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Analysis & Opinion
07.04.10 The Trial
By Tom Balmforth

Imprisoned oil tycoon Mikhail Khodorkovsky finally took to the stand Tuesday to open his defense against allegations of embezzlement and money laundering, after a year of hearings for the prosecution. The former Yukos manager’s eight year prison sentence is in its sixth year, but if he is found guilty in this second trial he faces another 22 and a half on the inside. And after a Khodorkovsky article in Nezavisimaya Gazeta was taken to task for “extremism,” a third case could be opened against Russia’s once richest man.

In the Khamovnichesky District Court in Moscow, where journalists and eager observers crammed in without a seat to spare, Khodorkovsky yesterday took to the stand, or rather his glass booth, to protest his innocence with smiles and showmanship. Khodorkovsky began by producing a few props to illustrate why he had not stolen the quantity of oil that he is accused of – 350 million tons of oil, and the subsequent legalization of the 450 billion rubles made from its sale.

The imprisoned oil tycoon produced two containers, one filled with crude oil and the other with untreated oil straight from the well, apparently in order to explain vital differences between the two. The flammable liquid was immediately ordered from the room, prompting Khodorkovsky to retort that he would make sure that it was returned to him, much to the amusement of the audience. But the point that Khodorkovsky was trying to make was that the prosecution’s argument conflates crude oil with the right to possess it. That is why, so he argues, the prosecution is wrong to accuse him of buying up cheap crude (and thus stealing) from his subsidiary companies between 1998 and 2003, when in point of fact his Yukos company was only buying the rights to it. “In this trial, the prosecution replaces the notion of ‘oil’ and the ‘right to possess,’” The Moscow Times quoted Khodorkovsky as saying yesterday.

Today he argued that the oil he is alleged to have stolen from Yuganskneftgaz, Samaraneftegaz and Tomskneft, all subsidiaries of his former company Yukos, was never kept in reservoirs, as the prosecution argues, but was actually transferred immediately to Transneft, a company that Khodorkovsky is not accused of stealing from. And the former oil tycoon therefore argues the prosecution testimony is contradictory, and all the more so because it accuses him of stealing from himself.

“At the moment one gets the impression that really the prosecution’s case is weaker than Khodorkovsky’s case,” said Irina Tumilovich, RIA Novosti’s expert on the case, during a short recess in the case on Wednesday. Reuters yesterday quoted Khodorkovsky as saying that “the court has accused me of stealing 350 million tons of oil based on sources not named in the investigation,” even after prosecution hearings that lasted a year.

And the case looks likely to drag on even longer. Tumilovich said that Khodorkovsky’s evidence would last a minimum of two weeks. “He’s really going into a lot of detail. Yesterday he warned that if he goes into every little thing, then it would go on for a couple of months so he is going to try and reduce that. But my opinion is it’s going to go on for two weeks because he’s going into a lot of detail at every moment when he is accused of something,” she said.

Khodorkovsky’s argument ostensibly remains the same, as he later summarized on his Twitter feed: “I consider this case to be political and corrupt, orchestrated by my opponents to prevent me from walking free.” And his argument has found no shortage of supporters both inside and outside Russia. Sabine Leutheusser-Schnarrenberger, a former German justice minister, filed a substantial report on the first trial which drew up a long list of procedural violations, although her report on the ongoing second trial was inhibited by comparatively limited access to proceedings and the Prosecutor’s Office.

Masha Lipman, an analyst at Moscow Carnegie Center said that the cases were “undoubtedly” politically motivated, but that the motives themselves were numerous. Before his arrest not only was Khodorkovsky the richest man in Russia, ran its biggest oil company, wielded immense influence both domestically and internationally, but he was also in a position to dictate where pipelines were going to be laid, one of the most sensitive topics in a country whose economy is based on oil and gas exports.

“He was a challenge to the state itself,” said Lipman. “And people close to Putin took advantage of this perception of Khodorkovsky as a rival,” said Lipman. “They probably pushed Putin toward the decision that he ultimately took.” Khodorkovsky has often singled out Igor Sechin, the Russian deputy prime minister, as behind his arrest, conviction and the breakup of Yukos and its absorption by Rosneft - now chaired by Sechin.

Speaking to the Independent on March 17, Khodorkovsky boldly called for Putin to answer questions in court and complained of double-standards for Rosneft and Yukos. “Your prosecutors say I stole Yukos’s oil, while your representatives in Strasbourg [Yukos is suing Russia at the European Court of Human Rights] say Yukos sold its oil, but did not pay enough tax. Which is lying? Why is it Rosneft paid the same per ton of production, but your tax authorities have no complaints about Rosneft?” he asked the prime minister.

“They are very pointed questions. On a purely theoretical plain, if Putin answered them and if the judge and the court were objective, Putin would find himself in a very difficult position,” said Lipman. “That is why it is impossible for today’s leadership to let Khodorkovsky go,” she added.

To the extent that Khodorkovsky’s call for the leadership to answer questions in court will certainly go unanswered, the stunt serves as little more than PR. But Khodorkovsky has become something of a symbol for critics of Putin’s regime. An art exhibition by Andrei Kotlyarova, currently on display at the FLAKON design factory in Moscow, depicts the whole Khodorkovsky saga in highly stylized cartoon format reminiscent of Gotham City. The Other Russia opposition Web site regularly publishes on the subject. As Grigory Pasko, a liberal journalist and critic of Putin, wrote after attending the trial last week “from the discussions on the net one can even say that it has grown: people understand ever more - the trial has obviously been ordered from above, is political, clearly unfair, and the power that has started it up in the first place clearly does not know what to do next.”

Khodorkovsky remains a threat to the ruling elite, and not because of his popularity among the opposition, which itself remains highly fractious. “Just because his Yukos company has been destroyed, does not mean that the political motivation has been exhausted,” said Lipman. “Khodorkovsky has emerged as a warrior – he has not given up, he is adamant that he is not to blame, that the charges against him are not justified. And his partners, his former partners continue the fight. Right now for instance there is a real threat being made to Rosneft,” said Lipman. On March 17 Yukos Capital, the successor trust to Khodorkovsky’s dismantled company, won two injunctions against Rosneft, which resulted in its assets being frozen in both Britain and the United States.

On Monday, prosecutors opened an investigation into an article by Khodorkovsky published in the Nezavisimaya Gazeta daily under Russia’s extremism law. In response to the article, titled “Authorized Violence,” State Duma Deputy Sergei Abeltsev replied on his personal Web site: “I advise you to stop predicting the end of the ‘system,’ serve out the rest of your time with dignity until you are free, and then with a clean conscience do your best to make amends for your guilt before the people.” It is unclear what the outcome of the investigation into extremism will be, although Interfax quoted the chief editor of Nezavisimaya Gazeta as saying that the investigation was more directed at Khodorkovsky than at the paper itself.

“He will continue his fight, his effort to prove that the charges against him were unlawful and that his was a politically motivated trial. Therefore having him at large is a high risk for the Russian leadership,” said Lipman.
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