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Cablegate: Transpetrol Negotiations Off to Slow Start

VZCZCXRO0975
PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHSL #0631/01 3340756
ZNY CCCCC ZZH
P 300756Z NOV 07 ZDK
FM AMEMBASSY BRATISLAVA
TO RUEHC/SECSTATE WASHDC PRIORITY 1346
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHKV/AMEMBASSY KYIV PRIORITY 0031
RUEHMO/AMEMBASSY MOSCOW PRIORITY 0667
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 03 BRATISLAVA 000631

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/27/2017
TAGS: ENRG ECON EPET PREL LO RS
SUBJECT: TRANSPETROL NEGOTIATIONS OFF TO SLOW START
FOLLOWING FAVORABLE COURT DECISION

REF: A. BRATISLAVA 561

B. MOSCOW 5350

BRATISLAVA 00000631 001.5 OF 003


Classified By: Deputy Chief of Mission Lawrence R. Silverman for reason
s 1.4 b) and d)

1. (C) Summary - As a result of the October 31 Dutch Court
decision that returned control of Yukos Finance (YF) to the
Khodorkovsky-appointed directors Dave Godfrey and Bruce
Misamore, YF and Slovak government officials have restarted
negotiations that were halted in 2006. The court decision
will certainly be contested by Monte Valle, the American-led
investment group that purchased the stake from Yukos Oil in a
Moscow auction in August, but even the Slovak Government now
recognizes that the situation has again shifted and Godfrey
and Misamore are once again the recognized representatives of
YF. The November 20 meeting between Economy Minister Lubomir
Jahnatek and YF representatives did not achieve the aim of
rebuilding goodwill and kickstarting more detailed
negotiations. Each side left frustrated, feeling that the
other was inflexible in its position and unwilling to engage
in a constructive dialogue. The GOS knows that it will
regain management control whether it buys back the stake or
if it is sold in an auction, but the buyback remains the
least risky option and would finally give the government the
control it has sought for the last 16 months. End Summary.

KHODORKOVSKY-APPOINTED DIRECTORS REGAIN CONTROL OF YUKOS
FINANCE
---------------------------------
------------------------------

2. (U) In a much-anticipated October 31 court decision, the
District Court of Amsterdam returned control of YF to the
Khodorkovsky-appointed directors Godfrey and Misamore. The
successful appeal overturned an August 11, 2006, decision
that had given the Russian court-appointed Yukos receiver
Eduard Rebgun control of Yukos Finance. The Amsterdam court
ruled that the Russian bankruptcy order that had appointed
Rebgun as the bankruptcy trustee was not in accordance with
Dutch principles of due process, and thus cannot be
recognized. All actions taken on behalf of Yukos Finance by
Rebgun, including the appointment of Shmelkov and Hogerbrugge
as directors, were deemed null and void by the 10/31
decision.

3. (SBU) The sale of the 49 percent stake in the Transpetrol
pipeline has been held up since the August 2006 decision over
competing claims to the asset by Godfrey and Misamore, who
maintained control of the YF daughter company Yukos
International (YI), and Rebgun. After the positive court
decision, Godfrey and Misamore are moving quickly to regain
control of YF and to lay the groundwork for an eventual sale.
As a first step they need to get themselves re-appointed as
the official directors of the company and have their names
put back on the Dutch Commercial Registry, which is the
official document that the Slovak Government refers to in
determining who can represent YF's shareholders' rights at
Transpetrol shareholders' meetings. Godfrey and Misamore
have appealed to the court for this to happen and expect the
issue to be resolved by the end of December, according to
local YF representative Jan Kridla.

BUT LEGAL HURDLES REMAIN
------------------------

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