Should possum come a-knockin' at the front door of embattled Russian oil goliath YUKOS (Pink Sheets: YUKOY) this week, he may be left waiting in the cold an awfully long time. Simply put, there appears to be no one left minding the store at YUKOS.
According to multiple media accounts published last week, the company is in the midst of a full-scale exodus of top officers, who are fearful of not only losing their jobs when their company goes belly up (as now seems all but certain) but of landing in the cooler themselves. All six of the company's top executives have now exited stage left. This includes both of YUKOS' American-citizen managers -- the chief financial officer and the chief executive -- despite neither one being under any official indictment (on the other hand, being under indictment might have complicated their departures somewhat).
The departures do seem prudent in light of not only the political nature of the assaults on YUKOS, but also the clear "heating up" of the business environment surrounding the company this fall. YUKOS' CFO, in particular, has already been "invited" to visit the tax police for questioning. An inauspicious development when you consider that the chairman of the board has been sitting in jail for over a year now, the vice president of a YUKOS subsidiary in Moscow was arrested just last week, and the company's general counsel has had an international warrant issued for his arrest.
So how serious are the departures for YUKOS the company? While YUKOS' executives were quoted in TheWall Street Journal as saying that the company could be run "from anywhere," the fact of the matter is that that's simply not the case. In today's wired age, it's true that there's often very little need for employees to be anywhere in order to do their jobs effectively. Telephones, video conferencing, and the Internet have made a person's physical location all but irrelevant. But that's not at all true in Russia, where there are countless corporate actions that, by law, cannot be effective without an executive physically signing a physical document.
It's certainly possible that, in the current crisis, a company like FedEx (NYSE:FDX) or UPS (NYSE:UPS) may be able to ride to the rescue by shuttling important corporate documents between Russia and England (where most of the executives are now holed up). Yet even then, YUKOS' operations are going to be irreparably damaged by the time lag involved, given the fast pace with which things are developing back in Russia. Reason enough for the company's U.S.-traded ADRs to crash more than 32% in value in Wednesday's trading.
Read all about YUKOS' tribulations in:
- Death and Taxes in Russia
- Russia Names Its Price
- YUKOS: From Dismal to Worse
- Russian Market in Gulag
- YUKOS' Slippery Situation
Fool contributor Rich Smith has no position in any company mentioned in this article.
