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Russia’s Yukos Names New Management Team

November 4, 2003

MOSCOW (AP) _ Russian oil giant Yukos sought Tuesday to distance the embattled company from the storm surrounding its jailed former chief by appointing a new management team the day after his resignation and stressing continuity and calm despite a persistent probe by prosecutors who have President Vladimir Putin’s backing.

A Russian-raised Amrican citizen, 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.

Kukes, formerly president and chief executive officer of Russia’s Tyumen Oil Company, 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 under which many of Yukos’ central corporate functions are gathered.

``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 Moscow headquarters, whose lobby was decked with larger-than-life photographs of Khodorkovsky in what Kukes called a ``sign of respect″ for the beleaguered 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 own plans amid media speculation that he may seek the political spotlight and possibly even run for president.

Many analysts say prosecutors have targeted Khodorkovsky to avenge 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.

Yukos official Mikhail Trushin said Tuesday that Open Russia ``has nothing to do with Yukos,″ emphasizing that it was founded and funded by Yukos shareholders, not the company.

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.

Theede, born in Hutchison, Kansas, 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 _ last year Yukos became the first Russian oil company to export crude oil directly to the United States _ and led a trend among Russian companies toward hiring Westerners to improve their tainted image and their business practices.

Konstantin Reznikov, chief oil analyst at Moscow-based Alfa Bank, said one reason for the large number of Americans in the new Yukos management team likely was to try to protect it from Russian authorities. Prosecutors may be more hesitant to arrest American citizens, and aggressive moves against Yukos could draw further complaints from Washington.

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

The pro-Kremlin lawmaker who requested the investigation that eventually led to Khodorkovsky’s arrest, Vladimir Yudin, said Tuesday that he hopes prosecutors will soon react to a letter he sent them last week asking for a probe into Sibneft _ a Russian oil company that has agreed to be taken over by Yukos, forming the world’s fourth-largest oil-producing company.

In an interview with Italian journalists that was posted on the Kremlin Web site Tuesday, 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 and said it won’t lead to a massive revision of the results of the controversial privatizations of the 1990s in which tycoons such as Khodorkovsky snapping up valuable state assets at rock-bottom prices.

But the U.S. State Department last week said the actions raise questions about the rule of law in Russia and a senior State Department official told The Associated Press in Washington that politics likely was ``the driving factor″ in Khodorkovsky’s jailing.

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