YUKOS to trap the Russian Federation

Hearings concerning the well-known “YUKOS v Russian Federation” case will soon be resumed in Houston, TX.

This time YUKOS attorneys will have to defend their rights to file the action in American courthouse. Apparently, this isn't an easy task. At first sight, the company doesn't seem to have many ties in Houston. Experts warn however that YUKOS could have prepared a trap for Russia. The trap is the company entitled YUKOS USA Inc., which has been registered in Houston, TX; some YUKOS top-managers refer to the latter as the official subsidiary of the Russian oil company. PRAVDA.RU conducted its own investigation attempting to contact YUKOS chief in Texas.  

Houston has gained its reputation after the establishment of the Space Center. Today, the city hosts another kind of control center. Russian oil company YUKOS has chosen Houston as its crisis management center. Currently, an entire managerial team headed by Steven Tidy and YUKOS chief financial officer Bruce Misamore is located in Houston. In the meantime, in Houston’s bankruptcy court Judge Leticia Clark resumes hearing of the case “YUKOS v Russian Federation”.

Up until now, the court has been favoring YUKOS: Judge Clark has temporary suspended all operations regarding the arrest of all YUKOS assets. This however didn’t prevent Russian authorities from auctioning of the main oil-producing company of YUKOS – “Yuganskneftegas.” However, the decision of the American court affected the company's ability to acquire credit from syndicates of Western banks for such large sum of money.

In its previous reports Pravda.Ru has informed its readers of several foreign banks: ABN AMRO, BNP Paribas, Calyon, Deutsche Bank, Dresdner Kleinwort Wasserstein (DrKW) and J.P. Morgan, which have been putting together a credit for Russian buyer of “Yuganskneftegas” in the sum of 10 billion Euro. For western banks this appears to be a favorable deal indeed. However, the Houston court's verdict has disrupted the possibility of offering the credit legally. US authorities were fully entitled to arrest American actives of banks-creditors for offering their financial help to the buyer of “Yuganskneftegas.”

While losing such advantageous contract, Deutsche Bank has submitted a petition to Houston's court asking to refuse YUKOS' plea to initiate bankruptcy proceedings, since Houston's court has no jurisdiction over the Russian company. According to spokesmen of the German bank, YUKOS’ connections with the State of Texas are miniscule.

Nevertheless, the court has determined that YUKOS possesses “considerable assets in Southern district of Texas.” By “considerable assets” judge Clark meant the following: 2 million USD in bank accounts, a mere part of the 6-million-dollar fee for the lawyers. In addition, the court has taken into account the fact that approximately 15 percent of YUKOS shares belong to institutional investors from the US as well as the fact that the company's chief financial officer permanently resides in Houston, TX. YUKOS in turn argued that due to the fact that its financial officer had been residing in Texas, that’s where the main financial decisions had been reached and consequently, Texas was one of the places where YUKOS had realized its business operations. According to the court, all outlined assets along with the company’s other ties with the US form reasonable grounds to acknowledge the fact that YUKOS actually does fall under the court’s jurisdiction and Southern district of Texas is a suitable place for the hearing of the case.

Such logic does seem a bit odd. Deutsche Bank lawyers must have felt the same way. True enough, as it turns out, for instance a citizen of Nigeria who put $100 on his account in an American bank and then moved with his entire family to the States, is fully entitled to file a claim in American court against his African motherland.

Perhaps, YUKOS top-managers realize this as well. But this is a different matter; if YUKOS had at least one of its subsidiaries in Texas, the issue concerning the court's jurisdiction in regards to the Russian oil company would have been nonexistent. Two and half years ago for instance, this wasn't an issue at all.

According to Associated Press, in 2002 one company attempted to sue YUKOS for some long past-due claim. The plaintiff chose Houston, TX for the case on the grounds that YUKOS subsidiary “Petroval” had once transported an oil tanker to that city. Back then lawyers of the oil company managed to prove that YUKOS had neither offices nor employees inHouston. He plaintiff was told that his claim was insubstantial.

Nowadays, YUKOS lawyers and management attempt to prove just the opposite. At least they keep referring to a company named YUKOS USA Inc more and more often. Apparently, the latter was registered in Houston, TX.

YUKOS USA Inc has first appeared in press when the US court was about to get a hold of temporary possession of YUKOS finances that were in the States. 21 million out of 27 million USD have been transferred under court's control; the money had been placed on YUKOS USA Inc account in South West Bank of Texas in December of last year. Earlier, the company was mentioned in an interview with YUKOS financial chief Bruce Misamore. The interview is available in the following site: (http://bankrupt.com/yukos.txt). 

Misamore makes rather interesting claims. For example, he points out that an unknown company located somewhere outside Russia has transferred additional 500 000 USD to Houston in order to pay for the bankruptcy-related expenses. This half a million dollars, according to Misamore, has accumulated on YUKOS USA Inc. bank account. Misamore also claims that the aforementioned company is in fact YUKOS subsidiary.

But if the company really is YUKOS subsidiary, then how come its name was never mentioned in Houston’s court decision?? Perhaps, despite Misamore’s claims, it has nothing to do with Russian oil company YUKOS?  

Through Texas Comptroller of Public Accounts PRAVDA.Ru found out that such company does in fact exist and is in fact registered in Houston, TX. More so, the company's director is Bruce Misamor himself. What appears to be even more exciting however is the fact that according to the public data, YUKOS USA Inc., was registered on December 14th, 2004: only a day prior to YUKOS filing its bankruptcy case to Houston's court. In Russia, this would be called a “fake company”. In fact this one seems to be even more “fake” than the well-known “Baikalfinansgroup”, the one that purchased “Yuganskneftegas” at the auction. “Baikalfinansgroup” has been registered two whole weeks prior to the significant event.

However, the information we managed to obtain lacked any trace of the real owner. Department of state services couldn’t provide us with any information on this account. So we decided to ask the company (CT CORPORATIONS SYSTEM) which had registered YUKOS USA Inc for help. The office accepted our inquiry and forwarded the request directly to Mr. Misamore. At the moment, we still  do not possess any information. We haven’t heard from neither the CT CORP. Office nor Misamore himself.

While searching for the truth, we thought an expert’s opinion (whose name will not be disclosed) would be of value. “Registration of fake companies abroad with names resembling those used here in Russia is a common practice. Usually, this is done to withdraw assets from the real company. When the names appear similar, not every official, especially a foreigner, will ever notice the trick,” states the interlocutor. According to him, YUKOS USA Inc most likely has no direct link to the YUKOS oil company, and all maneuvers somehow connected to it are nothing but a trap for Russia. Talks concerning the fact that YUKOS USA Inc is YUKOS subsidiary as well as numerous claims of the Russian company to the Houston court asking to watch over the finances of YUKOS USA Inc, all of it is a mere attempt to trick American as well as Russian law enforcement.

“The mousetrap will slam when someone from the plaintiff’s side, i.e. Russian Federation, will attempt to arrest accounts of YUKOS USA Inc in the US, while assuming that the company indeed bears some connections to the infamous YUKOS,” states the expert. In that case, it will turn out that Russian side will confirm the existing connection between the companies, adds he. Afterwards, American legislature will be fully entitled to claim that the Russian company’s case falls under its jurisdiction, since it has been acknowledged by the Russian plaintiff.

The assumption appears logical. And every time the name YUKOS USA Inc is mentioned, it can be regarded as a proof. In any case, the situation will clear up once Deutsche Bank will come forward and present its proofs of YUKOS’ lack of jurisdiction in Texas. YUKOS lawyers already presented their arguments. It is likely that the American “namesake” will come up at some point in the paperwork.    

Sergey Malinin