Yukos CEO's defiant testimony: 'I do not consider myself guilty of a single charge'

By ALEX NICHOLSON
Associated Press writer




MOSCOW -- Speaking from the courtroom cage where he has sat throughout his nine-month trial on tax evasion charges, the founder of Russia's largest oil company defiantly proclaimed his innocence Friday and said prosecutors had fabricated the whole case against him.

Mikhail Khodorkovsky read from a thick sheaf of notes in three hours of testimony as he methodically responded to each accusation, concluding each time that prosecutors had made "deliberately false declarations."

"I do not consider myself guilty of a single charge," Khodorkovsky said in his first official court statements since his trial began.

The former CEO of the shattered Yukos oil giant said he had managed a successful company "and helped a number of others to rise from the ruins after the collapse of the Soviet Union."

The politically charged trial and the dismantling of Yukos -- once Russia's most transparent company -- have slowed Moscow's oil exports, helped push up prices and raised questions about investing in the country.

Observers say the trial and the parallel back tax case against Yukos were launched by the Kremlin as punishment after Khodorkovsky funded opposition parties leading to parliamentary elections in 2003. President Vladimir Putin has repeatedly contended that the investigation targeted a rotten business empire and its owners.

Prosecutors argue that Khodorkovsky and business partner Platon Lebedev were part of an "organized group" that illegally won a 20 percent stake in Russia's biggest fertilizer component-maker, Apatit, using a complex web of shell companies in 1994. Khodorkovsky went on to build the Yukos empire on the basis of that acquisition.

Speaking from the cage where all defendants are held during proceedings, Khodorkovsky contended that state prosecutor Dmitry Shokhin -- sitting opposite in the blue uniform and gold lapels of the Prosecutor General's Office -- had failed to prove that he was "personally involved" in the events around Apatit or the other charges.

Even if he had been involved, Khodorkovsky said, no crime had been committed.

"The state prosecutor has not provided any evidence, but he tries to ... create it," Khodorkovsky said. He said he felt sorry for Shokhin, because "his role is to make a stand for the ... theories of others."

Huddled on the front bench, Khodorkovsky's elderly parents watched the proceedings unfold, exchanging written observations on a notepad.

Shokhin, who declined to cross-examine Khodorkovsky, retorted that his testimony had been "invented by his lawyers."

Once Russia's biggest oil company, Yukos lost 1 million barrels of daily crude production in one fell swoop in December when the government sold its core unit Yuganskneftegaz at a disputed auction in December. The unit was sold to pay off $28 billion in back taxes the government claimed Yukos owed.

In an 11th-hour attempt to stop the auction, Yukos filed for bankruptcy protection in a U.S. court in Texas. The court initially banned the auction from going ahead, but on Thursday, U.S. Bankruptcy Judge Letitia Clark court tossed the case out for lack of jurisdiction, effectively burying Yukos' last avenue of legal defense in the United States.

The winner of the disputed auction -- which went ahead despite the court injunction -- was ultimately bought by state-controlled oil company Rosneft.

Already nearly worthless, Yukos stock tumbled by 22 percent in the first three minutes of trading on Moscow's MICEX exchange Friday.

Yukos claims that U.S. investors lost nearly $6 billion as the company's value fell from its peak of $40 billion before Khodorkovsky's arrest in October 2003 to around $2 billion currently.

The holding company formed by Khodorkovsky that controls some 60 percent of Yukos, meanwhile, said it was disappointed by the U.S. court ruling. Yukos has said it will appeal.

"This judgment will not help in its (Yukos') struggle to survive," Group Menatep said.

While sounding the company's death knell, the U.S. decision could be the silver lining investors have been seeking in the Yukos affair.

Had the U.S. court accepted jurisdiction, the planned merger between Rosneft and state gas giant Gazprom would have been indefinitely put on hold, since Rosneft would have been the holder of an illegally acquired asset -- Yuganskneftegaz.

That would have delayed a complicated deal to give the Russian government a controlling stake in Gazprom -- a key requirement for allowing foreigners to buy Gazprom's massively undervalued shares.

Gazprom is the largest natural gas producer in the world and supplies a quarter of Europe's gas.

(AP via Casper Star Tribune, 02.26.2005)