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Russia Energy Co. Probed Over Taxes

September 21, 2000

MOSCOW (AP) _ Moscow’s tax police have opened a criminal case against the leadership of Russia’s electricity monopoly, Unified Energy Systems, accusing the energy giant of tax evasion, company officials said Thursday.

The case puts more pressure on the company, already burdened by billions of dollars of customers’ unpaid debts, and signals the government’s intention to significantly increase tax revenues.

UES operates the country’s high-voltage grid and holds stakes in most Russian regional energy companies. The government owns 51 percent of UES.

Kuzma Shalenkov, chief of the tax police operations department, told reporters that UES had failed to pay 3.2 billion rubles ($115.1 million) in taxes. He did not specify over what period the tax debt had accumulated.

The criminal case was opened on Aug. 28, following audits made at the UES main office in July and at the beginning of August, Shalenkov said. The tax police are investigating why UES has not paid the tax bill.

``If the tax debt is repaid, the criminal case will be closed,″ Shalenkov said, according to the Interfax news agency.

The utility, half-owned by the state, is caught in a web of financial problems. It has been unable to collect outstanding bills, recently estimated at 140 billion rubles ($5.1 billion), from customers including the military, schools and hospitals.

``UES does indeed owe taxes,″ a company official said by telephone. However, he said that the company had agreed to pay the arrears by the first quarter of 2001.

UES is headed by Anatoly Chubais, a former finance minister and deputy prime minister who spearheaded a controversial state assets privatization program in the 1990s. Under the plan, a few well-connected insiders grew rich, while the vast majority of Russians did not benefit.

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