Menatep Ducks Back Into the Shadows

Something is up. But what?

Following a management revamp in Yukos triggered by the arrest of its former chief executive Mikhail Khodorkovsky, changes appear to be pending within the oil giant's parent company, Gibraltar-based Group Menatep Ltd.

"I am currently in the process of discussing [the company defense] plan, including specifically with the group's [managing director] Stephen Curtis. The decision will be made tomorrow or the day after tomorrow," key Menatep shareholder Leonid Nevzlin told Interfax on Tuesday.

Curtis, a British lawyer, was appointed to run Menatep's day-to-day operations last week. It remains unclear, however, who is going to be the beneficiary of a 50 percent special trust arrangement in Menatep previously controlled by Khodorkovsky.

The identity and, most important, the actions of the new beneficiary of the Gibraltar trust are likely to be a determining factor in Yukos' struggle against legal and political pressure at home.

In a possible sign that something is afoot, Group Menatep has abruptly removed from its web site a document disclosing in detail the group's shareholder structure.

The $30 billion holding -- which in 2002 pierced the notoriously nontransparent Russian corporate world by publicizing its shareholding structure -- has once again became opaque. The now-missing list shed light for the first time on the personal wealth of Khodorkovsky and other Menatep managers and prompted other large Russian companies to follow suit.

Menatep spokesmen in London and Moscow could not clarify Tuesday whether the group's shareholder structure has changed or any new beneficiaries have been named. Menatep officials suggested recently that Khodorkovsky's beneficiary rights had been transferred to Nevzlin. On Tuesday, however, they refused to comment on the issue.

According to the original disclosure document, Khodorkovsky loses control over the 50 percent trust "in the event of ... an inability to act as beneficiary ... due to imprisonment."

Whoever is now a beneficiary of Menatep's special trust arrangement is also a beneficiary of some of the shares in Yukos arrested by the Prosecutor General's Office on Nov. 3.

"And if the beneficiaries are not related to the investigation, their rights are to be affected negatively [as the result of the arrest]," said a lawyer with a major international law firm who asked not to be identified.

The arrest by prosecutors of the 44.1 percent Yukos stake signaled a remarkable shift in how the authorities interpret the Russian Civil Code, according to a group of independent corporate lawyers polled Tuesday. A large part of the stake is held by a trust owned by offshore-registered Yukos Universal, which is wholly owned and controlled by Group Menatep.

Before the arrest, the Russian legal system, which is not based on precedent, did not recognize any stock held in a trust as belonging to a particular individual or beneficiary.

Going after a beneficiary opens the door for lawyers to argue that if a beneficiary is changed, the arrested shares should be released.

However, taking advantage of any legal opportunities that arise from a change in beneficiaries may not be the best tactic for Menatep and Yukos if they really want to protect their company, analysts said.

"If you look at the history of Yukos and Yukos management, they are masters of the offshore trust shell game," said James Fenkner, head of research at Troika Dialog.

But he added that trying to outsmart the Kremlin in this particular case could prove too dangerous.

"There are so many tentacles that can be used by the Russian state. For example, it controls the licenses to the oil fields," he said. "A solution to the Yukos conflict is unlikely to be solved by a fancy and nontransparent shell game."

A threat to play the license card was voiced by Natural Resources Minister Vitaly Artyukhov earlier this month. At the same time, the ministry together with the Prosecutor General's Office have been running numerous checkups on Yukos' compliance with production license agreements.

If Menatep comes up with a defense plan that tries to drag the Prosecutor General's Office into international courts, the Yukos crisis will escalate, said Kremlin-connected political analyst Sergei Markov. "This would mean that Yukos is continuing the fight," he said.

"And the point of the powers-that-be is that one shouldn't really act according to the letter of the law in this case," he said. "Yukos would win the game by playing according to the letter of the law because it is richer. But if the fight goes on, other methods will be used by the state."

Markov said the fight over Yukos could echo the ongoing saga at Swiss-based Noga, a company that to this day is trying to seize Russian government-owned assets over a disputed $60 million debt from oil-for-food deliveries in the early 1990s.

"But then, who knows? Charges against Khodorkovsky could broaden to homicide," Markov said.

Nevzlin, meanwhile, said Tuesday that talks on possible sale of a stake in Yukos to a strategic foreign investor were still under way. He refused to identify who is negotiating on Yukos' behalf.