For Mikhail Khodorkovsky, a preordained guilty verdict

ERIC REGULY

Mikhail Khodorkovsky believed from the outset of his latest courtroom drama that he was doomed, that the trial was rigged by political forces sympathetic to Vladimir Putin and that he would remain locked in a frozen Siberian labour prison.

In April the former oil tycoon – once Russia’s richest man – slammed the Russian judicial system. “I consider this case political and corrupt, orchestrated by my opponents to prevent me from walking free,” he said from his courtroom glass cage.

On Friday, only three days before a Moscow judge read the verdict, he lashed out at Mr. Putin himself. The Russian president-turned-prime minister leads a cynical government that is indifferent to the Russian people, Mr. Khodorkovsky said in a newspaper article. He called Mr. Putin “horribly lonely in the face of a vast and unsympathetic country.”

Mr. Khodorkovsky, who evidently felt he had nothing to lose by criticizing Mr. Putin, was right about the verdict. On Monday he and his former business partner, Platon Lebedev, were found guilty of embezzlement and money laundering in a case that has triggered condemnation from the United States, Britain, Germany and other countries. “He very well knew his fate was sealed long before the verdict,” Robert Amsterdam, the Canadian lawyer who is Mr. Khodorkosky’s former legal counsellor, said Monday night. “The charges against him were embarrassing, absurd.”

The duo were already serving eight-year sentences for fraud and tax evasion under a 2005 conviction, and Mr. Khodorkovsky, 47, was due for early release in late 2011. His defence team said the fresh convictions, which are to be appealed, mean he will probably spend another six years in prison.

Mr. Khodorkovsky is the former head of Yukos Oil, which was Russia’s biggest oil producer and exporter before it was crushed by the equivalent of $30-billion in tax claims and sold off in pieces after his arrest in 2003, when Mr. Putin was president (he became Prime Minister in 2008). Monday’s court decision found Mr. Khodorkovsky guilty of stealing $27-billion worth of oil, equivalent to all of the oil Yukos produced between 1998 and 2003.

The size of the theft defies logic and staggers the imagination, Mr. Khodorkovsky’s many supporters said. German Gref, who was Russia’s economy minister when the oligarch was arrested in 2003, testified at the trial that he would have noticed if that much oil wealth had gone missing.

“The trial was a charade of justice, the charges were absolutely false, but I fear the sentencing will be very real,” Vadim Klyuvgant, the lead defence lawyer, said in a statement after the verdict was read. “There isn’t the slightest doubt that there was pressure on the court.”

The supporters of Mr. Khodorkovsky say he is being punished for having the temerity to challenge the authority and integrity of the Kremlin during his years as Yukos’s chief. “Khodorkovsky’s mistake was mixing politics with business,” said a Russian businessman who invests money for wealthy Russian investors. “There were rumours that he wanted to become prime minister. You don’t do that sort of thing in Russia, and never when Putin is in charge.”

There is not doubt that Mr. Putin, unlike current Russian President Dmitry Medvedev, took a personal interest in the Khodorkovsky case. About a year ago, Mr. Putin compared him to the infamous American mobster Al Capone. A week before Christmas, Mr. Putin was at it again, suggesting on a televised phone-in show that he had little doubt the fallen oligarch would be found guilty and that “a thief should sit in jail.” Noting that Yukos’s former security chief had been convicted of murder, he even suggested that Mr. Khodorkovsky had blood on his hands.

Mr. Khodorkovsky, the ambitious and apparently money-craving son of a chemical engineer, started his own bank, Menatep, in 1988 and shortly thereafter delved into the free-for-all that saw entire Russian industries privatized for the equivalent of cents on the dollar. In 1995, he scored his biggest coup by nabbing control of Yukos, then Russia’s second-biggest oil company, for a mere $300-million or so in an auction that was run by Menatep, a blatant conflict of interest that would have violated any sense of fairness under Western securities regulations.

In his early years as an oil magnate, Mr. Khodorkovsky was considered as sleazy as the other oligarchs who had privatized state assets on the cheap. According to various reports, he would try to prevent minority shareholders from voting by moving shareholder meetings to remote locations at the last minute, and shuffled assets through subsidiaries to hide them from creditors during Russia’s 1998 financial collapse.

But by the early years of the last decade he made efforts to clean up his corporate act, including publishing financial statements that met international accounting standards, and earned the respect of investors and foreign oil competitors. His mistake was entering the political realm, say supporters and critics alike. He funded political parties that were critical of the Kremlin, formed a charity called Open Russia and promoted Western-style democracy.

Even though Mr. Putin made it clear that the oligarchs could keep their wealth if they did not interfere in politics, Mr. Khodorkovsky kept up the political pressure on the Kremlin, to the point where he was apparently considering challenging Mr. Putin for his job, though he denies he ever harboured such ambitions.

International reaction

The Khodorkovsky verdict has strained relations between Moscow and the West, where the reaction was unfavourable

United States

“We are troubled by the allegations of serious due process violations, and what appears to be an abusive use of the legal system for improper ends. The apparent selective application of the law to these individuals undermines Russia's reputation as a country committed to deepening the rule of law,” said White House spokesman Robert Gibbs, adding that President Barack Obama has spoken frequently about the case with Russian President Dmitry Medvedev and will closely monitor developments.

Britain

“We believe that Russia's people, and Russia's future, are best served by a judicial system properly independent of government or other outside interference; a system which administers justice consistently, transparently and objectively. This is also important in sustaining an environment in which investors can remain confident that they can do business, and that property and other rights are soundly protected,” said a spokesperson for the Foreign Ministry.

Germany

“The way the trial has been conducted is extremely dubious and a step backward on the road toward a modernization of the country. It is in the interest of our Russian partners to take these concerns seriously and to stand up for the rule of law, democracy and human rights,” said Foreign Minister Guido Westerwelle.

From Oligarch to Convict

How did Mikhail Khodorkovsky become a Russian oligarch?

If you look up the word “oligarch” in the dictionary, you will find it means a member of a small group holding power in a state. Today, though, it usually refers to the super-rich Russians who made their fortune in the sometimes barbaric business world of their country in the 1990s. They grew even richer as oil prices and the Moscow stock markets soared in the boom years which followed. In some cases, they sought to convert their new financial clout into political influence. Mr. Khodorkovsky's empire, which at its height produced more oil than OPEC member Qatar, was based around oil giant Yukos and Menatep, one of the first private banks in post-Soviet Russia. Vilified by minority shareholders as one of the country's most opaque businesses during Russia's 1998 financial meltdown, Yukos went on to become Russia's largest oil producer and the country's biggest private company, with a market value of more than $40-billion at its peak.

Why was he arrested?

He was first arrested in 2003 and convicted of tax evasion. This verdict found him and a partner guilty of stealing billions in oil from the company they ran. Supporters, however, say he is Russia's most famous political prisoner, arrested to send a signal to other businessmen inclined toward political dissent. Mr. Khodorkovsky had begun funding political parties other than the main pro-Kremlin party, and he angered the Kremlin by suggesting that certain oil deals involving the state were corrupt. Opponents say he simply lost a battle for influence because he did not see how the political climate had changed. Critics also say his tactics were among the most aggressive of the oligarchs, and that Western media have overlooked the more unsavoury aspects of his past.

What happened to his assets?

After Mr. Khodorkovsky's arrest, tax police filed huge back-tax claims against Yukos. Unable to pay, the Moscow-based firm eventually filed for bankruptcy and its production assets, which included some of the best oil fields in Russia, were sold off at state-run auctions, as were Mr. Khodorkovsky's other main assets.

Sources: Reuters, BBC

The rise and fall of Mikhail Khodorkovsky

Rise

1963: Born in Moscow, son of chemical engineers

1981: Enters Medeleyev Chemistry Institute, Moscow

1980s: Sets up computer software business with fellow students

1987: Founds Bank Menatep

1994: Buys Apatit fertilizer company at auction

1995: Buys Yukos for $350-million, with Menatep assuming $2-billion in debt

Fall

2003: Arrested for tax evasion, embezzlement and fraud

2004: First court case begins

2005: Found guilty on six of seven charges, jailed for eight years

2007: Yukos declared bankrupt

March, 2009: Second court case starts in Moscow

Dec. 27, 2010: Convicted of embezzlement and money laundering

Source: BBC