Russia's Khodorkovsky Pleads Not Guilty to Fraud

Russian oil magnate Mikhail Khodorkovsky, accused of heading a criminal gang that abused 1990s privatization sell-offs, pleaded not guilty on Thursday to charges including fraud and tax evasion.

"I plead not guilty to all the points on which I have been charged," Khodorkovsky, one of a handful of "oligarchs" to make vast fortunes in the 1990s, told the court.


His co-defendant Platon Lebedev, another key shareholder in oil giant YUKOS, also entered a not guilty plea.


The two men face 11 charges on seven articles of the Russian criminal code in one of the most prominent cases in post-Soviet jurisprudence. Both face up to 10 years in prison.


The court will resume hearings on Friday, when the defendants will get a chance to comment on charges against them.


The case has been accompanied by an investigation into YUKOS, which may face bankruptcy if it fails to pay tax arrears on a bill which may ultimately reach $10 billion.


State prosecutors had earlier accused Khodorkovsky of leading a criminal group that plotted to acquire shares illegally in the rough-and-tumble sell-off of state property in the aftermath of the end of Soviet rule.


The charge, in an indictment against Lebedev, marked the start of the state's case against the former chief executive of oil giant YUKOS.


Prosecutor Dmitry Shokhin said Lebedev had joined the group for the purpose of acquiring shares of big Russian companies.


"Lebedev in 1994 joined the organized criminal group led by Mikhail Khodorkovsky with the aim of acquiring shares through deception of major Russian companies in the privatization period," Shokhin said, reading from an indictment.


RELAXED KHODORKOVSKY


Khodorkovsky was in a relaxed mood on Thursday, swapping jokes with photographers from inside the defendants' metal cage from where he watches the courtroom proceedings with Lebedev.


Khodorkovsky, one of Russia's richest men, was arrested last October as investigations began into YUKOS. The trial is widely seen as punishment for his political ambitions, and marks a watershed in relations between the Kremlin and big business.


YUKOS, of which he is the largest shareholder, has so far been served with bills for back taxes of $7 billion. A justice ministry official was on Thursday quoted as saying YUKOS had begun to pay back part of the $3.4 billion it owes for 2000.


Lebedev faces specific charges of unlawfully acquiring 20 percent in the Apatit fertilizer firm in 1994, valued at $283 million. He is also alleged to have hindered legal attempts to force him to return the shares to the state.


Shokhin said that as president of Menatep bank, Lebedev also gave guarantees to fake companies acquiring shares in sell-offs.


Prosecutors say they are pursuing Khodorkovsky's case on the basis of firm evidence and pledge there will be no review of the outcome of the 1990s sell-offs -- a symbol of Russia turning its back on its communist past.

Khodorkovsky has offered to give up his stake to save YUKOS from bankruptcy. But officials have shown little willingness to talk to him or management.

YUKOS produces a fifth of Russia's oil and its collapse could tarnish President Vladimir Putin's image among investors. Putin has made attracting foreign investment part of ambitious plans to double the size of the economy this decade.

But he has resolutely cracked down on the huge influence oligarchs amassed in the power vacuum of the late 1990s.

HERE