Ministry lawyers challenged all the three judges now that pleadings have started. Ministerial spokesmen suspect the court president of bias and personal interest in the verdict. They have also increased their claim by 400,000 roubles, a Novosti reporter said from the courtroom.
In a resolution of April 14, the ministry evaluated Yukos back taxes plus fines at 99.375 billion roubles to bring a law suit for the sum the next day.
The ministry accused the Yukos, Russia's largest oil company, of tax evasion and profit underrating on many cunning patterns-in particular, by registering its affiliates and their branches in soft taxation areas and closed administrative territories, with fiscal bylaws all their own. The former instance implied contracts with Mordovia and Kalmykia-autonomous republics in Russia, and the Evenki autonomous area to oblige Yukos-controlled companies based there to invest in the host areas' economy and provide job opportunities. The host administrations rewarded them with exemption from profit and property taxes and fees to the road construction and maintenance fund.
The latter arrangement, for closed territories, concerned urban settlements in the Chelyabinsk, Sverdlovsk and Nizhni Novgorod regions and reduced tax rates for industrial companies with activities limited to those areas. The terms required more than 70 per cent of corporate assets confined to the host areas, and local residents to make a personnel majority.
As ministry spokesmen have it, the Yukos-related network failed to meet investment obligations in the host areas. The ministry regards them as men-of-straw, who were allegedly purchasing petroleum from drilling companies under the Yukos for reduced prices to sell it off at free market rates. The Tax Ministry thus accuses the Yukos of illegally saving the specified sum.
The company regards the ministry claim as unlawful and ungrounded. The ministry had no leg to stand on, and the arbitration court stooped to numerous procedural violations in the hearings, say Yukos spokesmen.
Valeri Korotenko, president of the body of three judges who are considering the claim, is perfectly unprejudiced, he hotly reassures.
"The ministry challenge came as some shock. I have no immediate interest in the dispute, and make it a point to proceed from the federal Arbitration Procedural Code. I have a working record of eight years as judge-and I think my competence is beyond doubt," said the judge.
