Top adviser to Putin criticizes takeover of oil company by state-owned business

Illarionov assails deal as `scam of the year'

December 29, 2004|By David Holley and Sergei L. Loiko | David Holley and Sergei L. Loiko,LOS ANGELES TIMES

MOSCOW -- In an apparent sign of infighting among Kremlin aides, a top adviser to President Vladimir V. Putin harshly criticized yesterday the takeover of Yukos Oil Co.'s main production unit by a state-owned company and warned of far-reaching repercussions for Russia's economy.

"The sale of the main oil-producing asset of the best Russian oil company ... and its purchase by Rosneft company, 100-percent-owned by the state, has undoubtedly become the scam of the year," top presidential economic adviser Andrei Illarionov told an annual end-of-year Moscow news conference, speaking just days after Putin praised the deal and called it entirely legal.

"When the Yukos case began, everybody was asking, `Which will be the rules of the game?'" Illarionov said. "Now it is clear that there are no rules."

Last week, Putin described the takeover of the private oil company's core asset by a state-owned company as a step to redress injustices of Russia's post-Soviet shift to capitalism. He appeared to drop the pretense that authorities' action seeking $27 billion in back taxes from Yukos was primarily a law enforcement matter.

Critics say the Kremlin wants to get control of Yukos' assets and punish its former chief executive, Mikhail Khodorkovsky, a political foe of Putin who is on trial for alleged tax fraud and is being held in jail.

Khodorkovsky said in a letter from prison published yesterday that the dismantling of Yukos was "the most senseless and destructive event in the entire reign of President Vladimir Putin." His letter was published in a leading Russian business daily, Vedomosti, and on his personal Web site.

"The destruction of Yukos demonstrates that bureaucrats who were set free from their leash are not guided by the real interests of the state," Khodorkovsky wrote. "They simply know that the state machine exists to serve their own interests." He predicted that "very soon there will remain only one opponent of this omnivorous bureaucracy: a fierce amorphous mob."

The Los Angeles Times is a Tribune Publishing newspaper.

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