In 2003, Russia arrested the country's richest man, seized his main asset, Yukos Oil, broke it up and sold it. More than a decade later, a three-judge arbitration panel in The Hague ordered Moscow to pay the shareholders of the now defunct oil giant more than $50 billion.
The Permanent Court of Arbitration in The Hague said Yukos was "the object of a series of politically-motivated attacks by the Russian authorities that eventually led to its destruction." The July 18 order called the company's seizure "devious and calculated."
The amount is one of the biggest-ever compensation awards in an arbitration case, but shareholders had sought twice that figure. They had based their claim on Yukos' $100 billion valuation.
The court ordered Russia to pay the judgment within 180 days or begin paying interest. If Moscow fails to comply, shareholders can attempt to seize its assets overseas. But that may be easier said than done. As The Wall Street Journal notes, "[P]laintiffs in similar cases in the past have had mixed results attempting to seize Russian assets overseas."
Russia's Finance Ministry said the ruling was "politically biased," and said it will appeal.
"The ruling adds to tensions between Russia and the international community at a time when relations are at their lowest ebb since the end of the Cold War. Following the downing of Malaysia Airlines Flight 17 over eastern Ukraine, the U.S. and European Union are debating further economic sanctions against Moscow because of its support for rebels suspected of launching the attack."
Late last year, Russian President Vladimir Putin pardoned Mikhail Khodorkovsky, the oligarch who controlled Yukos. Khodorkovsky was convicted of tax evasion in 2005 and found guilty of embezzlement in 2010. But critics of the Kremlin saw his treatment as punishment for daring to challenge the Kremlin.
The AP adds: "The Yukos takeover was the beginning of a process under which Russia, under President Vladimir Putin, re-took control of the country's energy industry. Yukos' main assets were sold at auction to a shell company. Just days later that company was bought up by state-owned Rosneft, making it the largest oil producer in Russia."
The case was brought by subsidiaries of GML Ltd., the former Menatep through which Khodorkovsky and his partners controlled Yukos.
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