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Analysis & Opinion
19.03.09 Fighting Off The Scum
By Sergei Balashov

The second trial of jailed oligarch Mikhail Khodorkovsky has barely begun, but the ways in which it differs from the first case are already becoming obvious. These differences are not limited to the scale of the allegedly crimes and the new jail terms the former oil tycoon and his business partner Platon Lebedev are facing. There appears to be much more at stake this time, as the events that took place during the preliminary hearings this week demonstrated.

Having learned from experience and knowing what to expect, Khodorkovsky’s lawyers resorted to an aggressive tactic, labeling the new accusations “absurd” and claiming them to be an attack on “common sense.” They filed various motions, going as far as petitioning to remove the presiding Judge Viktor Danilkin and stop the trial altogether.

Khodorkovsky himself also started out boldly. In an interview he gave to the Sobesednik newspaper this week, he shed some light on his relationship with the former and the current presidents. Labeling Vladimir Putin as “more of a historical figure than a former ‘partner in conversation’,” he said their feelings for each other were absolutely mutual. At the same time, he said he had nothing against Dmitry Medvedev, who has no reason to fear him.

Later he made another thinly veiled remark, suggesting there were certain parties that could get in trouble if he were freed, even if he himself has nothing to do with it. “There is plenty of little scum around every big case. Now this little scum has got big money on their hands. Right now, this scum is trying to make the Russian state believe that it, and not the scum, is in danger. They’ve succeeded so far, but we’ll see what comes next,” said Khodorkovsky.

It certainly wasn’t too hard to figure out what “scum” Khodorkovsky was referring to, but his lawyers made it even clearer during a press conference they held right after the end of the preliminary hearings on Tuesday. “If you want to know who is behind it, ask another question, which is ‘who gained from it.’ Khodorkovsky said the investigators did nothing to reimburse the lawful owner for the stolen property. The prosecutors did nothing during the whole duration of the investigation. We all know where this property is, I have seen it myself; the property that used to be owned by YUKOS and now belongs to Rosneft,” said Natalya Terekhova, the legal council for Mikhail Khodorkovsky.

Khodorkovsky himself accused Igor Sechin, Rosneft’s chairman and a deputy prime minister, as well as another member of Vladimir Putin’s inner circle. Rosneft CEO Sergei Bogdanchikov was also linked to the YUKOS case. Rosneft ended up buying the bulk of YUKOS’ assets at auctions.

Putin’s relationship with Khodorkovsky became strained when the latter struck a deal to merge YUKOS and Sibneft in order to set up a Russian oil supermajor, and later held negotiations with ExxonMobil and ChevronTexaco about selling a major stake in the new company. He did not thoroughly consult with the Kremlin on the negotiations, a move that reportedly angered Putin and sealed the self-willed oligarch’s fate.
YUKOS was also partially owned by foreign shareholders.

The new President Dmitry Medvedev also factored in the first YUKOS case, appearing to not be in favor of the extensive prosecution that was unleashed in 2003. At one point, the then chief of the president’s administration stated that the prosecutors should not rush to arrest the shares of the troubled company, causing the company’s value to grow by some eight percent and the RTS index by two percent. “Medvedev’s position on the so-called YUKOS case is very well known. This time, he wants a fair, competitive trial, and the court takes into account the signals coming from the Kremlin,” said Alexei Mukhin, the general director at the Center for Political Information.

Khodorkovsky’s recent statements could bring his foreign connections, along with the much feared “outside influence,” back into play, the campaign against “little scum” thus leading to further disputes over YUKOS property, which, in turn, would be a major debacle for Russia and those personally involved in the first case.

“Tensions between Putin’s and Medvedev’s camps could only come from their disagreements in dealing with business. Right now, Russia’s foreign partners, primarily the United States and the UK, which are closely monitoring the development of democracy in Russia, would be interested in instigating such a feud between the two. Khodorkovsky’s statements perfectly fit into the concept of such an informational attack. It can be taken negatively by both Putin and Medvedev, and then Medvedev with all his liberal views will be helpless,” said Mukhin.

The first steps down this exact path have already been made. International courts have deemed the complaints filed by YUKOS’ shareholders valid. The shareholders filed a grievance with the Strasbourg Human Rights Court, which was accepted this January. Late last year, an arbitration court in Hague started reviewing a $50 billion lawsuit filed by the GML company, YUKOS’ majority shareholders, against the Russian government. The plaintiffs argue that YUKOS’ bankruptcy was part of an “orchestrated political campaign,” and their property was taken away by the government illegally.

In the meantime, the YUKOS case is reshaping the Russian legislation. Medvedev has pledged to loosen state control over businesses to encourage entrepreneurship and fight corruption. This week, the Constitutional Court struck down a statute in the Russian Tax Code which permitted revenue services to conduct inspections after a court ruling had been issued based on a previous check. Even though the court reviewed a grievance filed by a company from Omsk, the connection to the YUKOS case is obvious. The entire case relied on extra tax inspections, a practice that has now been ruled unconstitutional. “Khodorkovsky’s counsels are hoping that [Medvedev] will be consistent in his liberalism, and will not permit the prosecutors to distort the information they’ve already provided,” said Mukhin.
The source
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