[3] Courts in several countries later ruled that the real intent was to destroy Yukos and obtain its assets for the government, and act politically against Khodorkovsky.

[8] The Parliamentary Assembly of the Council of Europe condemned Russia's campaign against Yukos and its owners as manufactured for political reasons and a violation of human rights.

The European Court of Human Rights ruled that there had been unfair use of the legal and tax system; the Arbitration Institute of the Stockholm Chamber of Commerce, an established neutral body used by Russia and the West since the 1970s for trade disputes,[10] concluded that the government's action was an "unlawful expropriation" using "illegitimate" tax bills, whose effect was intended to "destroy Yukos and gain control over its assets".

An arbitral tribunal at the Permanent Court of Arbitration in The Hague ruled unanimously upon awarding compensation of $50 billion for the company's assets, that Yukos was the target of a series of politically motivated attacks by Russian authorities that eventually led to its destruction, and that Russia had expropriated Yukos' assets in breach of the Energy Charter Treaty.

During 1995 and 1996, with Russia in economic difficulty, many large state-owned industrial businesses were privatized in a second round of reorganization ("Loans for shares"), in which major state assets were sold off through – and often to – Russian commercial banks in a series of rigged auctions whose participants were limited to favored bidders with political connections.

Since the state was very weak, these "New Russians" paid little or no taxes on their purchases" "Much of the second wave of privatization that did take place—in particular, the "loans-for-shares" scheme, in which major Russian banks obtained shares in firms with strong potential as collateral for loans to the state—turned into a fraudulent shambles, which drew criticism from many" In Putin and the Oligarch, Richard Sakwa offers a second perspective, that with oil prices varying from $16 to $25 a barrel, and great political and economic uncertainty, it was "unclear" at the time of the auction how much a company like Yukos was "actually worth", and concludes that perhaps the auctions were not wildly mispriced within the context, but regardless, they were a public relations disaster which "came to symbolize the flawed transition [of privatization] as a whole".

The initial period of "oligarchic privatization" was characterized by ruthlessness and bloodshed, with those having power sometimes compared to 19th century robber barons, and Yukos was no exception.

[citation needed] "When the former banker acquired his 36% stake in Yukos... most people assumed he would cash out as soon as a rich opportunity presented itself.

Yukos however recovered very quickly and, in the course of the next few years, became one of Russia's largest oil companies, one of the world's largest non-state oil companies, but more significantly, a leader in Russian corporate governance reform and corporate transparency,[32] with Khodorkovsky being widely seen as a pro-democratic reformer who advocated for international co-operation and against corruption in Russia.

In 2002 four companies – Yukos, Lukoil, TNK and Sibneft – established a consortium to build a pipeline from Western Siberia to Murmansk.

Yukos had five Americans on its board, and Khodorkovsky's charity "Open Russia" listed Henry Kissinger and Lord (Jacob) Rothschild as chairmen.

[35] In April 2003, Yukos agreed to a merger/takeover with Sibneft, to create the fourth largest private company in the world, although this merger became undone in the aftermath of the October 2003 arrest of its CEO.

[36] Although weak at the time of the auctions and the economic downturn of the mid-1990s, from 2000 the government under new leader Vladimir Putin grew in strength, until it became able politically to outweigh the power of the oligarchs.

Leonid Bershidsky, founder of Russian business newspaper Vedomosti, wrote: "Any of the oligarchs could have faced similar charges; Khodorkovsky's imprisonment made them so docile that Putin confined himself to making an example of just one victim".

[38] At the time of his arrest, Khodorkovsky was believed to be the wealthiest man in Russia and was listed by Forbes as the 16th richest person in the world, with a fortune estimated at $15 billion.

His eventual sentence in 2005 was for 10 years, and attracted widespread international concern related to a perceived political motivation and lack of due process.

[39][40] (The European Court of Human Rights eventually ruled that while the arrest and several other points were unlawful,[41][42] he was not a "political prisoner" since the charges against him had been based on reasonable suspicion.

In December 2004, Yuganskneftegaz was sold for $9.35 billion in a closed-room auction of just two bidders (one of which, Gazpromneft, was subject to a US court injunction and did not enter a bid [citation needed]), and an unknown front company called Baikalfinansgrup which had been registered a few days before the auction, and whose bid was financed by state-owned oil company Rosneft.

[46] On February 7, 2006, in response to a question posed by a Spanish journalist, Russian President Vladimir Putin disclosed that Rosneft had used Baikalfinansgrup as a vehicle to acquire Yuganskneftegaz to protect itself against litigation risks.

A general crackdown on such tax evasion practices began with Putin's presidency, with numerous companies closing or purchasing their trading vehicles.

The reason given was to prevent a group of shareholders led by Khodorkovsky from selling a large stake of the company to the US oil firm Exxon.

The Russian Government sold Yukos's main production unit, known as Yuganskneftegas, at auction on December 19, 2004 to recover some of US$28 billion in alleged tax debts, following the loss of an appeal by the firm.

It accused the Russian authorities of "an unprecedented campaign of illegal, discriminatory, and disproportionate tax claims escalating into raids and confiscations, culminating in intimidation and arrests".

Executives Mikhail Brudno and Vladimir Dubov fled to Israel in 2003, and were seen on February 2, 2005 in Washington, D.C. at an official function for President George W.

[61] The Yukos Oil Company's former shareholders and management filed a series of claims in courts and arbitration panels in various countries, seeking compensation for their expropriation.

[73] On 20 April 2016 the District Court of The Hague set aside the decisions of the PCA, ruling that it had no jurisdiction as provisional application of the ECT arbitration clause violated Russian law.