Yukos, Russia's second largest company with a turnover of US$35 bn in 2003, produces 20% of Russia's oil and accounts for 6% of its GDP. By mid-2004, however, the company seems to have been caught in a quagmire of legal hassles. The company was burdened with a huge tax, a sum that could potentially bankrupt Yukos. The article looks at how the trouble began at Yukos.

OAO Yukos Oil Company (Yukos) is Russia's second largest company with a turnover of US$35 bn in 2003. Yukos produces 20% of Russia's oil and accounts for 6% of its GDP. By the end of 2003, Yukos was the only Russian company amongst the world's top ten oil and gas majors.¹ In the mid-1990s, Yukos had adopted western management practices under the charismatic leadership of Mikhail Khodorkovsky. The company seemed to have a bright future.

But in mid-2004, Khodorkovsky was arrested and put in jail, even as Yukos was facing a deep liquidity crisis. The Arbitration Court of Moscow has asked the oil company to pay RUR 99.3 bn, or about $3.4 bn for the year 2000, in back taxes and fines before June 7, 2004.

Trouble at Yukos, turnover of US$35 bn, produces 20% of Russia's, oil and accounts, GDP, mid- quagmire of legal hassles, company huge tax, potentially bankrupt Yukos, trouble began at Yukos,OAO Yukos Oil Company (Yukos), Russia's second largest company.