Russia rapped over Yukos dissolution
European Court of Human Rights rules that Moscow violated rights of defunct oil giant but orders no damages.
Europe’s top human rights court has condemned the Russian government over the demise of oil company Yukos, although it did not rule on the issue of compensation sought in a case brought by former management.
The European Court of Human Rights faulted Moscow on Tuesday for unfairness in its handling of the 2006 bankruptcy and its jailing of former Yukos executives including Mikhail Khodorkovsky, the company’s former boss.
The plaintiffs, including former US directors at the company, are seeking $98bn in damages over the demise of Yukos, which they have said would be distributed to former shareholders and other stakeholders.
Yukos lawyers had argued that Russia’s leadership under Vladimir Putin, who was then the country’s president, deliberately sought to destroy Yukos.
At the time, the oil comapny produced as much oil annually as all of Libya, and Khodorkovsky was the country’s richest man and considering a political challenge to Putin.
The Russian Ministry of Justice said in a press release following the court’s decision that it was satisfied the court did not find the case politically motivated.
It also rejected claims of a “repressive nature” of the persecution of Yukos and discrimination against it by the Russian government.
Long legal battle
The ruling by the court’s nine-judge panel will be binding. It follows an eight-year battle between Yukos and Russia’s government, and between Putin and Khodorkovsky, who has been jailed since 2003.
The court has repeatedly found Russia in violation of the 1950 European Convention on Human Rights. In fact, it deals with more cases involving Russia than any other country.
However, the court has never dealt with such a costly demand since it was created half a century ago.
Russian authorities had accused Yukos of using shell companies to hide revenue from tax authorities. Through the courts, the government ultimately froze the company’s assets, forced it to sell its shares in other companies and declared it insolvent in 2006. Yukos was finally liquidated a year later.
Many of its assets ended up in the hands of state-run oil company Rosneft.
Political ambitions
Khodorkovsky founded the company in the chaotic years that followed the 1991 Soviet collapse. He was convicted on charges of fraud and tax evasion, but the Kremlin’s critics say he was singled out for punishment because of his political ambitions.
At the 2010 hearing in the case, lawyers for Yukos argued that Russia violated the company’s right to a fair hearing and to protection of property.
They also argued that the tax claims made on Yukos lacked a proper legal basis and resulted in selective and arbitrary prosecutions.
The same court ruled earlier this year in a separate case that Russia violated Khodorkovsky’s rights during his arrest in 2003 and subsequent detention, but rejected the contention that the arrest was politically motivated.