Policy Memos

The Yukos Affair: Terminating the Implicit Contract

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On July 2, 2003, Russian law enforcement arrested billionaire Platon Lebedev, chairman of the Board of Directors of MENATEP, the financial center of the oil giant YUKOS. A few days earlier the police had arrested Alexei Pichugin, the head of the Economic Security Department of the Security Service of YUKOS. The General Procuracy (Russia’s chief law enforcement agency) charged Lebedev with financial fraud, dating back to the privatization of the phosphate-producing plant Apatit in 1993–1994, and with tax evasion by MENATEP subsidiaries in the Tomsk oblast’. Pichugin was charged with much more serious offenses: organizing five contract killings. On October 25, Mikhail Khodorkovsky, the head of YUKOS and one of Russia’s leading oligarchs, was arrested and charged with fraud, tax evasion, and theft. Two days later, Vladimir Putin publicly declined to engage in any bargaining over the activities of law enforcement agencies and abruptly called for an end to all speculation and hysteria around the arrests of YUKOS management. Then, on October 30, the General Procuracy (GP) froze 44 percent of YUKOS stock (the major part of which belongs to Khodorkovsky and his closest associates). The same day Putin accepted the resignation of Alexander Voloshin, the Head of the Administration of the President (AP), and appointed Dmitri Medvedev as his successor. Finally, while still in detention, Khodorkovsky resigned as the Chairman of the Board of Directors of YUKOS. [...]


About the author

Vice-Rector for Innovations; Head of the Research Institute for the Rule of Law
European University at St. Petersburg