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Moscow Arbitration Court upholds $670 mln tax claim vs. RussNeft -1

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MOSCOW, August 10 (RIA Novosti) - The Moscow Arbitration Court upheld a back tax claim of about 17 billion rubles ($670 million) against private oil company RussNeft for 2004-2005, a RIA Novosti correspondent reported from the courtroom.

The court ruling rejected the Russian company's appeals against tax authorities, but slightly reduced the size of the claim.

On January 16 the Federal Tax Service announced its claims against RussNeft, one of Russia's top 10 oil and gas companies, for 2003 and the first quarter of 2004. Two weeks later, the Interior Ministry's investigative committee launched a probe into large-scale tax evasion by the company.

In late July, the court upheld claims worth 3.7 billion rubles (about $145 million). The court slightly reduced the figure, partially granting RussNeft's appeal.

Investigators from Russia's Interior Ministry said Wednesday they had seized on a court order 100% of RussNeft's securities as collateral for the claims, and as part of an illegal business probe against the head of the company.

CEO Mikhail Gutsiriyev, who denies the allegations against him, and has not yet been formally charged, resigned on July 30.

In a statement briefly posted on the company's Web site on July 30, Gutseriyev said he had been forced to resign and sell the oil business under pressure from prosecutors and tax authorities. However, the tycoon later said the decision to sell RussNeft was made by shareholders, and that the company would be sold at market value.

Earlier the company reported that Kremlin-friendly industrial holding Basic Element, controlled by billionaire Oleg Deripaska, had applied to the Federal Anti-Monopoly Service for permission to acquire a controlling stake in RussNeft. Under Russian law, the service must make a decision within three months. A source close to the negotiations said the deal could be worth $6.5-$7 billion.

If charged and convicted, Gutsiriyev faces up to six years in prison, in a case reminiscent of legal battles for the now bankrupt oil firm Yukos, widely seen in the West as punishment for its founder Mikhail Khodorkovsky and as part of a Kremlin campaign to regain control of oil and gas assets.

RussNeft has recoverable reserves of more than 630 million metric tons (4.6 billion barrels) of oil, and produces around 17 million metric tons (125 million bbl) annually.

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