Russian oil giant YUKOS looked closer to bankruptcy on Monday after creditors warned it was in default. Its troubles are compounded by the fact that its main owner Mikhail Khodorkovsky, is now on trial for fraud and tax evasion.
Creditor banks declared that the company is in default on a $1 billion loan, sending shares lower and adding weight to speculation the banks were playing a game of brinkmanship with the government.
Many see YUKOS's plight as orchestrated by the Kremlin, unwilling to tolerate the political ambitions of key shareholder. The YUKOS default announcement came hard on the heels of an eight-hour weekend raid on its Moscow headquarters, during which tax police seized documents, computer discs and safes.
The company must pay $3.4 billion for 2000 tax arrears by Wednesday. It says the demand will bankrupt it because courts have frozen its assets and it has insufficient cash.
If that happens, it will be despite pledges by President Vladimir Putin that he did not want to destroy YUKOS, which accounts for a fifth of Russia's oil output.
The $1 billion loan in default was organised, managed and arranged by Citibank, Societe Generale, Commerzbank, Credit Lyonnais, Deutsche Bank, HSBC, ING Bank, BNP Paribas, and UFJ Bank's Dutch unit.
Bankruptcy at the hands of the Kremlin, some analysts say, could damage Russia in the eyes of investors as Moscow tries to boost the economy and hoist millions out of poverty.
