Rights court clears Russia of trying to destroy Yukos

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The European Court of Human Rights on Tuesday cleared the Russian government of charges that it tried to deliberately destroy the defunct oil giant Yukos.

The judges did rule that the authorities violated the right to a fair trial in the European Convention on Human Rights by giving the company insufficient time to prepare its defence case in 2000 tax assessment proceedings.

And the court also ruled that there had been a further breach regarding the imposition and calculation of tax penalties.

However it said "there was no indication of any further issues or defects in the proceedings against Yukos which would have enabled the court to conclude that Russia had misused those proceedings to destroy Yukos and take control of its assets."

"The court found that Yukos's debt in the enforcement proceedings resulted from legitimate actions by the Russian government to counter the company's tax evasion.

"Throughout the proceedings, the actions of the various authorities involved had had a lawful basis and the legal provisions in question were sufficiently precise and clear to meet Convention standards," the Strasbourg-based court added in its ruling.

Yukos, once headed by jailed opposition figure Mikhail Khodorkovsky, sought colossal damages of $98 billion (72 billion euros) over claims it was illegally targetted by the state over tax fraud.

The amount is more than double Russia's annual defence budget and would have amounted to the largest penalty ever awarded by the court.

Yukos was established by the Russian government in 1993, to acquire and manage several independent oil companies.

It was privatised through the mid-1990s, part of the privatisation wave that swept through the Russian economy as the country sought to liberalise after decades of centralised Soviet control.

Khodorkovsky led the company's hugely profitable privatisation campaign, acquiring immense personal wealth in the process, but he was jailed in 2003 for fraud and tax evasion.

His supporters say he was prosecuted for daring to politically challenge Russian strongman Vladimir Putin.

In its complaint to the European Human Rights Court, Yukos claims it was unjustly targetted by the state on tax enforcement issues, which led to its collapse and subsequent liquidation in November 2007.

Yukos further claims that Russia's inquiries into its tax burden were irregular and that the company's right to a fair hearing was not honoured. Khodorkovsky and his business partner Platon Lebedev were convicted in Russia in 2003, and sentenced to 13-years in prison.

Ruling on a separate case filed by Khodorkovsky in 2004, the Strasbourg court in May censured Russia for its treatment of the jailed tycoon, but rejected charges that his detention was politically motivated.

© 2011 AFP

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