Khodorkovsky's Trial Drags on in Moscow

Russia's richest man Mikhail Khodorkovsky briefly defended a 1994 privatization deal Tuesday as the trial against him and business partner Platon Lebedev dragged on in a Moscow court.

Dressed in jeans and a black T-shirt, Khodorkovsky spoke softly and slowly as he responded to prosecutor Dmitry Shokhin's questions.

Khodorkovsky confirmed that Menatep bank, where he was chairman of the board, had participated in the privatization of Apatit, which makes a key fertilizer component, but insisted that it had not broken the law.

Khodorkovsky said he was speaking to stop the court "wasting time" by explaining "self-evident circumstances." He said he would respond to the prosecutor's other questions after all the evidence had been presented.

Prosecutors accuse Khodorkovsky and Lebedev of being part of an "organized group" that won a 20 percent stake in Apatit through shell structures that bid for the shares.

The legal actions against Khodorkovsky and his Yukos oil company are widely seen as Kremlin-approved punishment for the oil mogul's growing political activity in opposition to President Vladimir Putin's government.

If convicted, the billionaire businessmen could face 10 years in prison.

The Apatit deal was just one of many post-Soviet selloffs of state property in auctions which often brought prices far lower than the enterprises' estimated value.

As government funding dried up in the early 1990s, many colossal Soviet-era plants, which whole regions relied on for employment, were crippled. The privatization auctions were devised as a way to pump money into the flagging industrial jewels, but the process saw them sold off to a handful of moguls close to then President Boris Yeltsin's Kremlin.

The third witness to be called in Khodorkovsky's trial took the stand Tuesday - Yevgeny Komarov, former governor of the Murmansk region.

Komarov was grilled by Shokhin and defense lawyers over whether Khodorkovsky had fulfilled the investment promises at the plant.

Komarov said that the privatization tender was legal, but that the investment program had not been fulfilled, citing projects such as the construction of an airport.

Khodorkovsky and Lebedev's lawyers said that these projects had not been included in the original investment plan.

Nevertheless, Komarov said that the arrival of Khodorkovsky's team had saved 1,000 workers from layoffs, kept production steady and pulled the company from the verge of bankruptcy after rail and electricity debts of 38 million rubles ($1.3 million) were paid off.

The trial was adjourned until Thursday.

Meanwhile, Yukos' appeal of its crushing 2000 back taxes bill was put off until next month, the Interfax news agency reported Tuesday.

The Moscow arbitration court delayed the appeal hearing until Sept. 7, satisfying a request from the Tax Ministry. The Tax Ministry said it wasn't ready as it was occupied with other matters, Interfax reported.

The $3.4 billion tx bill has already been upheld by local courts, and it is currently being enforced by bailiffs, who have frozen Yukos bank accounts and seized shares in Yukos subsidiaries.

Yuganskneftegaz, the western Siberian production unit that accounts for 60 percent of Yukos output, is being evaluated for possible sale as collateral for the tax claims, which are expected to rise up to $10 billion to cover the period 2000-2003. A Moscow court ruled Tuesday that Yuganskneftegaz shareholder documents had been legally arrested.

Yukos officials said Monday that they will have paid half of the 2000 claim by the month's end. But with other bills looming and a freeze on its accounts, the company has repeatedly raised the possibility of bankruptcy or production stoppages.

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