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. Last Updated: 07/27/2016

Tax Chief Orders Assets Seized at 3 Oil Giants

Postponing earlier threats to cut off export pipeline access to oil company tax debtors, tax chief Boris Fyodorov ordered the tax service Thursday to seize the assets of three oil companies.

Repeating tactics used against Gazprom last month, State Tax Service officials announced they had begun seizing buildings, cars and apartments belonging to the managers of Sidanko, Onako and a Yukos subsidiary, Eastern Oil Co.

"The tax service ordered the implementation of all measures to guarantee the debt repayment," Vladimir Popov, head of the department responsible for forcibly collecting company tax debts, said at a news conference, Reuters reported. "The seizure [of assets] has already begun."

Analysts criticized officials for backing down on threats to impose export cuts and noted that two of the government's targets -- Eastern Oil and Onako -- are partly owned by the government.

The tax service said Sidanko owed 737.8 million rubles ($119 million) and Onako 214.5 million rubles. It did not reveal Eastern's debt.

A spokesman for Sidanko, the biggest of the three targeted companies, said late Thursday that nothing had been seized.

"We received a letter from the tax service that it is ready to take this kind of action, but so far, no concrete action has been taken," spokesman Denis Davydov said.

In a statement, Eastern Oil did not say whether asset seizure had begun but called the government's decision "economically ill prepared."

The company noted that payment of Eastern's tax debt was supposed to have been a condition of a privatization tender for 34 percent of the company. But the government has twice failed to sell the share packet, leaving Eastern with the debt, the statement said.

"The owner of one of the biggest packet of Eastern shares remains the government," the statement said.

One oil analyst said he was unimpressed with the actions, criticizing the government for abandoning a punishment that would have truly hurt companies -- cutting off exports.

"I am skeptical that seizing a few Mercedes is going to help," said the analyst, who asked not to be identified.

The government would be far more likely to get companies' attention by preventing them from exporting oil and thus cutting their primary access to cash payment, he said, but that plan, too, has its drawbacks.

"If they were to cut off Sidanko, then the chances of them getting any money for taxes would decrease," he said.

Sidanko is controlled by Vladimir Potanin's Uneximbank, while the privatized stake of Eastern Oil is owned by the holding company Yukos, run by Mikhail Khodorkovsky. Onako is 85 percent government-owned.

Fuel and Energy Minister Sergei Generalov told reporters Thursday that the government was still reviewing cutting exports to debtors, and that Deputy Minister Viktor Ott would make the final decision after reviewing new data from the tax service, Interfax reported.

At the same time the tax service was announcing a crackdown on tax debtors, the Fuel and Energy Ministry came out in support of the nation's highly taxed oil producers, saying a commission has been formed to create a more "flexible tax system."

The ministry issued the statement following a Wednesday meeting between Prime Minister Sergei Kiriyenko and oil company executives at which the pressing issue of taxation was discussed.

In the next few days, a commission including oil company executives and government representatives will forge a tax system "that will take into account international circumstances and other external factors," the statement said.

World oil prices have fallen about 70 percent since October, leaving Russian producers struggling under the weight of massive taxes.

The World Bank and the International Finance Corp. will also participate in the commission, the statement said.