Yukos says bankruptcy is imminent

Russian oil group Yukos warned yesterday that tax demands could drive it into bankruptcy by the end of the year and called for talks with the government to strike a life-saving deal.

The country's biggest oil firm faces a £1.9bn bill for back taxes and fines for the 2000 financial year.

But it said it expected further charges for 2001, and that letters to senior officials suggesting payment by installment had been ignored. "If the tax ministry actions continue we can talk of a high probability of bankruptcy by the end of the year," Yukos said.

"At the moment there is a court order banning us from selling any property belonging to the company, including shares. While this order is in place, it is impossible for us to realise any assets in order to raise capital."

The warning came a day after a Moscow court upheld the £1.9bn bill - a decision ratings agency Standard & Poor's said increased the possibility of a liquidity crisis, a forced sale of assets or effective nationalisation. Yukos shares fell 12% to $8.36, their lowest since 2002.