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Yukos CFO Warns of Potential Accidents

MOSCOW -- Yukos CFO Bruce Misamore said mounting legal pressure on company management is jeopardizing the oil giant's operations and increasing the likelihood of accidents at the company's production fields, according to the Moscow Times.

"We are doing our best to make certain the company is operating safely. But if we've got prosecutors calling people in for questioning and threatening criminal charges against managers in the field, [managers] are not going to be concentrating on preventing accidents, or directing their attention on what they ought to be doing," Misamore said by phone from London. Fearing arrest, several Yukos executives have fled the country.

"The government is increasing the level of risk in an already risky situation," Misamore said. "It's a risky business, period."

Authorities started seizing a large chunk of Yukos's operating revenues in summer to cover outstanding tax claims, preventing the company from spending as much as it normally does preparing its Siberian production facilities for winter. Despite paying off more than $4 billion, claims against the company have since risen to more than $20 billion.

Misamore's comments came after Yukos's management board issued a statement from London saying increasing pressure from prosecutors, the forced sale of its main production unit, Yuganskneftegaz, and massive new tax claims had destroyed any chance of saving the company.

With no hope of reaching a settlement, Yukos is now forwarding only two options for shareholders to consider at an extraordinary meeting: bankruptcy or liquidation. The meeting is scheduled for Dec. 20, one day after the government plans to auction off Yuganskneftegaz at a starting price of $8.65 billion.

An anti-crisis plan designed to pave the way for a settlement with the government and maintain operations till 2009 has now been lifted from the meeting's agenda, the statement said. "There would be no prospect of the board executing such a plan," it said.

The statement also said the board had agreed to develop "a short-term emergency plan" to prevent technical accidents and social tensions from happening following the forced sale of Yugansk. But "the unprecedented daily pressure on Yukos managers from the prosecutor general's office now forces the management board to question if this emergency plan can be fulfilled," it said.

Responsibility for damage to Yukos now lies in the hands of prosecutors, it added.
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