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ROSNEFT BOUGHT YUGANSK BY PROPER MARKET RULES - IVANOV

NEW YORK, January 14 (RIA Novosti) - The deal that made Rosneft the owner of Yuganskneftegaz was made by proper market rules, Defense Minister Sergei Ivanov said in his speech at the Council on Foreign Relations here.

"All actions by Russian law enforcement and tax agencies with regard to Yukos were taken in strict compliance with our legislation," he said. "This also goes for the recent auction as a result of which the state-run company Rosneft became the owner of Yuganskneftegaz, an oil-producing unit of Yukos. ...It should be said that the deal was made by proper market rules."

"The state used perfectly legal mechanisms to ensure its economic interests, unlike the early 1990s when many market players used various tricks during privatization, including some that violated the legislation, to get hold of state property worth billions of dollars," the minister said.

He also mentioned the hearing of the Yukos case in the Texas court. "I think few people know that two years ago one of the foreign shareholders of Yukos appealed to that court with a suit. But the court refused to hear his case then, arguing that its jurisdiction did not spread to the company registered in Russia," Mr. Ivanov said.

Before filing the suit last year, one of the shareholders bought a flat in Dallas and transferred his account of several million dollars to the city, Sergei Ivanov said. This allowed the court to hear a case involving tens of billions of dollars.

"I think that fears over foreign investment in Russia are greatly exaggerated in the USA," the minister said. "We do not sense such fears on the part of our European and Asian investors."

As for the alleged guilt of Mikhail Khodorkovsky, only the court can say if he is guilty or not, Sergei Ivanov said. "I am convinced that only the court can decide if Mr. Khodorkovsky and other defendants are guilty or not," he said. "This is how it should be done in a democratic state."

Sergei Ivanov also noted that, being the defense minister, he was not well versed in all details of the case. "I have more than enough of my own problems," he said.