Jailed Oil Tycoon Slams Charges

Testifying in his defense for the first time, Khodorkovsky rejects Russian government's allegations of financial manipulation as lies.

By David Holley, Times Staff Writer


MOSCOW — Mikhail Khodorkovsky, the former head of Yukos Oil Co. who is on trial on charges of fraud and tax evasion, bitterly rejected the prosecution's case against him Friday in his first testimony in his own defense.

Speaking from a steel cage, where defendants are routinely kept while in court, Khodorkovsky methodically responded to accusations made against him during nine months of trial, calling each a deliberate lie.

"I categorically object to the way that normal business activity has been given a crime-fiction-style interpretation," the former oil chief said. "I am accused of crimes that didn't take place and that are the result of the prosecution's artistic fantasies."

The privatization of state assets in the early 1990s, in which Khodorkovsky and other "oligarchs" amassed great wealth, is widely known to have been an opaque and corrupt process.

But Khodorkovsky, 41, and his supporters have argued that the case against him and a separate court action against Yukos are a cover for state seizure of Yukos' assets and punishment for political opposition to President Vladimir V. Putin. Critics contend that Khodorkovsky's case is evidence that Russia has regressed on democracy and the rule of law.

The state-owned firm Rosneft took over Yukos' core production unit in December after the Kremlin auctioned it off to pay for a $27-billion tax claim against the firm.

In a major setback to Yukos, the U.S. Bankruptcy Court in Houston dismissed a case Thursday that had been filed in the hope of blocking the production unit's sale or recovering damages. Judge Letitia Clark, noting that the "vast majority" of Yukos' operations took place in Russia, ruled that her court was not a suitable forum for addressing the dispute.

Prosecutors in Khodorkovsky's trial have presented a mind-numbing flurry of documents and details concerning his rise to wealth and the activities of Yukos and firms with which it dealt. That includes voluminous material related to Khodorkovsky's alleged illegal 1994 takeover of a 20% stake in a large, state-owned fertilizer company, Apatit.

"I don't admit any guilt on any of the charges," said Khodorkovsky, who has been jailed since October 2003. "On the contrary, I am proud of having managed for 15 years a number of successful companies and helped other companies to rise from their knees after the Soviet Union collapsed."

Dressed in jeans, a black turtleneck and a brown jacket, Khodorkovsky distanced himself from many of the individuals and firms mentioned in the accusations. The charges are based in part on the allegation that Khodorkovsky controlled dummy companies that enabled him to manipulate business deals. His defense is based largely on the argument that the individuals and firms involved in the deals could act independently.

"Investigators have presented as evidence of crimes information about normal business activities, most of them carried out by enterprises not owned or managed by me," he said.

According to the charges, the firm Volna, which won the fertilizer company tender with backing from a Khodorkovsky-controlled bank, had posed as an independent company but was really a front for Khodorkovsky. Volna later became embroiled in a legal dispute that is part of the backdrop to the fraud charges.

Khodorkovsky tried to separate himself from the firm. "If the court made a decision about Volna, it was decision about Volna, not about me," he said.

"I always acted within the law," he added. "I have given a detailed account of the circumstances of the acquisition of 20% of Apatit. I consider the accusation that acquisition was fraudulent to be a deliberate lie."

Prosecutor Dmitry Shokhin declined to question Khodorkovsky but declared that everything the defendant said was "untrue, written by his lawyers." That comment drew a rebuke from Judge Irina Kolesnikova.

Shokhin's decision not to cross-examine Khodorkovsky raised some eyebrows.

"The government prosecutor's unwillingness to ask Khodorkovsky any questions is both ridiculous and self-explanatory," said Yulia Latynina, a columnist with the Novaya Gazeta newspaper. "It is ridiculous because common logic says that if you know that your opponent is lying and you have got facts in your hands, nothing could be easier than asking a couple of questions, driving this person into a corner and catching him lying.

"Shokhin was clearly afraid to end up being beaten in this intellectual boxing ring by a person who has his hands and feet tied," she said.

However, the judge grilled Khodorkovsky on his relationships with people and companies named in the charges, which describe the former oil executive as head of a "criminal group." Khodorkovsky acknowledged knowing most of them but stressed that most were mid-level managers who could have conducted their own business activities.

(From Los Angeles Times, 02.26.2005)

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I would like to add, that if this paper seems to insinuate, that Khodorkovsky is tring to escape his responsability, it is not the case. He gave very detailed answers to all the points mentionned by the prosecutors. The most important fact is that he and his lawyers presented evidencies that tax charges has been payed to the State and that the Apatit question has been regulated according to the law.