Episodios
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“I believe that Yukos was Putin’s first foray into trying to test the West… and the West fell flat on their faces - they did absolutely nothing to help the Western shareholders in Yukos.” The lack of response from the West during the Yukos Affair encouraged Putin’s tyranny. Putin’s Oil Heist is an insider’s account of the Yukos Affair. In this final episode, Loren Steffy draws a line from the 2022 invasion of Ukraine back to the expropriation of Yukos in the early 2000s, with first-person accounts from former Chief Financial Treasurer, Bruce Misamore.
Hear him talk about:
The West’s inaction. Yukos, in its bid to embrace Western standards of capitalism in the hopes of gaining a New York Stock Exchange listing, hired Misamore and other American shareholders. But when Putin’s government trumped up tax charges and used them to seize the entire company without compensating those shareholders, the US government did nothing. Misamore claims they could have made government-to-government claims on behalf of the shareholders that were harmed. The West’s failure to act became a pattern in the following years, which only emboldened Putin.
Putin’s grand plans. Had the invasion of Ukraine gone the way he wanted, it’s likely that Putin wouldn’t have stopped there, Misamore contends. Putin regrets the fall of the Soviet Union, and there have been hints throughout his presidency that suggest his intention to revive it. His next logical target, after Ukraine, would have been Moldova, and then the rest of Georgia. The resistance of the Ukranians seems to have halted Putin’s thirst for conquest.
The Russian people. The innocent citizens of Russia are not responsible for the actions of their government. Though Putin has improved their standard of living to keep up his popularity, they could easily be talked into going the other way. However, they’re scared and docile, behavior instilled by centuries of violent history, and they fear the dire consequences of rebellion. In addition, the government’s crackdown on independent media, prevents the people from getting an accurate view of the war in Ukraine.
How the Yukos Affair influenced other companies’ attempts to do business in Russia. One such situation involved a joint venture between BP and the Russian company TNK, which eventually devolved into the same tensions that pervaded the Yukos steal. The Russians bristled at Western efforts to control the operations, which led to reports of break-ins at BP executive Bob Dudley’s Moscow apartment, threats of him being detained, and even word that there was poison found in his blood. Dudley, who later became chairman of BP before retiring in 2020, wound up fleeing Russia and the venture was sold to Rosneft.
Resources
Loren Steffy on LinkedIn
Stoney Creek Publishing -
“The company was liquidated in 2007.” As far as most of the world was concerned, that ended the Yukos Affair. But Bruce Misamore was still outraged at what Vladimir Putin had done to his friend and his company, and he wasn't about to stop fighting. Putin’s Oil Heist is an insider’s account of the Yukos Affair. In this episode, host Loren Steffy details Misamore’s efforts to salvage what he could of Yukos, with first-person accounts from the former Chief Financial Treasurer.
Hear him talk about:
The fight to recover Yukos assets outside of Russia. Misamore still wanted to return the stolen value to the company’s shareholders, despite being officially retired. The cases, which spanned the globe, were numerous, and some are still pending. The largest group of shareholders in Yukos’ Netherlands subsidiaries brought an international arbitration proceeding there in 2014 to recover pilfered assets. Russia was ordered to pay $50 billion dollars, but it appealed that decision to the Dutch Supreme Court. This was the Russians’ tactic: if they lost case, they would appeal as often as they could simply to delay cases.
The European Court of Human Rights. In 2004, Misamore and a human rights attorney filed a case against Russia to the ECHR in an attempt to protect their rights. The Court agreed to hear the case in 2010, and in 2014, ruled in Yukos’ favor, saying that the Russian government’s seizure of Yukos “threatens the very integrity and legitimacy of the European Convention on Human Rights.” They ordered the Russian government to pay $2.6 billion in damages related for the Yukos seizure, the largest judgment in the court's history. The Russian Duma passed a law that disallowed Russia from honoring any case deemed unfair to them, but the ECHR did not accept the legislation’s legitimacy.
Another scheme to protect Yukos. In 2005, Yukos’ executives moved all of Yukos’ international assets into two Dutch foundations they formed, called stichtings, and Misamore was a director of both. One was based in Cyprus, and the other held assets based in the Netherlands. The Russians were livid that he had managed to move Yukos’ assets beyond the government's reach, which may have been another motivation behind the burglary of Misamore’s home in Houston.
Legal battles over the stichtings. Even now, Misamore is still under criminal investigation for the theft of $10 billion Yukos assets, which is what the Russians contend was the value of assets they moved into the stichtings. The stichtings were involved in two other legal battles, one of which they recently won. The remaining case involved a subsidiary of Yukos that owned their treasury shares but received no money for the shares when they were expropriated.
Resources
Loren Steffy on LinkedIn
Stoney Creek Publishing -
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“These were professional thugs that had been hired by the KGB, known as the FSB in Russia today, but they're still the KGB.” Even though he’d fled the country, Bruce Misamore couldn’t seem to escape Russia’s reach. Putin’s Oil Heist is an insider’s account of the Yukos Affair. In this episode, host Loren Steffy describes Misamore’s swift exit from Russia and its consequences, with first-person accounts from the former Yukos chief financial officer.
Hear Misamore discuss:
Leaving Russia. Saddled with crippling and, according to Misamore, illegal tax liabilities, Yukos was drifting towards insolvency. During his stay in London for an industry conference in November 2004, Misamore got a call warning him not to go back to Moscow or he would be arrested and face prosecution. He heeded the warning, but his wife was still in Russia. And she seemed to be under surveillance.
Bankrupting Yukos. Convinced that the Russian government was orchestrating a scheme to either take over Yukos or seize all of the company’s oil and gas assets, Misamore began talking to lawyers about what legal recourse Yukos executives might have to stop the looting of the company. Attorney Mark Baker came up with the idea of intentionally bankrupting the company and getting it into a legitimate jurisdiction in the United States. U.S. bankruptcy laws essentially freeze time for companies while they figure out their next move. But there was a problem: a Russian company with no U.S. assets had no grounds for filing a proceeding in the United States.
Stopping the auction. While Misamore was in London, the Russian government announced an auction of Yukos' principal production subsidiary, Yuganskneftegaz, to settle some of the tax claims against Yukos. Misamore hadn’t planned or prepared to flee Russia, so he hadn’t taken any documents with him. However, he realized he had all he needed to move forward with a U.S. bankruptcy case: his company laptop. As an officer of Yukos living in Houston in possession of a company asset, he had grounds for a filing. A federal bankruptcy judge agreed, ruling the filing was legitimate and that she had jurisdiction because of Misamore and his laptop. The filing created a court-issued injunction to stop the sale of Yuganskneftegaz.
The plan’s contact with the enemy. Russia went ahead with the auction, but couldn’t get financing from international banks. The move caught the Kremlin off guard but it wasted no time in responding, assembling a legion of attorneys in the U.S. Ultimately, Misamore’s bankruptcy tactic failed because Russia refused to cooperate. Misamore attempted to run Yukos from London, where they had established the company’s new headquarters. Three months after Khodorkovsky’s conviction in 2006, Misamore and his wife came home after dinner in Houston to find their house had been burglarized. Among the things stolen were Misamore’s company laptop, and $30,000 worth of jewelry.
Resources
Loren Steffy on LinkedIn -
“We really didn't have much of a choice, as one of the largest oil companies in the world, other than continuing to run it and implement our strategies.” Yukos was left reeling after their CEO was arrested. Putin’s Oil Heist is an insider’s account of the Yukos Affair. In this episode, host Loren Steffy follows up on the arrest of Mikhail Khodorkovsky and the theft of Yukos with first-person accounts from Bruce Misamore, former Chief Financial Treasurer.
Hear him talk about:
The incarnation of Misamore’s worst fear. In the months after the arrest, Vladimir Putin made his thoughts on foreign executives like Misamore running one of Russia’s biggest oil companies very clear. He levied large tax charges on Yukos, and despite being cleared by Russian tax authorities, they were under fire two months later from a random tax assessment that totaled some $30 billion. Khodorkovsky attempted to distance himself from Yukos after his arrest to avoid dragging the company down with him, disposing to his partners all his shares in an attempt to keep the Kremlin away from Yukos. Unfortunately, it did not work.
Khodorkovsky’s threat to Putin. By 2003, Putin had viewed Khodorkovsky as a political rival. Taxes were Putin’s weapon of choice for eliminating political threats. Even before his arrest, Yukos was facing inquiries from Russian tax authorities about the state of its taxes.
The fabrication of fraud. The government began assessing taxes on Yukos going back four years, and the numbers kept growing. In some of the years, the tax assessments exceeded the company’s gross revenue - it was all clearly fake. Still, trying to battle the tax claims in court proved futile, as the judges were quite literally told over the phone how to rule.
Misamore’s efforts to save Yukos. Thwarted at every turn, Misamore decided to go on the offensive as much as he could. He called one of Yukos’ international lawyers asking how to protect their rights in Russia, and they came up with the European Court of Human Rights. They hired a specialist attorney and filed a case against Russia in April 2004, which they ended up winning. Despite this, however, Yukos’ assets were frozen, and the company was drained of resources by the repeated tax levies and penalties. The final blow came from Rosneft,the state-controlled oil giant. Rosneft used a syndicate of lenders to force Yukos into bankruptcy using the loans that the banks had made to Yukos for oil export contracts. Misamore, though, wasn’t about to give up.
Resources
Loren Steffy on LinkedIn
Stoney Creek Publishing -
In the early 2000s, Bruce Misamore moved to Moscow to work for Mikhail Khodorkovsky at Yukos. Yukos was growing rapidly, but Russian President Vladimir Putin wasn’t pleased with the growing influence of Westerners at Russian companies. Putin saw threats to his power everywhere, and the government passed legislation limiting foreign investment. Misamore found himself in the middle of a hurricane. Join Loren Steffy and Bruce Misamore for the second episode of Putin’s Oil Heist.
Learn About:
How Putin ousted Yeltsin supporters from their positions in a return to a less democratic Russia.
The speed of growth Yukos experienced, and how the owners and investors in the company began to think about diversifying economically and geographically. The company wanted to expand, and the fastest way to grow an oil company is to buy or merge with others.
The drawbacks in merging with another Russian oil company. Bruce talks about the challenges in making representations to the New York Stock Exchange, and how he believed it would be impossible to provide the necessary transparency if Yukos acquired another Russian company.
The straw that broke the camel’s back when it came to Khodorkovsky and Putin's relationship. The Americanization of Yukos had gone too far.
What it was like for the employees at Yukos when Khodorkovsky was arrested—and what it meant for Russia’s economic future. -
Putin's Oil Heist Episode 1: Putin’s Plan
“If you want to understand the story behind the story of Russia's invasion of Ukraine, you can draw a straight line back to the Yukos Affair.” The demise of Yukos, Russia’s second-biggest oil company, marked the first time that Vladimir Putin tested the West, watching to see how the West would respond to the seizing of the company’s assets, Bruce Misamore says. Putin’s Oil Heist is an insider’s account of the Yukos Affair. In this pilot episode, host Loren Steffy explores how it unfolded, with first-person accounts from Misamore, the company’s former Chief Financial Treasurer.
Learn About:
Bruce Misamore’s expectations when he went to Russia in the early 2000’s. When Vladimir Putin rose to power, he was seen as someone who wanted to reform the Russian government and strengthen ties with the West. Bruce thought he’d be helping to modernize and establish new standards for Russian business to operate in the global market.
Mikhail Khodorkovsky’s rise to riches. Prior to being Misamore’s boss at Yukos, Khodorkovsky was a communist youth leader who started a business selling imported computers with some friends. With the money they made from the PC business, they started a bank, Menatep, and helped keep the Russian government afloat by buying assets from struggling state-owned businesses. Among the companies Menatep controlled was Yukos.
How Misamore came to work for Yukos. By the year 2000, Khodorkovsky had positioned himself as the leading practitioner of normalized democratic capitalism in Russia and insisted on making Yukos more transparent by bringing in foreign directors to establish internationally recognized standards for the company’s operations. Despite Khodorkovsky’s reputation of questionable business dealings, Misamore felt that he was sincere in his passion for Yukos.
Yukos’ role as a model for Russian businesses in the global marketplace. It became the first Russian company to publish quarterly financial statements that adhered to the U.S. generally accepted accounting principles, or GAAP. Yukos became Russia's largest oil and gas company and the only large Russian company with no state ownership. They were the fastest growing oil company in the world by rate of both percentage and actual production, and the best performing international equity, both in emerging markets as well as the oil and gas markets. -
Putin's Oil Heist is 6-part series by Loren Steffy is exporing the Yukos Saga - and traces a direct line from it to Russia's invasion of Ukraine this year. Bruce Misamore, a former Yukos Oil executive, shares his experience being on the front lines of the worlds largest state-sponsored theft.
