In Three-Hour Doses

The YUKOS affair

On the second day of reading of the verdict against Mikhail Khodorkovsky and Platon Lebedev, the Meshchansky Court found them guilty of two more crimes – tax evasion by YUKOS and fraud on the return of overpaid taxes from the state budget. The court also found Khodorkovsky guilty of misappropriation of 2.6 billion rubles belonging to YUKOS in favor of companies owned by Vladimir Gusinsky. Yesterday, the court began reading the proof of guilt of the accused, a process that will continue for at least three days.

A police patrol stopped me on the road 400 m from the Meshchansky Court and asked “Where are you going, lady?” I said I was a journalist and I was going to court to hear the verdict. “Documents!” the sergeant demanded in a tone of voice that suggested walking along Kalanchevskaia Street at ten o'clock in the morning was a serious crime. The officer turned my passport and press card round and round in his hands for about three minutes and then said, “Don't put your documents away. They'll check you again after 30 m.”

I was dazzled by the people in police uniforms (near the courthouse, as reported later, were 500 patrol service officers) and special forces personnel in camouflage. Groups of several police officers were on duty with German shepherds and Rottweilers trained to detect explosives. “What's this, a special operation?” I asked the next patrol. “Can't you see?” one of the officers answered irritably.

A minute later, patrols once again checked my passport and looked through my briefcase, at the same time ordering me to take out everything metal and edible. I asked why they needed food, and the sergeant answered jokingly, “We're hungry.” Half an hour later, a colonel of the patrol service explained to me they were ordered to confiscate all food “so people won't throw it.”

However, once again, most journalists were not admitted to the courtroom to hear the verdict against Mikhail Khodorkovsky and Platon Lebedev, not even those who had submitted written applications for accreditation to the president of the court. A bailiff came over to the reporters and advised those who had filed applications to do it once again and send them to the court each day while the verdict was being read. I asked what was the point of wasting paper if even with an application, only a select few were admitted (yesterday, for example, they used a megaphone to invite journalists from TVC and Moskovia TV and the newspaper Rodnaia Rech into the courthouse, but didn't admit journalists from Vedomosti, the Washington Post, Gazeta.Ru, Radio Svoboda, and nearly all foreign journalists). The bailiff replied curtly, “If you don't want to send in an application every day, you'll stand at the fence.”

As on Monday, the reading of the verdict lasted only three hours, although everyone involved in the trial were prepared to spend the whole day in court. The same patrol service colonel explained the reason for this to me. “If they let everyone out of the courtroom for a lunch break, then afterwards we have to screen and recheck everyone coming back in. It's a nerve-wracking job – you saw how people were ready to run over each other to get in. So the police made a deal with the judges to work three hours a day without lunch.”

At 13.40, presiding judge Irina Kolesnikova announced a recess until the next morning. For three hours, the three judges, reading in turn, managed to finish the fundamental part of the verdict. Whereas on Monday, the court found Khodorkovsky and Lebedev guilty of six crimes, yesterday it found them guilty of another two. According to the verdict, the accused were behind the tax evasion by YUKOS in 1999-2000. YUKOS subsidiaries sold oil cheaply to four front companies registered in a domestic offshore in the city of Lesnoi in Sverdlov Region, and then they sold it for market prices; however, using the exemptions of the domestic offshore, they did not pay the full amount of tax. In addition, these companies paid part of the taxes with YUKOS bills, whereas according to the Tax Code, taxes are to be paid in cash. By the judges' calculations, the treasury was underpaid by 17.3 billion rubles.

The court also found Khodorkovsky and Lebedev guilty of large-scale tax fraud. The verdict recounts how the four front companies mentioned above roamed around the country to avoid tax audits, transforming themselves and getting registered first in one region and then in another. The legal entities set up as successors to these companies demanded cash compensation from the tax inspectorates for overpayment of taxes their predecessors had paid with YUKOS bills. In this way, they obtained 407.1 million rubles from the treasury, which investigators and then the court regarded as embezzlement.

In addition, the court charged Khodorkovsky with organizing bill transactions, by means of which 2.6 billion rubles were transferred from the accounts of YUKOS and two YUKOS affiliates to the accounts of companies controlled by the head of ZAO Media Most, Vladimir Gusinsky. The court agreed with the Prosecutor General's Office that Khodorkovsky engaged in “embezzlement, which caused damage to the owners of these funds.” That is, according to the verdict, as YUKOS's principal owner (at that time), Khodorkovsky caused damage to himself. There was no evaluation of the embezzlement of 20 percent of the shares of OAO Apatit in the fundamental part of the verdict. The court will probably issue a separate ruling on dismissing the criminal case due to expiry of the statute of limitations. At any rate, the accused should not expect an acquittal in this episode.

Proceeding to the so-called operative part, the court began to cite proof of guilt for each episode, as well as to rebut the proof of innocence presented by the defence. Yesterday, the judges read only the testimony of six witnesses to the fraudulent acquisition of shares of the Research Institute of Fertilizers and Insectofungicides. During this time, the accused were engaged in their usual pursuits. Lebedev was working on a crossword puzzle, and Khodorkovsky was reading some sort of history book, every now and then glancing affectionately at his mother and wife. They already seemed to be resigned to the fact that they would not be leaving prison soon, but not wanting to distress their relatives, were not allowing themselves to show emotion.

The lawyers for the accused looked depressed as they left the court. “It's already clear that the verdict is illegal,” said defence lawyer Yury Smidt.

Kommersant will continue to follow the reading of the verdict.

by Ekaterina Zapodinskaia

(From Kommersant, 5.18.2005)