OPR WEEKLY: MUTINY IN MOSCOW

A strange scene unfolded Friday in the Moscow boardroom of OAO Yukos, once Russia’s mightiest oil conglomerate. Anatoly Nazarov, head of Yukos Refining and Marketing and the most senior manager remaining in Moscow (most of the team is safely ensconced in London), told a stunned management assembly that he was siezing control of the company and would no longer take orders from Yukos CEO Steven Theede.

According to a letter obtained by the Moscow Times, Nazarov told employees that the company was on the verge of bankruptcy, which, of course, came as news to no one. Yukos has been staving off bankruptcy since it was dismembered by the Kremlin in 2004. However, the letter went on to say that the company had been hit by a number of new court cases recently, which showed that “Yukos was constantly under attack by raiders of all flags.” Nazarov urged employees not to forget that “we live and will live in Russia, and should carry out our work only in a legal framework, not forgetting the interests of society, the state and the company.”

While Nazarov failed to elaborate, the cryptic claim concerning foreign flags may have been a reference to a suit filed Friday with the Moscow Arbitration Court by a group of foreign banks to declare Yukos bankrupt. Yukos owes the group of lenders approximately $480 million.

Nazarov’s move came amidst a widening company investigation in which Stanislav Vinokurov, head of Yukos’ domestic sales and financial arm, Yukos Trading House, was fired on suspicion of arranging unauthorized discounted sales to an unnamed third-party trader. The sales reportedly cost the company $50 to $100 million. When Theede directed Nazarov to appoint a Theede loyalist, Roman Khomenko, as the new head of Yukos Trading House, Nazarov refused. Instead, Nazarov rehired Vinokurov, promoted him to first Vice-President, and staged his mutiny.

But it gets worse. Khomenko on Thrusday was being questioned by Russian prosecutors as part of a “widening criminal investigation” about which no details are available. Yukos Chief Financial Officer Frank Rieger, currently in London, was issued a similar summons last week but is afraid that a trip to Moscow may lead to his arrest. A company source said Vinokurov's father was a senior Federal Security Service officer in Samara, and suggested Nazarov was trying to gain protection from the FSB in return for reinstating Vinokurov. Several other Moscow based managers have been issues summonses as well.

Yukos said that company management is reviewing the situation and will make a final decision soon on how to handle it. Yukos’ website makes no mention of the affair, but a webpage on company management updated last week bears an ominous message. “Under Construction.”