Meshchansky Court Establishes Price Cutting

The verdict


Yesterday for the first time, Moscow's Meshchansky District Court read the verdict against Mikhail Khodorkovsky and Platon Lebedev for an entire day, reading 150 pages as result. The court produced evidence of the defendants' guilt in misappropriating proceeds from the sale of OAO Apatit's products, causing damage to the company's shareholders, and failing to execute a court order to return 20 percent of Apatit's shares to the state. At the same time, according to Robert Amsterdam, Khodorkovsky's Canadian lawyer, there was no mention at all of the defence's arguments in the part of the verdict read out, as if the lawyers had not taken part in the proceedings.


It was hot yesterday in the court chamber where the reading of the verdict against Khodorkovsky and Lebedev has been going on for two weeks now. Presiding Judge Irina Kolesnikova even turned on the air conditioner, but it was not powerful enough for a 45-m room packed with people. The accused, who were sitting across from the air conditioner, didn't even feel a puff of air. However, they endured the stuffy room patiently, trying to keep themselves occupied in order to make the time pass more quickly and less tediously. Lebedev, who slept through the reading on the weekend, was back at his favorite crosswords yesterday. Khodorkovsky was trying to read a book, but he couldn't concentrate and started doodling in a notebook, occasionally glancing at the judge reading the verdict.

Meanwhile, contrary to the already established tradition, the reading of the operative part of the verdict did not end at 14:00, but continued to the end of the working day (until 18:00 in the court), and the pace of reading was noticeably faster. The participants in the proceedings took a one-hour lunch break. The change of routine pleased both the accused and the lawyers. Defence lawyer Genrikh Padva told journalists during a break that “if the court continues at today's rate, we will finally hear the concluding part of the verdict by the end of this week or the beginning of next week.”

The judges, reading in turn, first finished an analysis of the evidence in the episode of failure to execute a court order to return 44 percent of the shares of the Research Institute of Fertilizers and Insectofungicides to the state [Kommersant reported on this part of the verdict on May 19, 20, and 21]. After that, the three judges went on to the episode of misappropriation of proceeds from the sale of OAO Apatit's products. The court established that Khodorkovsky and Lebedev, “after receiving the right to strategic and operative management of OAO Apatit in 1995, transferred its products in the guise of a sale contract to dealers – Russian and foreign companies – controlled by them.” Apatite concentrate was sold to the dealers at an understated price (this nonlegal term migrated from the findings of the Prosecutor General's Office to the verdict), whereas the actual selling price was more than $23 per metric ton. Khodorkovsky and Lebedev, as well as members of the organized group they formed, turned the resulting difference to their own advantage. Lebedev misappropriated $32.5 million, including $2.8 million together with Khodorkovsky.”

The court mentioned in particular that proof of the defendants' guilt in this episode was obtained in observance of the Code of Criminal Procedure, but the fact that the crime was committed as a member of an organized group was an aggravating circumstance. In the judges' opinion, Khodorkovsky was the organizer of the crime and Lebedev fulfilled the duties of chief treasurer in the organized group – he was in charge of the disposition of proceeds and controlled the cash receipts to accounts in Swiss banks. Lebedev subsequently, with Khodorkovsky's consent, transferred this bonus to himself and members of the organized group in the guise of payments for rendering consulting services through foreign companies. In the court's opinion, the defendants' nonrecognition of their guilt in this episode was evidence of their attempts to avoid punishment for the committed crime.

Judge Kolesnikova then proceeded to state the evidence for the next charge – damage caused by the accused to Apatit's shareholders. Again there was mention of the understated price for which apatite concentrate was allegedly sold to the dealers, who then resold it at market prices. As a result of this resale, in the court's estimation, Apatit's net profit for 2000-2003 was reduced by more than 6 billion rubles, which caused damage to the company's shareholders, including the state.

The third episode in the case analyzed by the court was also connected with Apatit. The accused were proven guilty, as was Andrey Krainov (a former employee of MFO MENATEP), who is being tried in the same case, of failure to execute a court order to return 20 percent of Apatit's shares to the state. It is notable that perhaps the main evidence of Khodorkovsky and Lebedev's guilt was Krainov's testimony in court that he was not insistent enough and believed Bank MENATEP's managers, who promised to implement Apatit's investment program (this obligation was assumed by Krainov's company Volna, for which said bank was the guarantor).

After the end of yesterday's session, Amsterdam came out to the press to express his frank astonishment at the text of the verdict. “The court not only did not analyze, but did not even mention, a single fact or argument cited by the defence during the trial. The reading of the verdict gave the impression that the defence had not taken part in the proceedings at all.” The reading will continue today starting at 11:00, and Kommersant will be following it.

by Ekaterina Zapodinskaia

(Kommersant, 5.24.2005)