind the winning bid would be pursued in court.