The Boss Behind Bars

It is a Year Since Mikhail Khodorkovsky, the Billionaire Head of Russian Oil Giant Yukos, Was Arrested at Gunpoint at a Siberian Airport.

YOU ARE on remand in a hellish jail, being tried in an illegal court for breaking a law that does not exist. The prosecution is as shambolic as your defence is watertight, but you will be convicted anyway. The only question is the length of your prison sentence - five to 10 years, probably.
That, says his defence team, is the predicament of Mikhail Khodorkovsky, the oil tycoon on trial in Moscow on charges of large- scale fraud and tax evasion.

You are the richest of Russia's loathed oligarchs. You made yourself a multibillionaire by buying up State assets on the cheap in dodgy privatisations while the rest of the population, which should be benefiting from that wealth, wallows in poverty. The authorities are right to prosecute you and you should go to prison. That is the view of many Russians.

Khodorkovsky has a knack of polarising opinion. For the Kremlin, he is a political irritant and a springboard to greater popularity - by taking a tough line with the oligarch, President Vladimir Putin has boosted his own ratings. For many Western businessmen, he is a pioneer of good corporate governance in Russia, a clear-thinking entrepreneur who has fallen foul of the jealousies of an autocratic political system.

True, Westerners are wary of the origins of his fortune, but they find the apparently personally targeted and politically motivated nature of his prosecution more troubling.

Critics say he is a fool. He funded opposition parties, criticised creeping authoritarianism, cosied up to foreign politicians and made pronouncements on sensitive policy issues - reckless and hubristic challenges to Kremlin authority. Among colleagues, he elicits fierce loyalty. Former employees - at least those never on the receiving end of his alleged ruthless streak - describe him as attentive, polite, a competent manager and natural leader, as well as more down to earth than many less successful executives.

He is also renowned for self-control. A Western oilman recalls a recreational weekend with Yukos leaders in the wilds of Siberia. Away from the media, Khodorkovsky had a rare opportunity to relax, and got drunk.

Someone ushered one of the beautiful local girls making up the numbers towards him: "As soon as she invaded his personal space, he made a gesture to one of his security guards and she vanished. He never, never loses control."

IINTERVIEWED Khodorkovsky in 2001 when he was well on the road to making Yukos Russia's largest oil producer, a position it recently ceded to Lukoil.

He was feted for revolutionising corporate governance and for achieving a 3000% rise in Yukos shares in two years, and oil executives, politicians and journalists hung on his every word. He was immaculately turned out and extremely courteous. His image seemed to have been meticulously devised to convey calm, thoughtful authority - weighing each word, he spoke very quietly, knowing that he did not have to raise his voice to make himself heard.

Just as Khodorkovsky polarises opinion, his character itself is full of polarities. He jealously guards his privacy yet relishes being in the public eye and influencing Russian life. So who is the real Khodorkovsky?

Born on 26 June 1963, Mikhail Borisovich Khodorkovsky grew up in a two-room communal Moscow apartment. He made his fortune buying Yukos at a bargain-basement State auction in 1995 through Menatep, the bank he founded in 1989. His wealth has been estimated at between $8 billion (Pounds 4.4 billion) and $11 billion, but since most of it is tied up in Yukos stock some has been wiped out by the firm's share-price slump.

Khodorkovsky, who until last October lived in a mansion outside Moscow with his wife and four children, is being prosecuted over alleged irregularities in the 1994 privatisation of fertiliser maker Apatit. The trial had been expected to end this month, but the "pre- trial detention" of Menatep colleague Platon Lebedev, who is being prosecuted simultaneously, has been extended to 26 December, suggesting the case will take longer.

Khodorkovsky's defence team says the charges are bogus but has no illusions about convincing the judge of that. "There was never a prospect of the defence succeeding," says Robert Amsterdam, his international lawyer. "This is a political case."

Amsterdam claims the treatment of his client goes beyond the removal of a political threat - demobilising and discrediting its charismatic figurehead have facilitated attacks on Yukos.

Khodorkovsky's plight is a cautionary tale for other oligarchs - a reminder of where real power lies, of the central role the State plans to play in the strategic oil industry and of Putin's determination to foster a taxpaying culture.

It seems to have worked.

Business leaders are falling over themselves to be seen as good corporate citizens. And, with US oil giant Conoco-Phillips forking out almost $2 billion for a 7.59% stake in Lukoil last month, neither do foreign firms seem to have been put off by apparent political interference in judicial matters.

Meanwhile, Khodorkovsky has spent a year behind bars. One associate suggests he is able to cope with his grim everyday reality because he "lives in the future, not in the present".

His declared dream, which supporters say is genuine and not tactical posturing, is to see "civil society" established in Russia within his lifetime, and that is where his mental energies are directed. He adds that Khodorkovsky is not necessarily interested in holding political office but sees himself exerting influence to achieve that end in the mould of George Soros.

Soon after his dramatic gunpoint arrest on the night of 25 October 2003, Khodorkovsky quit as boss of Yukos, pledging to continue his work as chairman of Open Russia, an organisation with the lofty aim of building an open and "truly democratic" society in Russia by supporting educational and civic initiatives.

CYNICS find the shift from capitalist heavyweight to philanthropist and social reformer hard to swallow. But his supporters point out that he has been making charitable donations for years. In addition, at the time of his arrest, he is said to have been planning to sell down his Yukos holdings in order to focus on his social programmes and was deep in negotiations with various foreign buyers, including ExxonMobil and ChevronTexaco.

"He has an internal drive to accomplish the impossible," says one former colleague.

"Having turned round a dinosaur oil corporation into a dynamic company, he has turned his attention to saving the country."

This messianic - some say Quixotic - crusade has drawn both admiration and scathing criticism, with detractors dismissing his aspirations as manifestations of a Christ complex. But the martyrdom of prison may yet help him get his message across. One associate says Khodorkovsky believes he needs to go through some sort of "purgatory" to make himself more acceptable to the public. And although he remains unpopular, partly because of anti-Semitism (he is Jewish by birth), there are signs his incarceration is softening up opinion.

Nonetheless, even if he is remembered in a decade, for a 40-year- old man in a country where the average life expectancy for men is under 59, 10 years in prison might prove too long to make a difference.

No privileges and sharing a cell with four others

CONDITIONS are generally appalling in Russian prisons, and northern Moscow's Matrosskaya Tishina jail is no exception. Sources claim Khodorkovsky has not been able to buy privileges but he is said to be bearing up well under difficult circumstances.

Access to him is tightly controlled and it is impossible to get a message to or from him without official sanction. Conference rooms are bugged. Even in court, his hard-of-hearing Russian lawyer must keep at least one metre away from Khodorkovsky's cage, making private conversation difficult.

A typical prisoner would be in a cell about five metres square - designed for six people but inhabited by 20, sleeping in shifts. Sources say Khodorkovsky has escaped such conditions and shares a cell with about four others. The special treatment is thought to be a way of encouraging him to drop his guard and confide in his cellmates, who monitor him.


TOM NICHOLLS
(From Evening Standard, reprint ConocoPhillips 2004-10-22)