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. Last Updated: 07/27/2016

Tax Service Launches Russneft Suits

Itar-TassLawsuits against 11 firms linked to Russneft may allow the government to take control away from Gutseriyev.
Pressure on Mikhail Gutseriyev's Russneft grew as the Federal Tax Service on Wednesday announced eight lawsuits against the midsized oil producer's current and past shareholders.

The lawsuits against 11 companies, filed in April over share sales, may allow the government to confiscate these shares and take control of Russneft.

The announcement of legal action is the latest blow to Gutseriyev, whom police charged with fraud last month after authorities accused Russneft of exceeding its production quotas. Gutseriyev, previously believed to have Kremlin connections, denied that he was charged.

As the onslaught on Russneft and its majority owner Gutseriyev widened, the company's production slumped in the first five months of this year, compared with the same period last year, apparently due to a lack of investment, an oil analyst said.

Shareholders are now facing accusations from the Federal Tax Service that they bought and sold their shares contrary to "foundations of the rule of law and morals," a tax service spokeswoman said, declining further comment.

It was not clear Wednesday why the Federal Tax Service was challenging the share deals.

Russneft spokesman Eduard Sarkisov did not return repeated calls seeking comment. Earlier this month, Gutseriyev said through Sarkisov that he would agree to interviews only after the situation surrounding the company returned to normal.

The Moscow Arbitration Court said Thursday that it had accepted the lawsuits, Interfax reported.

Russneft's troubles are believed to originate from its refusal to fold into a state-run oil and gas major such as Rosneft or Gazprom. Another reason could be its purchase of Yukos assets that were apparently coveted by state-run firms.

If tax officials prove that Russneft acted with malicious intent, they will be able to confiscate the shares, said Nikolai Averchenko, a lawyer at law firm Egorov Puginsky Afanasiev & Partners.

"Everything will depend on the ... judge's discretion," Averchenko said. "Lawyers call these criteria of rule of law and morality bendable."

Prospects for the lawsuits are uncertain, he said, because courts normally throw out similar claims by the tax service. On the other hand, a Moscow court ruled in favor of the taxmen in the latest such case, brought against PricewaterhouseCoopers' Russian unit, but that ruling has not taken effect yet and is being appealed.

The share sales disputed by the Federal Tax Service could relate to the consolidation of the company in the past four years, said Konstantin Cherepanov, an oil analyst at Rye Man and Gor Securities in Moscow. Russneft began from scratch in 2003 and emerged as a serious player after a shopping spree for assets, aided by commodities trader Glencore.

In one 2005 purchase, it bought Yukos' 50 percent stake in Zapadno-Malobalykskoye, a Siberian joint venture with Hungarian oil firm MOL, as Yukos came under legal attack from the state. In 2006, Gutseriyev attempted to buy Yukos' stake in Transpetrol, a Slovak oil pipeline company, but the Slovak government blocked the sale.