$1.4B Fine For Russian Oil Giant

The Moscow Arbitration Court ruled Monday that the embattled oil giant Yukos must pay some $1.4 billion in fines and penalties as part of a $4.1 billion back-tax claim for 2001, Russian news agencies reported.

The decision came after the deputy chairman of the court threw out a request by Yukos lawyers seeking the appointment of a new judge in the case, which is part of a broad-based legal campaign against the company and its former CEO Mikhail Khodorkovsky.

Yukos is struggling to pay a $3.4 billion tax bill for 2000 by the end of October. The 2001 bill, however — of which the core amount of $2.7 billion was already payable before Monday's ruling — has raised the company's total liabilities to some $7.5 billion. Analysts expect more claims to follow, eventually pushing the final bill to well beyond $10 billion for 2000-2003.

The Yukos legal team had sought to have the judge in the case on the 2001 fines and penalties removed, questioning his impartiality after he refused to postpone the hearing and provide certain documents, the Interfax news agency reported. The Moscow Arbitration Court identified the judge as Dmitry Zyuba.

Lawyers for Yukos and Khodorkovsky have frequently had appeals rejected during the web of cases against them, which began over a year ago. While cast as a clampdown on shady tax-optimization schemes and business practices, the legal onslaught is widely regarded as Kremlin punishment for Khodorkovsky's growing political clout.

Adding to the company's woes, its main subsidiary Yuganskneftegaz was last week handed a separate, nearly $1 billion tax claim for 2002. The unit, which is being evaluated for sale against the company's debts, pumps 60 percent of Yukos' oil.