[Congressional Record Volume 153, Number 195 (Wednesday, December 19, 2007)]
[Extensions of Remarks]
[Pages E2646-E2647]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   COURT RULINGS ON YUKOS MANAGEMENT

                                 ______
                                 

                          HON. ROGER F. WICKER

                             of mississippi

                    in the house of representatives

                      Wednesday, December 19, 2007

  Mr. WICKER. Madam Speaker, I would like to share information with my 
House colleagues about the application of the rule of law and free 
market economics in Russia. While economic growth has been positive 
since the 1998 financial crisis, Russia's legal and political system 
has regressed, threatening the development of a diverse economy based 
on market principles and the rule of law. The Russian government's 2003 
expropriation of the YUKOS Oil Company raises concern about the 
stability of the economy and continues to remind us that investing in 
Russia is still very risky.
  As Co-Chairman of the Congressional Human Rights Caucus Russia 
Working Group, I would point out that the same legal system that has 
undermined the civil and human rights of former YUKOS head Mikhail 
Khodorkovsky and his business partner Platon Lebedev, also caused the 
company's downfall. In the YUKOS case, the Russian courts failed to 
adhere to basic principles such as private property rights protection, 
independent judges, due process and equal application of the law.
  YUKOS, once Russia's largest oil company, was forced to declare 
bankruptcy in August 2006, when it could not pay claimed back taxes. 
After a series of auctions, YUKOS' remaining assets fell into the hands 
of the state-owned company, Rosneft. On November 22, 2007, Russia's 
Federal Tax Service announced it had completed YUKOS' bankruptcy 
procedure and that the company had ceased to exist as a legal entity.
  In contrast to their experience in the Russian judicial system, 
Khodorkovsky and Lebedev have won several court rulings in other 
countries. The first favorable decision came in August 2006, when a 
Dutch court refused to give the Russian receiver of YUKOS, Eduard 
Rebgun, full control of its Dutch unit.
  In August 2007, the Supreme Court of Switzerland ruled that the case 
against Khodorkovsky and Lebedev was politically motivated and refused 
to release bank documents to Russia in connection with the case.
  Shortly afterwards, in October 2007, the European Court of Human 
Rights ruled that Russia had violated the rights of Lebedev during his 
arrest and pretrial detention, and the Russian government was ordered 
to pay him compensation.
  However, in the most recent and significant ruling on October 31, 
2007, a Dutch court ruled the YUKOS receiver did not have the right to 
sell off the firm's foreign assets in a bankruptcy auction in August. 
The court nullified all actions taken in that auction. The court also 
ruled that YUKOS was denied a fair trial to establish how much back 
taxes it owed to the Russian government.
  The Dutch court ruling is important because it highlights three 
vitally important issues: First, the ability of Russian officials to 
appoint their own managers to run YUKOS; second, the bankruptcy of 
YUKOS and the process used to achieve it; and third, the validity of 
the original tax claim against YUKOS.
  This decision, like many others before it, raises concerns about the 
legitimacy of the Russian court rulings in the YUKOS case. When the 
European Court of Human Rights along with courts in Switzerland, the 
United Kingdom, the Netherlands and other jurisdictions all reach the 
same conclusion, it strongly indicates that there is something very 
wrong in the application of the rule of law in Russia.
  I want to share details of the October 31st Dutch court judgment 
relating to this case, and would like to submit for the Record the 
``Decision'' section of that ruling.

                                Judgment

       District Court of Amsterdam, civil law division, case 
     number/docket number: 355622/HA ZA 06-3612.
       Judgement dated 31 October 2007 in the case of 1. David 
     Andrew Godfrey, resident in London (United Kingdom); 2. Bruce 
     Kelvern Misamore, resident in Houston, Texas (United States 
     of America); 3. the private company with limited liability 
     YUKOS Finance B.V., with registered seat in Amsterdam; 
     claimants, procurator litis: Mr. R.J.

[[Page E2647]]

     van Galen versus 1. Eduard Konstantinovich Rebgun, in his 
     capacity of trustee in the bankruptcy of the legal entity 
     under the law of the Russian Federation OAO YUKOS Oil 
     Company, having chosen domicile at Rotterdam; 2. Leendert 
     Jacob Hogerbrugge, Resident at Leiden; 3. Sergei Savelyevich 
     Shmelkov, resident at Moscow (Russian Federation); 
     defendants, procurator litis: Mr. P.N. van Regteren Altena.
       Claimants jointly hereinafter to be called Godfrey et al. 
     and separately Godfrey, Misamore and Yukos Finance. 
     Defendants jointly hereinafter to be called Rebgun et al. and 
     separately Rebgun, Hogerbrugge and Shmelkov. OAO Yukos Oil 
     Company hereinafter to be called Yukos Oil.


                              The decision

       The District Court:
       Passes a declaratory judgment that all Shareholders' 
     Resolutions in regard to Yukos Finance, in so far as taken by 
     Rebgun in his capacity of trustee of Yukos Oil, including but 
     not limited to the decision to dismiss Godfrey and Misamore 
     as directors of Yukos Finance B.V. dated 11 August 2006 and 
     the alleged decisions to appoint Shmelkov and Hogerbrugge as 
     directors of Yukos Finance, are null and void;
       Passes a declaratory judgment that all decisions taken by 
     Shmelkov and/or Hogerbrugge in their supposed capacity of 
     directors of Yukos Finance B.V. are null and void;
       Orders Rebgun to lend his immediate and unconditional 
     cooperation to the reversal of the (consequences of the) 
     Shareholders' Resolutions he made in Yukos Finance, subject 
     to a penalty of 10,000 Euros for each individual violation 
     and of 1,000 Euros for each day that such violation 
     continues, to a maximum of 500,000 Euros;
       Forbids Rebgun to exercise any rights with respect to the 
     shares of Yukos Finance or to have these rights exercised, 
     subject to a penalty of 10,000 Euros for each individual 
     violation and of 1,000 Euros for each day that such violation 
     continues, to a maximum of 500,000 Euros;
       Orders Shmelkov and Hogerbrugge, both jointly and 
     severally, to lend their immediate and unconditional 
     cooperation to the reversal of the (consequences of the) 
     managerial decisions taken in Yukos Finance, whether 
     individually or jointly, subject to a penalty of 100,000 
     Euros for each individual violation and of 100,000 Euros for 
     each day that such violation continues, to a maximum of 
     100,000 Euros;
       Forbids Shmelkov and Hogerbrugge to exercise any rights 
     with respect to their alleged representative authority in 
     Yukos Finance or to have these rights exercised, subject to a 
     penalty of 100,000 Euros for each individual violation and of 
     100,000 Euros for each day that such violation continues. to 
     a maximum of 100,000 Euros;
       Orders Rebgun, Shmelkov and Hogerbrugge jointly and 
     severally to pay the procedural costs on the side of Godfrey 
     et al., estimated up to this judgment at 332,87 Euros in 
     disbursements and 1,808 Evros in local counsel's salary:
       Orders Shmelkov to pay the costs incurred in connection 
     with the Russian translation of the Writ of Summons, being 
     10,882,06 Euros;
       Declares the aforementioned orders and injunctions as well 
     as the orders to pay the procedural costs immediately 
     enforceable;
       Dismisses all other applications.
       This judgment was passed by Mr. W. Tonkens-Gerkema, Mr. 
     C.S. Naarden and Mr. A.W.H. Vink and delivered in open court 
     on 31 October 2007.

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