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Stop, look and listen

  • 2002-08-29
A cursory look at Yukos' takeover of the Lithuanian oil group Mazeikiu Nafta has led most in Lithuania to fear the worst. Hostility began to simmer the moment the deal was announced last week and has been bubbling with nationalistic slogans and contempt since.

To a point its obviously understandable. Yukos is a big Russian oil company and many in Lithuania, and the rest of the world for that matter, don't have a lot of faith in large Russian companies. Their reputation for corruption and mismanagement precedes them wherever they go.

Then there is Russia's historical legacy, which most countries this side of Berlin have trouble shrugging off.

But make no mistake, Yukos is not your typical Russian company.

Probably no other large company in Russia is managed as well as Yukos, the sixth largest oil company in the world in terms of reserves.

It's strategy has been to pump more at a lower cost and get the oil to the lucrative European and North American markets. That's why it bought a controlling share in Mazeikiu.

But perhaps just as important is the makeover the company has undergone in recent years, mostly thanks to CEO Mikhail Khodorkovsky.

Throughout the 1990s Khodorkovsky was one of the infamous oligarchs accused of plundering corporate Russia and chasing off shareholders — many of them from abroad — through shady offshore deals conducted under a cloud of secrecy.

But that has changed. Khodorkovsky is among a new set of Russian tycoons who have made heaps of cash and now want to shed their bandit image for one of refinement.

Khodorkovsky has shaved off his moustache and gotten rid of his tinted eyeglasses in favor of the more stylish rimless sort worn by top corporate brass elsewhere.

He has even consulted with British aristocracy on the ins and outs of philanthropy.

For Yukos shareholders and subsidiaries like Mazeikiu Nafta that's a good thing.

Yukos now follows U.S. generally accepted accounting principles (GAAP), it has added five foreigners to its 15-member board of directors and a quarter of the top management is non-Russian. Lord David Owen, the former British foreign secretary, chairs Yukos International.

The company paid out $500 million in dividends last year and have made a point of making their ownership structure public.

Yukos' share price and market value have soared in response, setting the stage for a listing on the New York Stock Exchange planned for this fall.

It would be unfortunate if politics and misplaced stereotypes in the way of what could be the best thing to ever happen to Mazeikiu Nafta. It's time to let people who now how to run oil companies run Mazeikiu Nafta.