Russian Oil Magnate Return to Court

Mikhail B. Khodorkovsky, the jailed oil magnate, returned to the courtroom and the barred, metal defendant's cage today, repeating his offer to give up his shares in his oil company Yukos just as the Russian government took steps to collect against a $3.4 billion back tax bill.

Today's hearings addressed mostly procedural issues, like whether Mr. Khodorkovky's co-defendant, Platon A. Lebedev, facing the same line-up of fraud, embezzlement and other charges, could be seen by a doctor. The judge denied the motion, despite Mr. Lebedev's jaundiced appearance and an offer from his daughter, son and brother to post a personal bond.

But during a break in the criminal proceedings, Mr. Khodorkovsky turned to saving Yukos, which is facing bankruptcy if it does not pay the outstanding $3.4 billion back tax claim. Mr. Khodorkovsky confirmed that there are ongoing negotiations with Russian government officials about the future of Yukos.

Late last week, Yukos officials sent a proposal letter to the Kremlin to settle back taxes for the years 2000-2003 for a total of $8 billion.

Outside on the street, where students were protesting with balloons and red T-shirts printed with "MBK," the oil billionaire's initials, his lawyer Anton Drel denied a report that Mr. Khodorkovsky would hand over his Yukos shares free, saying the billionaire hoped to get some kind of compensation, possibly from the company and at a future date.

Mr. Drel said there had been no reaction from the government to the offer.

The joint trial is just one part of a series of Russian government's mounting legal cases against Yukos and its owners. Mr. Putin has insisted the trial is a matter for the courts, and that he has no interest in bankrupting Yukos. However, many analysts believe the legal campaign stems from Mr. Putin's fury over the billionaire businessman's political fund-raising in last year's parliamentary elections and advocacy for private, non-state oil pipelines.

Mr. Khodorkovsky added there were no negotiations about his personal fate or hopes for possible leniency from the courts tied to his offer to give up Yukos shares.

Nonetheless, his attorneys conceded that if he hands over his 44 percent stake in Yukos, it could have a potential impact on the criminal case.

"It's a case with political influences," said Yuri Schmidt, a leading Russian human rights lawyer, who defended both Soviet dissidents and environmentalist Alexander Nikitin. "It's possible" Mr. Khodorkovksy's offer to hand his shares to Yukos managers as a bargaining chip could have an effect, Mr. Schmidt said.

Today, a government source quoted by Interfax news agency said Mr. Khodorkovsky's offer was under consideration.

Mr. Khodorkovsky and Mr. Lebedev were surrounded by half a dozen armed Ministry of Justice troops in the Moscow courtroom. The judges rejected three defense motions related to Mr. Lebedev's illness from hepatitis — one requesting an independent medical exam, another his release from jail and the third a halt in the trial pending a diagnosis.

"Mr. Lebedev has taken a turn for the worse," said a lawyer, Robert Amsterdam, part of the American defense team for the two men. "He can barely stand."

Mr. Khodorkovsky criticized the court's decision, but said, "I understand the reasons why all this is happening," hinting at Kremlin political motivation.

So far, the West has given Mr. Putin the benefit of the doubt in the Yukos affair, accepting Kremlin arguments that Russia is following due process in the trial of Mr. Khodorkovsky on fraud and tax evasion.

But increasingly, Russia seems to be bumping up against a image problem and the jarring gaps between its economic prosperity and its yet-to-be-reformed institutions, such as the justice system and deeply ingrained bureaucracy.

German Chancellor Gerhard Schroeder of Germany, an old friend of Mr. Putin's, last week played down the Yukos case, saying "the most persuasive signal for investment" is Russia's strong macro-economy. "I can certainly understand that a state wants taxes and there is no indication that it is not going about it by legal means," Reuters quoted Mr. Schroeder as saying before meeting Mr. Putin. And President Bush did not raise the Yukps issue when he met with Mr. Putin at the Group of Eight summit in June.

But Russia's defense minister, Sergey Ivanov, today lashed out at critics. "The issue has nothing to do with the questions of democracy and human rights," he told a press conference in London. "The Yukos case complies with Russian laws. A court of the Russian Federation is the only institution that can make a decision."


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