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Russia’s Yukos Picks New Management Team

November 5, 2003

MOSCOW (AP) _ A Russian-born U.S. citizen took over as head of the oil giant Yukos on Tuesday, one of three Americans tapped for top positions as the company sought to distance itself from its jailed former chief.

Simon Kukes was named chief executive, replacing Mikhail Khodorkovsky, who was arrested and jailed Oct. 25 on charges of fraud and tax evasion.

``It’s hard to say with Mikhail gone from our ranks that it’s business as usual, but it really is business as usual for the company,″ said Bruce Misamore, an American who retained his post of chief financial officer in the new management board.

The 56-year-old Kukes, who emigrated to the United States in 1977, formerly headed Russia’s Tyumen Oil Company. He was elected chairman of the Yukos board of directors in June. The company also appointed Steven Theede, another American, as executive director and president of Yukos-Moscow, a subsidiary that handles many of Yukos’ corporate functions.

Company officials may be trying to protect Yukos from Russian authorities by putting Americans in top positions, said Konstantin Reznikov, chief oil analyst at Moscow-based Alfa Bank. Prosecutors may be more hesitant to arrest American citizens, and aggressive moves against Yukos could draw further complaints from Washington.

But analysts said authorities can still hurt the company by revoking drilling licenses or by launching new probes. ``The story’s not over with the resignation of Khodorkovsky,″ Reznikov said.

Kukes said the company’s operations would continue apace.

``Mr. Khodorkovsky is a very strong leader ... but with his departure, I don’t think anything will stop or change,″ Kukes told reporters at the company’s headquarters in Moscow. The lobby was decked with larger-than-life photographs of Khodorkovsky in what Kukes called a ``sign of respect″ for the jailed billionaire.

Khodorkovsky said he resigned to take the heat off the company and its employees. The new managers emphasized that day-to-day operations won’t change much, but were pointedly silent over Khodorkovsky’s plans amid media speculation that he may seek the political spotlight and possibly even run for president.

Many analysts say prosecutors have targeted Khodorkovsky because of his financial clout and his funding of opposition parties. Khodorkovsky struck a political note in his resignation announcement, saying he would dedicate himself to work as the head of Open Russia, a foundation he said aims to help build a ``truly democratic society″ in Russia.

Khodorkovsky’s jailing came amid a 4-month-old probe of Yukos and its shareholders that has hurt the Russian stock market and raised questions about Russia’s economic and political course. Last week, prosecutors persuaded a court to freeze some 44 percent of Yukos shares.

``I think it would be naive to say the events over the last two weeks have not caused some Western companies to have second thoughts about where Russia is headed,″ Theede said.

Kukes was born and raised in Russia but emigrated to the United States at 31. A chemist by training, he was a post-doctoral fellow at Houston’s Rice University from 1977-79, according to a biography assembed by the World Leaders Forum. He held various positions at Phillips Petroleum from 1979-86, and at Amoco from 1987-96.

Theede, born in Hutchison, Kan., joined Yukos this year after heading European and Caspian exploration and production for ConocoPhillips. Misamore, a native of Findlay, Ohio, and a veteran of U.S.-based companies including PennzEnergy, Pennzoil and Marathon Oil, joined Yukos in 2001.

Khodorkovsky has pursued close ties with the United States and led a trend among Russian companies toward hiring Westerners to improve their tainted image and their business practices. Last year Yukos became the first Russian company to export crude oil directly to the United States.

In an interview with Italian journalists that was posted on the Kremlin Web site Tuesday, President Vladimir Putin reiterated his defense of the prosecutors, saying ``they are acting correctly as long they don’t go beyond the law.″

Putin has denied any political motives behind the Yukos probe. He denied speculation that it would lead to a massive review of the sale of former government enterprises in the 1990s. During that era, tycoons like Khodorkovsky snapped up valuable state assets at rock-bottom prices.

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