Animals in the Courtroom

Ex-Yukos bosses Mikhail Khodorkovsky and Platon Lebedev stand accused of a crime that even prosecutors are finding difficult to define, writes Mariana Toroschesnikova. Now foreigners are beggining to understand the real danger in Russia lies not in wild bears roaming its streets but in wild prosecutors ruling the courts.
Maryana Torocheshnikova
20 June 2010

"A load of old cobblers" and "hogwash" was how key defence witnesses characterised the charge against the former YUKOS owners Mikhail Khodorkovsky and Platon Lebedev.

The two stood accused under the rather unusual charge of "stealing" 350 million tons of oil.

The logic of the prosecution tabled against Khodorkovsky and Lebedev was that: a) their company YUKOS was not, in fact, one of the largest oil companies in Russia, but no more a criminal syndicate; b) the oil that its daughter companies extracted was not sold in Russia and abroad as previously seemed the case, but embezzled; c) the profit that YUKOS made was from stolen goods and the company's investments (including those investments made in to production) were simply the material result of money laundering; d) over a total of six years, an organised criminal group, consisting of top managers from YUKOS and other “unidentified persons”, were led by Khodorkovsky and Lebedev to acquire, steal and launder what belonged to …. Mikhail Khodorkovsky and Platon Lebedev.

This absurdity of the charge was not lost on Mikhail Khodorkovsky, who did his best to demonstrate its value to presiding Judge Victor Danilkin.

Khodorkosky trial

In a piece of theatre, Khodorkovksy's lawyers presented the court with two jars of oil — one with crude oil and one with bore liquid — and asked state prosecutors and Judge Danilkin if they could tell the difference between them. Khodorkovsky then asked persmission to conduct "an experiment", in which he challenged the prosecution to show how the jars that belonged to him and were being held by lawyers could be “confiscated”, how the oil contained in this jar could then be turned into personal gain by signing a contract, or under the guise of signing a contract, or by transferring it to someone’s balance sheet, “without committing another action as yet unspecified in the charge sheet”. The prosecution, naturally, did not begin to cooperate with Khodorkovsky’s experiment, but the incident caused quite a fuss in Court and was written about extensively in the Russian and Western press.

During his evidence, Khodorkovsky gave detailed comments on literally every sentence contained within the indictment. Everyone present in the courtroom of the Khamovnichesky court in Moscow was given exhaustive information both of the activity of vertically integrated companies (of which YUKOS was one) and of the oil and gas industry as a whole.

Khodorkovsky concluded that any discussion about the disappearance of part of the profit from the sale of oil — which is exactly what the prosecution were attempting to prove throughout the past year — could only begin if prosecutors drop charges of stealing the oil itself. As Khodorkovsky argued, profit cannot arise in a company in which everything has previously been stolen.

Spiritual sessions at Court

Khodorkovsky’s lawyers made an attempt to summon to the court five leading Russian politicians, including Russian Prime Minister Vladimir Putin, the two deputy prime ministers Alexei Kudrin and Igor Sechin, head of Sberbank German Gref and minister of industry and trade Viktor Khristenko.

Khodorkovsky argued that Putin was a witness who knew where YUKOS oil was being delivered and what the company’s money was spent on, since Khodorkovsky had reported this to him personally. Sechin also, so the defence’s logic went, must have been well informed about the movements of YUKOS oil and money, since he now is Chairman of the legal successor to the majority of YUKOS assets (Rosneft). As for Kudrin, Khodorkovsky told the court that Kudrin personally provided “clarifications about the taxation of oil companies, and specifically the level of taxes which YUKOS was supposed to pay on oil”; and that Kudrin considered such oil to be “produced, sold and not stolen by YUKOS”. Khristenko, said Khodorkovsky, “personally determined the direction of deliveries of oil, which the prosecution believes was stolen, as he was the acting head of the commission to determine access to pipe-line transport”. While Gref, as deputy head of the Russian state property board from 1998 to 2000, was summoned to shed light on alleged “theft” of shares from the state oil company VNK.

State prosecutor Valery Lakhtin predictably objected to questioning high-ranking officials, claiming Khodorkovsky had “summoned witnesses in order to reject the contents of a charge that he has misunderstood, despite the fact that the nature of the charge has already been explained to him”. Lakhtin continued: “Khodorkovsky is not being charged, as he is attempting to say, with stealing oil by a primitive method of cutting into the pipeline, but by seizing the right to oil delivered by the Transneft pipeline”. Lakhtin argued there were “no grounds” for summoning the officials.

In the end, of the five witnesses called by the defence, the court only sent summons to two of them, German Gref and Viktor Khristenko, who are due to appear on 21 and 22 July respectively. With the no-show of Putin and Kudrin, the defence’s attempt to make top politicians give evidence has been described by journalists as a “summoning of the spirits”.

 Defence into attack

The first witness to appear for the defence — former Russian prime minister and current opposition member Mikhail Kasyanov — caused a considerable consternation in the state prosecutors’ camp. Mikhail Khodorkovsky’s lawyer, Vadim Klyuvgant, presented Kasyanov as “one of the few people who is not afraid to talk about the way things really were”. Kasyanov “was prepared to show exactly how oil companies functioned, why there were transfer prices, and why they were in the single case of YUKOS suddenly declared not only a crime, but theft”. “In general terms”, Klyugvant concluded “there is only one conclusion: that this type of theft, which our clients are incriminated with, is impossible”.

Perhaps the greatest noise came from Kasyanov’s statement that both the YUKOS affair and the criminal prosecution of its heads were politically motivated. Kasyanov referred to a conversation he had seven years ago with the current Russian president Vladimir Putin. According to Kasyanov, Putin expressed dissatisfaction with the fact that YUKOS not only financed Union of Right Forces and Yabloko, but the Communist Party, which he, the president, had not allowed it to finance.

“It was fairly surprising to me the entirely legal activity supporting political parties turned out also to require the secret approval of the president of the Russian Federation,” said Kasyanov. “I heard the same reply from Putin in response to a question about why Platon Lebedev was in jail. By the end of 2003, I was firmly convinced that Mikhail Khodorkovsky and Platon Lebedev had been arrested and were under suspicion on politically motivated grounds,” said Kasyanov.

The witnesses who followed used yet more vivid epithets.

“A load of old cobblers!” retorted former head of Central Bank of Russia Viktor Gerashchenko when asked about the charge facing Khodorkovsky and Lebedev. Geraschenko, who served as chairman of the board of directors of YUKOS from 2004 to 2007, argued: “Any accusation that they stole oil is not correct. If they were stealing oil as described, YUKOS would not have been the leading oil producer, processor and seller in the country, surpassing LUKoil for at least three years. If they stole oil as described, Exxon-Mobil would not have offered to buy 45% of shares in YUKOS for $40 billion, and that they had certainly studied everything that was done in YUKOS.”

Gerashchenko was mainly questioned over alleged tax issues. Time after time, lawyer Vadim Klyuvgant asked the witness whether he had ever received any reports about the theft of oil. Gerashchenko’s answer was clear: there was no theft of oil. After the end of the questioning, the former Chairman shared his impressions with journalists: “It’s clear that the entire case has been ordered. The trial is also not in the best traditions of justice. I’ve been here once before – and I heard such ridiculous things! I don’t think that for all the skill and competence of the lawyers they will be able to win the case. All the hope lies in international courts. I’m sure they will conclude that that the entire situation and bankruptcy of YUKOS took place with a huge number of legal violations”.

The first foreign witness for the defense, Jacques Kosciusko-Morizet, described the charges made against the accused as “zoological” and “hogwash”. Kosciusko-Morizet was from 2000 to 2004 an independent director of YUKOS — heading the audit commission at the company — and stressed that the prosectutors’ charges not only contradict common sense but also the facts he knows from his four years of experience at the company.

The demarche of prosecutor Lakhtin

The longer the hearings continue, the more neurotic the atmosphere seems to become in the Court. The state prosecutors — and primarily Valery Lakhtin — have demonstrated what lawyers say is unprecedented rudeness towards witnesses and specialists invited by the defence. For example, he accused Tatyana Lysova — the editor of highly respected broadsheet Vedomosti and an expert on the YUKOS affair — of receiving bribes from Khodorkovsky and Lebedev. When she replied that this was not the case, he could not contain himself: “Why, then, did you agree to come here today and give evidence? What is the reason for such an interest in Khodorkovsky and Lebedev? Are you their personal PR manager or what?!”

Valery Lakhtin also asked the specialist Kevin Digess (who the court did not question, incidentally), whether he was not afraid for his reputation by taking part in a case where the accused were charged with grave crimes. And then Lakhtin even went as far to criticize the interpreter accredited by the UN, who is helping the court in questioning foreign witnesses. “He’s potential non-objective!” the prosecutor exclaimed.

Lebedev’s lawyer, Konstantin Rivkin, was forced to appeal about Lakhtin’s behaviour to the presiding judge: “In our opinion, he [Lakhtin] is not only bringing shame on the General prosecutor’s office, but with his outrageous behavior he is bringing shame on the Russian Federation! A great number of foreigners are present today, and will be present in future. We are wondering what they will say when they return home. I imagine that they’ll say something like: “Yes, we saw that wild bears do not roam the streets of Moscow, but you should see the wild prosecutors they have in the courts!”

Prosecutor Lakhtin’s remarks do seem to have started getting on the nerves of the presiding judge in the trial, Viktor Danilkin, who has on several occasions make critical comments of the state prosecutors. Neverthless, the judge has overturned all appeals to remove him.

Lawyers for Khodorkovsky and Lebedev intend to question several dozen more witnesses. What is perhaps most noteworthy is that some 34 people from the list of the defence were in fact previously announced as witnesses for the prosecution, but were not summoned to court.

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