Two endings to tale of 'original sin'

By Arkady Ostrovsky
Published: September 29 2005 03:00 | Last updated: September 29 2005 03:00

Their fortunes could not have been more different.

As Mikhail Khodorkovsky, the former owner of oil company Yukos, is to start his eight-year prison sentence for fraud and tax evasion, his former business partner and owner of Chelsea Football Club, Roman Abramovich is poised to receive $13bn for 72 per cent in Sibneft oil company, which he sold to Gazprom, the gas monopoly.

Yukos and Sibneft were created and privatised at knock-down prices ahead of the 1996 presidential election. A group of Russian oligarchs received shares in companies in exchange for loans made to the Kremlin.

Both companies were run aggressively by their owners who minimised tax payments to below the statutory rate of 24 per cent in 2001. Over the past two years Yukos has been crippled by $28bn in tax claims and the largest part of the company forcibly sold in an auction to Rosneft, a state-owned oil company. Sibneft on the other hand, was yesterday acquired by Gazprom.

The seller is Millhouse Capital, a London-based investment company controlled by Mr Abramovich, Russia's richest man who is believed to be close to the Kremlin. The full shareholder structure of Millhouse Capital has never been publicly disclosed and all it would say was that Mr Abramovich and his partners controlled it.

Al Breach, chief strategist at UBS Brunswick, says the sale of Sibneft marks the end of one of the most controversial privatisation deals in Russian history. "The original sin was the shares-for-loans privatisation in 1995. The sale of Sibneft is bringing that chapter to an end. Gazprom has paid the market price for the company, and that is good news for the market."

Mr Abramovich is one of the first Russian oligarchs to exit a company bought under the programme. However, he could still face legal action from former partners. Boris Berezovsky, once a co-owner of Sibneft told the FT he would next month file a legal case against Mr Abramovich in a London court for allegedly pressuring him to sell his stake of the company at a knock-down price on the Kremlin's order.

Mr Abramovich and Millhouse Capital also face action from Sibir Energy, listed on London's Aim market, which alleges that Sibneft stole 50 per cent of Sibneft-Yugra, a joint venture to develop the South Proiobskoe field in western Siberia. It alleges Sibneft diluted its 50 per cent stake to 1 per cent through a share issue Sibir was not told about. The case has been filed in the British Virgin Islands.

It is not the first time that Mr Abramovich has tried to sell his company. Sibneft has twice tried to merge with Yukos, most recently in 2003.

As part of the merger deal to create Russia's largest oil company, Mr Abramovich received $3bn in cash in addition to Yukos's shares. But a few months later Mr Khodorkovsky was arrested and the government attacked Yukos. Mr Abramovich called off the merger and unwound the share swap. The $3bn was never paid back and Yukos still owns 20 per cent of Sibneft.

After the dismantling of Yukos the Kremlin was no longer prepared to sell majority stakes in Russian oil companies to foreign buyers. This meant that the only possible buyer for Sibneft would be a state-controlled entity such as Gazprom.

Gazprom argues the deal is part of its strategy to become a global integrated energy player. But Steven O'Sullivan, head of research at UFG, an investment bank, is not convinced. "It is not unusual for oil companies to go into gas, but we have not seen many gas companies buying oil assets."

Yuri Trutnev, Russia's natural resources minister, told the FT: "This acquisition enhances the strength of Gazprom and makes it a powerful player in the global market." On the other hand the creation of such a giant, Mr Trutnev said, could put pressure on smaller players.

(Financial Times, 9.29.2005)

Russia gets tough on Khodorkovsky legal team

Russia gets tough on Khodorkovsky legal team
By Arkady Ostrovsky in Moscow
Published: September 23 2005 18:04 | Last updated: September 23 2005 18:04

Russian authorities on Friday deported a US-Canadian lawyer for Mikhail Khodorkovsky and threatened to disqualify the Russian tycoon's legal team a day after he lost his appeal against a conviction for fraud.


The incidents are the latest in the battle between Russian authorities and the former owner of the Yukos oil company, who was arrested two years ago. His lawyers and numerous political analysts believe the fraud charges were masterminded by the Kremlin to block Mr Khodorkovsky from delving into politics and to strip him of his assets.

The rejection of Mr Khodorkovsky's appeal on Thursday disqualified him from running for parliament in a Moscow by-election in December.

Robert Amsterdam, a Canadian lawyer who also holds a US passport, said his visa was revoked and he had been threatened with arrest unless he left Russia within 24 hours. Canadian and US diplomats in Moscow said they were concerned about the move and had contacted Russia's ministry of foreign affairs.

The incident, reminiscent of the tactics used by the secret police during the cold war, began early in the morning at the Park Ararat Hyatt, a five-star hotel in the heart of Moscow.

Mr Amsterdam, speaking before he left Russia, said he heard a knock on the door and a shout of "Police". "I opened the door and saw five men in plain clothes. They flashed some ID, but refused to give their names. They just said they were Moscow police."

Mr Amsterdam said they took his Canadian passport with a Russian visa and, speaking through an interpreter, demanded that he come with them to the police station.

"I refused to go with them. Then . . . they cancelled my visa and told me that if I was not on a 5pm British Airways flight out of Moscow, they would arrest me."

Mr Amsterdam said: "This can only be qualified as intimidation and harassment of a lawyer. I was put in a position where I had to choose between my personal safety and representation of my client."

Night-time "visits" by the secret police were one of the favoured intimidation devices used by the KGB and its Soviet predecessors. Observers said the resurgence of these tactics in Russia was a worrying sign of growing harassment of the Kremlin's opponents.

Russia's ministry of foreign affairs distanced itself from the expulsion of Mr Amsterdam but the federal migration service confirmed it cancelled Mr Amsterdam's visa on the grounds that his activities and the purpose of his visit did not correspond with the business visa he was issued with.

Mr Amsterdam was a member of Mr Khodorkovsky's international legal team and an important contact for reporters covering the case during the past two years. He had not argued the case in court.

Russia's prosecutor-general's office on Friday also demanded that a half-dozen members of Mr Khodorkovsky's Russian team of lawyers be stripped of their legal status for "breaching lawyers' ethics".

Genrikh Padva, the lead lawyer for Mr Khodorkovsky, said: "The prosecutors are simply taking revenge against lawyers who were doing their job. This is outrageous."

Mr Padva said he had been denied a meeting with Mr Khodorkovsky.

(The Financial Times, 9.23.2005)

"The Federal German Government has a duty to criticise the scandalous circumstances of the appeal trial."

Sabine Leutheusser-Schnarrenberger
September 23, 2005

On the occasion of reports about the circumstances of Mikhail Khodorkovsky’s appeal trial, Sabine Leutheusser-Schnarrenberger, Speaker of the FDP Parliamentary Party on Human Rights Policy, states:

The court has precipitously pushed through the appeal trial. One of the charges was simply discarded and the sentence was reduced to eight years. This obvious farce has nothing to do with an appeal trial in accordance with the rule of law.

The pressure which the Russian State is applying around the appeal trial is a true scandal. Apparently, US defence counsel Robert Amsterdam has been expelled from the country. The three Russian lawyers are being threatened today with the revocation of their licences.

In January 2005, the Parliamentary Assembly of the Council of Europe passed a resolution with a two-thirds majority in which it ascertained massive violations in the criminal prosecution of Mr Khodorkovsky. European governments were asked to call upon the Russian Federation and demand necessary reforms of the judiciary with a view to strengthen its independence.

The incumbent Federal German Government has a duty to criticise the scandalous circumstances of the appeal trial and express this criticism via the diplomatic means which it has at its disposal.

(MBK press-center, 9.23.2005)

Prosecution launches attack on Khodorkovsky lawyers

MOSCOW, September 23 (RIA Novosti) - Russian prosecutors launched a fierce attack on Mikhail Khodorkovsky and his lawyers Friday, one day after the former oil tycoon was sentenced to eight years in jail.

Khodorkovsky's international attorney Robert Amsterdam from Canada said that unidentified people in civilian clothes had arrived at his hotel and taken away his passport on Thursday night. They later returned it, but with a stamp indicating that he had to leave Russia on Friday.

The Foreign Ministry and the Federal Migration Service said they had nothing to do with the expulsion of the attorney.

The Russian lawyers of the former head of Yukos oil major came under fire from the prosecutors.

"This so called most transparent oil company used criminal methods at every stage of its work," said Natalia Veshnyakova, press chief of the Prosecutor General's office. "And the lawyers used these methods, which were close to criminal," she said.

Prosecutors appealed to the Ministry of Justice, asking it to strip of their law licenses all members of Khodorkovsky's defense team with the exception of two men. The attorneys had deliberately tried to drag out the trial and delay and disrupt the hearings, she said.

The Moscow City Court dismissed Khodorkovsky's appeal in one-day hearings Thursday but reduced his sentence on tax evasion and fraud as well as that of his business partner Platon Lebedev from nine to eight years.

Genrich Padva, one of those Khodorkovsky lawyers not targeted by the prosecutors, said the sentence would be appealed in the Strasbourg Court as the statute of limitation on the main charge, on which Khodorkovsky and Lebedev got seven years in prison, had expired on September 21.

Padva said he had not been allowed a meeting with Khodorkovsky Friday.

The defense would also complain about violations of international law during the trial.

Chief prosecutor Dmitry Shokhin said Khodorkovsky, 42, was being portrayed as a martyr whereas he had got off easy as for similar charges in the United States he would have faced 40 years in jail. "I sleep well, my conscience is clean," he said.

"Banal swindle and tax evasion should not be turned into a 'case of the century'," Vishnyakova said.

(RIA Novosti, 9.23.3005)

Khodorkovsky To Appeal To EU Human Rights Court

Chris Noon, 09.23.05, 9:09 AM

Bureaucracy ostensibly works by applying standard operation procedures, yet these procedures are recast at the behest of whoever is in charge of them. And like all bureaucracies, Russia's bureaucracy has come to keel for its chief when it has needed to. On Thursday a Moscow court upheld the conviction of Mikhail Khodorkovsky, thus dooming the ex-Yukos chief executive's eleventh-hour effort to run for parliament, a move that would have piqued Russian President Vladimir Putin.

The court lopped one year off the ex-Yukos CEO's prison sentence--reducing it to eight years from nine--but the oil tycoon's lawyers are already picking their next move: To appeal Khodorkovsky's conviction on fraud and tax evasion charges to the European Court of Human Rights.

The Moscow City Court judges proved they could be clinical when it suited them, announcing their decision after only one day of deliberation. Few were surprised at the lack of ceremony accorded the billionaire, yet the judges' verdict drew furious accusations from Khodorkovsky's lawyers that their client received an unfair trial.

The lawyers can, and will, protest until they're blue in the face--yet punishing Khodorkovsky almost seems to have become part of standard procedure for Russia's bureaucracy. "This court in one day has demonstrated, has proved eloquently, everything we have said about political control. This is institutionalized bias," argued defense lawyer Robert Amsterdam. Amsterdam's own Russian visa has been annulled, and he was ordered to leave the country Friday, allegedly because he had failed to show up at the Russian company that had sent him the invitation necessary to receive an entry visa.

From the other side, just the sounds of stony protocol: "This case itself has demonstrated that there are no untouchable people in the country and no citizen who has breached the law will escape punishment," a Pro-Kremlin politico was quoted as saying.

At his court appearance, Khodorkovsky again took the opportunity to proclaim his innocence and reiterated the charges were politically fabricated. The verdict upheld "is not a court decision, it has nothing to do with justice," he said.

(Forbes.com, 9.23.2005)

Russian Oil Tycoon's Conviction Upheld

By Peter Finn
Washington Post Foreign Service
Friday, September 23, 2005; Page A14

MOSCOW, Sept 22 -- A Moscow court swiftly rejected an appeal by the former oil tycoon Mikhail Khodorkovsky on Thursday, deliberating for an hour before affirming his conviction on fraud and tax evasion charges.

After a one-day hearing, the Moscow City Court reduced Khodorkovsky's prison sentence from nine to eight years and ordered the sentence carried out immediately. "The punishment will come into force," Judge Vyacheslav Tarasov said. "The hearing is over. I ask the guards to take the convicted man away."

Mikhail Khodorkovsky, former head of the Russian oil giant Yukos, listens from the defendant's guarded glass cage. (By Misha Japaridze -- Associated Press)
The decision ended Khodorkovsky's unusual plan to run for parliament in a December by-election, because Russian law bars convicted prisoners from seeking elective office.

"Not only am I not guilty but also a crime was never committed," Khodorkovsky said in a statement to the court before the decision was announced. "My guilt has been recognized not by a court but by a clutch of bureaucrats."

Khodorkovsky, 42, smiled wanly as he looked toward his elderly parents and his attorneys before he was led away in handcuffs.

He has been held in Moscow since shortly after his arrest in Siberia in October 2003, when masked commandos stormed his private plane at an airport. He is likely to be transferred to a prison facility away from Moscow, where he has been able to communicate with the news media and others through his attorneys.

Khodorkovsky charges that his arrest and prosecution were part of a government effort to break up Yukos Oil Co., the conglomerate he founded and once headed. The company has largely been dismantled in a series of parallel legal actions concerning tax evasion, and its key assets have been taken over by a state-owned oil company. Once valued at close to $40 billion, Yukos is now struggling to survive against further state and private claims.

Khodorkovsky's supporters have condemned his prosecution as a Kremlin-orchestrated case designed to crush a potentially dangerous political opponent. Once Russia's richest citizen, Khodorkovsky before his arrest had been staking out a political role in opposition to President Vladimir Putin.

Khodorkovsky's business partner, Platon Lebedev, was also convicted on tax charges. His nine-year sentence was also reduced by one year, although he had declined to formally appeal and had derided the process as a farce. The court also struck down or modified some of the charges against Khodorkovsky and Lebedev.

Khodorkovsky's attorneys said they would continue to seek redress in higher courts and were likely to take the case to the European Court of Human Rights in Strasbourg, France. That court's rulings are binding on Russia, a signatory to the European Convention on Human Rights. Khodorkovsky must first appeal to the Russian Supreme Court, which is not obliged to take the case.

"The current hearings are a parody of justice," one of Khodorkovsky's attorneys, Yuri Schmidt, said after the verdict. He called the one-year reduction in his client's sentence a "cosmetic facelift" and "a pure act of propaganda."

Prosecutors insisted that they had successfully put a rogue businessman behind bars. "We are generally satisfied with the Moscow City Court ruling," said Dmitri Shokhin, one of the prosecutors. "It was the right of the court to reduce the prison term."

(The Washington Post, 9.23.2005)

Khodorkovsky appeal rejected

By Arkady Ostrovsky in Moscow
Published: September 22 2005 20:59 | Last updated: September 22 2005 20:59

A Moscow court on Thursday rejected an appeal by Mikhail Khodorkovsky, the jailed Russian tycoon, against his conviction for fraud and tax evasion but cut his nine-year sentence to eight years.

The ruling, which came at the end of one-day hearing, ends another chapter in the legal battle between the state and the former owner of the Yukos oil company, who was arrested two years ago.

The attack on Mr Khodorkovsky, widely believed to be masterminded by the Kremlin, has dominated Russian politics over the past two years. Economists believe it has damaged the investment climate in the country and empowered hardliners close to Vladimir Putin, Russia's president.

Mr Khodorkovsky's jail sentence comes into force automatically on the rejection of the appeal and disqualifies him from running for parliament.

Mr Khodorkovsky had earlier announced he would stand in a Moscow by-election on December 4, but his registration documents sent by post last week never reached the electoral commission. Yuri Shmidt, one of Mr Khodorkovsky's defence lawyers said: “What we are dealing with here is not the prosecutors or the judges, it is the full weight of the state machine.” “I did not think the authorities would be so cynical in the way they did it - they have abandoned any appearance of legality,” Mr Shmidt said.

The 42 year old Mr Khodorkovsky smiled before being led out of the glass-fronted cage in the court-room, and waved to relatives and supporters. His lawyers said they would continue to fight for reversal of his conviction in other courts, including the international court of human rights in Strasbourg.

During the hearing Mr Khodorkovsky accused Kremlin bureaucrats of prosecuting him out of greed and fear in order to steal his oil company and neuteralise him as a political opponent.

“Kremlin bureaucrats come and go. Those who are currently breaking up Yukos will also not be here for ever. In a few years, they will move to the West,” he said from within the glass-fronted metal cage in which he followed proceedings.

“I understand the task given to the court.”

(The Financial Times, 9.23.2005)

Court Rejects Khodorkovsky Appeal

By Valeria Korchagina and Catherine Belton
Staff Writers

The Moscow City Court late Thursday rejected Mikhail Khodorkovsky's appeal in a marathon 11-hour session, cutting short his campaign for a State Duma seat before it even began.

The three-judge panel reduced his sentence -- and that of his business partner Platon Lebedev -- from nine years to eight.

"The punishment will come into force," Chief Judge Vyacheslav Tarasov said. "The hearing is over. I ask the guards to take the convicted man away."

As Khodorkovsky was led out, he looked pale but waved at supporters. His parents, Boris and Marina, watched with teary eyes.

"This sentence was written on Oct. 25, 2003," Marina Khodorkovskaya said, referring to the day her son was arrested in a dawn raid by gun-toting special forces at a Siberian airport.

Later, in the darkness outside the heavily guarded courthouse in northeastern Moscow, Boris Khodorkovsky quietly remarked, "From nine to eight. ... I won't live that long."

It was not immediately clear where Khodorkovsky, 42, would be sent next. Under Russian law, once an appeal is exhausted, a prisoner serves the rest of his term in a prison colony. Khodorkovsky's lawyer Yury Shmidt said his client would be sent to a prison not far from Moscow.

Shmidt, however, could not say when. "There had been reports in the past that the Prosecutor General's Office was planning to bring more charges," Shmidt said. "So who knows?"

State prosecutor Dmitry Shokhin refused to comment on the possibility of further charges after the court session concluded at about 9 p.m.

The ruling ends Khodorkovsky's attempts to defend himself against a legal onslaught that is widely believed to be Kremlin punishment for his political and business ambitions.

It also quashed any chance that Khodorkovsky had of running for a seat in the State Duma in a Moscow by-election in December. Once a convicted prisoner's appeal is rejected, he can no longer run.

The judges handed down their ruling before elections officials received Khodorkovsky's official application to run, which he mailed from his cell in the Matrosskaya Tishina detention center last week.

Shmidt said the ruling was rushed through to ensure that Khodorkovsky's election bid failed. "I'm sure the letter will arrive tomorrow," he said. "Veshnyakov will say, 'We would have tried to register him, but now it's impossible.'" Alexander Veshnyakov is the chief of the Central Elections Commission.

In a two-hour speech to the court, Khodorkovsky said the case against him had been engineered by a group of Kremlin bureaucrats out to gain control of his Yukos oil company. "Kremlin bureaucrats come and go. Those who are currently breaking up Yukos will also not be here forever. In a few years, they will move to the West for quiet retirement," he said from the padlocked glass-and-metal defendant's cage.

"I had hoped there would be justice, but there isn't any," he said as he wrapped up his address.

As Khodorkovsky spoke, the judges appeared anxious to deliver their ruling. At 7:20 p.m., about an hour into Khodorkovsky's speech, Tarasov interrupted him, saying, "We have all the documents. We're actually ready to deliver the ruling." Nonetheless, the judges waited until Khodorkovsky finished and later read out their ruling in a period of a few minutes.

Shmidt called the decision "an abuse of the law, of lawyers and of the defendant."

"The decision to reduce the sentence by one year is a pure propaganda ploy designed to show the impartiality of the court," he said. "The state has ordered this, and the order has been fulfilled."

After the ruling was read out, Shokhin told reporters that it was "fair, well-founded and just." During his closing argument, he had lashed out at the defense lawyers and said they had tried to "create the image of a martyr."

Earlier, the judges threw out Khodorkovsky's request for more time to study the 600-page trial record, which he said was shot through with misleading errors on every page. "I understand the task given to the court. I will be held in jail as long as the fear of opposition outweighs conscience," Khodorkovsky said, before being interrupted by Tarasov.

"These are political issues," Tarasov said. "This is an ordinary case, an ordinary criminal case."

Shmidt called for the judges to be dismissed, saying they were biased and pressured by third parties into delivering a quick ruling. In Russian courts, it is the judges themselves who rule on whether they are fit to serve. So after a short break to consult with his fellow judges, Alexei Marinenko and Svetlana Lokhmachyova, Tarasov dismissed Shmidt's complaint as groundless.

Throughout the day, Khodorkovsky's lawyers complained that the judges were rushing through the hearings at what they called breakneck speed. The trial lasted 11 months, and the reading of the verdict in May lasted a record 12 days.

Shmidt also brought up the political aspect of the case. "What we are dealing with here is not the prosecutors or the judges, it is the full weight of the state machine. The political authorities are dictating what is going on here," he said.

Tarasov, however, had little patience for Shmidt's remarks. "Shmidt, we are hearing a criminal case, not politics ... a normal criminal case," he said.

The judges only began hearing the appeal Thursday, after a week of stop-start wrangling between themselves, Khodorkovsky and his lawyers over when the appeal could start. Until Thursday, the only lawyer Khodorkovsky had authorized to defend him, Genrikh Padva, had been hospitalized.

Shmidt said the defense team would continue to work on the case but offered no details.

It was also unclear Thursday what, if anything, would happen to Khodorkovsky's Duma campaign. His supporters have pledged to hold independent "people's elections," regardless of whether Khodorkovsky was allowed to run, and encourage supporters to write in his name on the ballot if he was not. Following the ruling, his campaign chief, Ivan Starikov, said he was still considering the options.

Khodorkovsky supporters will either put up one of two alternate candidates, or push ahead with holding the people's elections, he said.

(The Moscow Times, 9.23.2005)

Fortunes go to Kremlin Favorite

By Catherine Belton
Staff Writer
With Gazprom's securement of a record $12 billion loan now appearing to be a mere formality, the gas giant looks set to buy out Roman Abramovich's stake in Sibneft -- the biggest state buyout in post-Soviet history.

The deal would apparently let Abramovich walk out of Sibneft with nearly $9 billion in profit on an acquisition he made in the controversial loans-for-shares auctions of the mid-1990s.

Gazprom's buyout of his stake would also mark a stark delineation between Abramovich and his erstwhile partner Mikhail Khodorkovsky, whose conviction on fraud and tax evasion was upheld by an appeals court on Thursday.

Sources familiar with the negotiations between Gazprom and a syndicate of Western banks said that the loan was "imminent" and would be signed once remaining formalities were settled.

Earlier this week, Gazprom deputy CEO Dmitry Medvedev said that the gas giant could complete the acquisition of Sibneft by the end of the year.

The deal would put almost $9 billion in cash into the pocket of Abramovich, who along with his one-time partner Boris Berezovsky forked out a little more than $100 million for the oil firm in 1995-96.

It is difficult not to compare Abramovich's fortunes to those of Khodorkovsky, who now faces an eight-year prison sentence after a highly politicized trial and whose Yukos oil empire has been crushed under a $28 billion back tax claim. The legal onslaught was widely seen as retribution for the threat that Khodorkovsky posed to Kremlin power.


Even though the Audit Chamber has found that Sibneft underpaid its taxes by 10 billion rubles ($360 million) in 2001 and 2002, no legal action has been taken against the firm. Sibneft has denied any wrongdoing.

Meanwhile, Sibneft's effective tax rate in 2001 was just 9 percent, below Yukos' 13 percent in 2002 and much lower than the statutory rate of 24 percent.

Furthermore, lingering questions over Sibneft's murky ownership have raised speculation that Abramovich has the backing of the Kremlin.

In the summer, President Vladimir Putin publicly said that he was aware of talks between Sibneft and Gazprom -- and that the state should treat it as any other deal.

Berezovsky, who has fallen out of favor with the Kremlin and is living in exile in London, said in a telephone interview Thursday that he had evidence that Putin was seeking personal gain in allowing the Sibneft sale to go through unhindered.

In July, Berezovsky said he was preparing to sue Abramovich in a London court on charges of forcing him out of his stakes in Sibneft and other major assets at a knockdown price after relationship with Putin's Kremlin soured in 2000.

"I have been saying for a long time that Putin is a business partner of Abramovich," he said. "I have no doubt that the profits from the sale of Sibneft will be shared between Abramovich and Putin, as well as among several other individuals."

The difference in treatment between Khodorkovsky and Abramovich underlines Putin's interest, he said.

"It's now clear they just took away Yukos because it was not owned by any of their gang. Proof of this is exactly what's happening with Sibneft now. Putin has said he personally supports the deal."

Kremlin spokesman Dmitry Peskov declined to comment on Berezovsky's remarks. "A person who is under an international arrest warrant cannot accuse anyone of anything," he said. "It would not be correct to make any comment on his remarks."

Russian prosecutors have charged Berezovsky with widespread fraud.

Berezovsky claimed he had seen direct evidence of Putin's collusion with Abramovich in Sibneft when Abramovich forced him to sell the 50 percent stake in Sibneft he jointly owned with partner Badri Patarkatsishvili for $1.3 billion in 2000.

Abramovich said he was speaking in Putin's name when he told him he had better sell or watch the stake be taken from him anyway, Berezovsky said.

"This was done for the benefit of Putin. I can't rule out that during the investigation in England and during the court proceedings, Putin will be called to the court to give evidence."

Berezovsky also claimed he had documentary evidence of Putin's interest in Sibneft, but declined to elaborate on what his records might reveal, saying he did not want to give his enemies time to prepare for his legal attack.

Berezovsky said his suit would likely be filed in October, rather than the September date he had given earlier.

Sibneft spokesman John Mann denied that Abramovich had any special ties to Putin.

"It is clear to anyone that the relationship between Abramovich and Putin is the same the president has with any regional governor in the country," he said. Abramovich is governor of the Chukotka region in the Far East.

Mann declined to disclose the exact shareholder breakdown of Sibneft, saying only that 72 percent of Sibneft was managed by the Millhouse holding company on behalf of core shareholders, who "include Abramovich and a group of current and former Sibneft managers."

Mann declined to say whether the core shareholder group included any other individuals.

Sibneft's ownership structure has often posed a conundrum for financiers and even bankers extending loans to the firm.

"Documents on the ownership of Millhouse are pretty meaningless. If you look at them, you pretty soon run into a dead end," said one banker, speaking on condition of anonymity.

The banker added that a rigorous look at the company's ownership had not been a requirement in previous loan deals secured by oil exports.

Other market observers have suggested that Abramovich may at the least have to share some of his winnings with other state officials.

"One oligarch has said to me he doesn't think for a minute that Abramovich will keep all that cash. He owes a lot of people a lot of money, and a lot of it will make its way back to the Family," said a source close to a natural resources tycoon, referring to the clique of businessmen and powerbrokers who surrounded former President Boris Yeltsin.

Analysts said any lawsuit launched by Berezovsky was unlikely to affect Gazprom's title to the oil firm. Yet, another legal battle could give the gas giant and its big Western lenders some reason to pause.

Sibneft's former partner, Sibir Energy, is suing the oil company in Russia and the British Virgin Islands, alleging that it was pushed out of a joint venture to develop the Sibneft-Yugra field.

Hearings as to whether the British Virgin Islands court had jurisdiction over the case began Thursday, a spokesman for Sibir Energy said.

The spokesman said he could not comment further because the hearings were closed. If jurisdiction is granted, proceedings could take months, he said.

"The outcome of this could impact the value of Sibneft," said Chris Weafer, chief strategist at Alfa Bank.

Sibneft-Yugra produces some 8 percent of Sibneft's total oil output, according to Valery Nesterov, an oil and gas analyst at Troika Dialog, who said that the field could be excluded from the deal.

Gazprom has been so open and active in seeking to buy out Sibneft that the gas giant would suffer a serious blow should rivals Rosneft or Surgutneftegaz snap it up at the last moment.

"This has become a question of image after Gazprom's lack of success in merging with Rosneft," Nesterov said, referring to the failed merger between the two energy giants earlier this year.

"It would not be good for them to get into the same situation again. It's become a question of reputation and of how much you can trust the company's management."

"You still can't say it's a cinch," Weafer said. "As we saw in Rosneft, anything is possible right up to the point where the ink is still drying on the page."

(The Moscow Times, 9.23.2005)

European ties Yukos feud to WTO entry

European ties Yukos feud to WTO entry
By Patrice Hill
The Washington Times
Published September 23, 2005

WASHINGTON -- Russia's cavalier handling of the Yukos Oil Co. affair, frequently ignoring property rights and the rule of law, will be an issue in negotiations with the United States and Europe over Moscow joining the World Trade Organization, a top European official said yesterday.

Jean Lemierre, president of the European Bank for Reconstruction and Development, told The Washington Times that the Russian legal system's dismissive treatment of the oil company's rights has become a matter of concern since Russia moved in the past year to break up the company, seize its assets and jail its former chairman, Mikhail Khodorkovsky.


"I just had a discussion with [Secretary of State] Condoleeza Rice about this. It will be an important part of the discussions of joining the WTO," Mr. Lemierre said.

"What is key is improvement in the rule of law. Improvements are too slow," and the judicial system continues to act like an arm of the executive branch, he said.

A State Department spokesman declined to comment yesterday. The department frequently has spoken out about the need to honor property rights during Moscow's nearly two-year legal wrangle with Yukos and Mr. Khodorkovsky.

A Russian court yesterday reduced the former oil magnate's jail sentence on fraud and tax evasion charges from nine years to eight.

The United States is negotiating the terms of Russia's WTO membership bilaterally as well as multilaterally with Europe and other nations. It hopes to complete a bilateral accord this year, addressing issues such as trade in poultry, energy and financial services.

The broader, multilateral agreement -- which would open the way for accession to the WTO -- may take longer to complete, an administration plete, an administration spokesman said. The European Union reached a bilateral agreement with Russia in May 2004.

Russia's treatment of Yukos prompted a dramatic drop in investment in the country by Western companies, analysts say, and has killed potential business deals in strategic sectors such as oil, banking and aerospace, where Westerners fear Moscow might move to seize control.

Seeking reform of Russia's legal system to honor the rights of corporations and investors, which exist in law but often are disregarded by courts in practice, is consistent with the stated U.S. goal of requiring Russia to honor intellectual property rights as part of any WTO accession.

"President [Vladimir] Putin has made WTO membership and integration into the global trading system a priority," U.S. Trade Representative Robert B. Zoellick told Congress in 2003.

"We will support Russia as it promotes reforms, further establishes the rule of law in the economy and adheres to WTO commitments that support a more open economy. This effort needs to include action by the Duma to establish a fully effective legal infrastructure for a market economy," he said, referring to Russia's lower house of parliament.

Mr. Lemierre, whose bank invests more than $4 billion in Russia and Eastern Europe each year, said that although he is impressed with Russia's economic progress, stability and growth since its financial crisis in 1998, he is not impressed by its legal system.

"Right now in Russia, people see the courts as an element of the fight" between the state and defendants such as Yukos, he said.

But the judges should be impartial "referees" who determine whether parties have complied with contracts and the law, as they are in the West, he said.

"This is a cultural point, and it takes time to change all of this," said Mr. Lemierre, noting that Russia gained little experience with an impartial judiciary either under its former Communist government or the monarchy that preceded it.

Mr. Lemierre said Mr. Putin was popular in Russia for his harsh treatment of Yukos and Mr. Khodorkovsky, who is disparaged as an "oligarch" there, and that it is clear that after 73 years of state ownership of all property, Russians still do not have a good grasp of the value of private ownership.

Mr. Lemierre said, however, that he has not concluded that democracy is in danger in Russia; it just needs time to evolve.

• Staff writer Jeffrey Sparshott contributed to this article.

(The Washington Times via WorldPeaceHerald, 9.23.2005)

Khodorkovsky Told to Find a Lawyer

By Valeria Korchagina
Staff Writer
Judges at the Moscow City Court on Tuesday adjourned Mikhail Khodorkovsky's appeal for a third time due to the absence of key defense lawyers Genrikh Padva and Yury Shmidt, but warned that if they failed to show up in court on Thursday a state-funded public defender would step in.

Padva, the only lawyer authorized by Khodorkovsky to represent him in the appeal, remains in the hospital due to poor health, and Shmidt is traveling.

The delay, which infuriated state prosecutor Dmitry Shokhin, allows another couple days' breathing space for Khodorkovsky to register as a candidate in a Dec. 4 State Duma by-election. Registration for the race in the traditionally liberal Universitetsky district of Moscow began Monday and lasts until Oct. 29.

If Khodorkovsky's appeal is rejected, he will not be allowed to run.

By Thursday, a 10-year statute of limitations will run out on one of the charges against Khodorkovsky and his business partner Platon Lebedev, the alleged illegal privatization of a research institute in Moscow. It was unclear whether the two men's sentences of nine years in prison would be reduced as a result, but such a legal opportunity exists, Khodorkovsky's lawyers said.

Khodorkovsky and Lebedev were found guilty of fraud and tax evasion in May after a highly politicized trial. Lebedev has refused to participate in the appeal proceedings, citing a lack of faith in the judicial system. Khodorkovsky has insisted on being represented only by Padva, whose absence has already delayed the start of the appeal by a week, or by Shmidt, another experienced lawyer.


Khodorkovsky has refused to seek the services of other lawyers, despite the court on Monday attempting to replace Padva with lawyers Anton Drel, Yelena Levina and Denis Dyatlev. All three on Tuesday officially declined to represent Khodorkovsky in court, saying they had not had time to study the complete trial record. They were then asked to leave the seats allocated for the defense team and told to sit with the public. Khodorkovsky, at least briefly, was left unrepresented by any lawyer.

After an outburst by Shokhin, who said that the defense lawyers' absence was "a deliberate attempt to delay the hearing," the panel of three judges ruled that the appeal would begin Thursday. If neither Padva nor Shmidt appeared in court then, the court would appoint a lawyer for him.

"Given the contradictory information regarding the time needed for lawyer Padva's recovery, and regarding the possibility of Shmidt appearing in court ... the court considers it necessary ... to provide Khodorkovsky with a public defender," assistant judge Alexei Marinenko said as he adjourned the hearing.

A public defender is unlikely to be required, however, as Padva sent an official letter to the court saying that he would show up Thursday.

Khodorkovsky's father, Boris, welcomed Tuesday's ruling as fair and legal.

"Compared with previous court proceedings and judges, maybe these are really judges that act according to the law," he said after the adjournment.

During Khodorkovsky's and Lebedev's 10-month trial at Moscow's Meshchansky District Court, their lawyers frequently complained that the judges were violating procedures and obstructing the defense.

The Moscow Times, 9.21.2005

More delays in Russia tycoon case

MOSCOW, Russia (Reuters) -- Prosecutors accused Russian oil tycoon Mikhail Khodorkovsky on Tuesday of deliberately delaying his appeal against a fraud conviction while he makes an election bid designed to embarrass the Kremlin.

During a third day of procedural wrangling in the case, the judge ordered an adjournment until Thursday, saying the court could appoint a lawyer if Khodorkovsky's high-powered defence team did not arrive by then.

Khodorkovsky, 42, is keen to run in a parliamentary by-election on Dec. 4. He would be disqualified if the Moscow city court throws out his appeal before the poll, but simply by registering he could start a campaign to embarrass the Kremlin.

The high-profile battle between Khodorkovsky and the Kremlin has dominated Russian politics since his arrest in 2003, hurting investor confidence and resulting in the messy dismemberment of the oil major Yukos, which he once controlled.

A pale and thin Khodorkovsky, sentenced to nine years in prison in May, sat inside the glass defendants' box and spoke calmly. He was once ranked as Russia's richest man.

On two previous days, Khodorkovsky has asked for adjournments since lawyer Genrikh Padva is in hospital. Supporters have accused prosecutors of trying to dash through the process to scupper his poll chances.

The court ruled on Monday that he should be defended -- against his wishes -- by three other lawyers but on Tuesday they left his defence team in place and the judge said he should be defended by the hospitalised Padva.

Second lawyer Yuri Shmidt is abroad.

"I insist on my position to allow the participation of these two lawyers to avoid risking a mistrial," Khodorkovsky said.

Prosecutors' claim
Prosecutors said Khodorkovsky, who made his money in the freewheeling 1990s, was deliberately delaying the appeal and asked for his requests to be rejected.

"What is happening is an obvious attempt to block court hearings and an attempt to delay them further," said Prosecutor Dmitry Shokhin.

"Khodorkovsky is perfectly aware that Shmidt has left Russia... and knows that Padva is in hospital."

Although he has scant chance of winning the by-election, a political campaign would give him access to media and a platform to argue his case that the Kremlin engineered his prosecution to divide up Yukos and neuter a powerful opponent.

The Kremlin denies any role in Khodorkovsky's case. Officials say he is just a corrupt businessman who got caught.

Supporters said election officials had so far failed to register him as a candidate.

Anton Drel, a member of the legal team, said prison officials said they had sent registration documents on Sept. 15 while election officials said they had not received them.

"(Election officials) have not yet received Khodorkovsky's registration documents. This has been done deliberately so he cannot register in time. The documents were sent on Sept. 15," said Drel.

Reuter via CNN, 9.20.2005

Khodorkovsky Appeal Delayed for 2nd Time

Mikhail Khodorkovsky on Monday won a day's reprieve for his election campaign as the Moscow City Court for a second time adjourned proceedings in his appeal.

The three judges pressed Khodorkovsky to have two of his junior lawyers and his close legal adviser, Anton Drel, represent him in the appeal and ordered all three to sit at the defense table in the court in a bid to start proceedings. The only lawyer authorized by Khodorkovsky to defend him in the appeal, Genrikh Padva, was hospitalized last week due to poor health and has so far been unable to appear.

After Khodorkovsky categorically refused to be defended by the lawyers urged on him by the judges, the judges agreed to give him more time to select a lawyer and said the court would reconvene Tuesday.

Yukos founder Khodorkovsky and his business partner Platon Lebedev were found guilty of fraud and tax evasion in May after a highly politicized trial and sentenced to nine years in prison.

The day's breathing space could give Khodorkovsky slightly more hope of registering to run in a December by-election for the State Duma. Registration for the race in the traditionally liberal Universitetsky district of Moscow began Monday and lasts until Oct. 29.


Drel told reporters Monday that the judges had tried again to speed up the appeal to ensure Khodorkovsky could not register as a candidate in the election. If Khodorkovsky's appeal is rejected, he will not be allowed to run.

"The authorities have ordered the Moscow City Court not to allow Khodorkovsky to be registered, and this explains everything," Drel told reporters after the hearing was adjourned.

Khodorkovsky's campaign manager, Ivan Starikov, who was also in court Monday, said the authorities' aim was "to make sure Khodorkovsky is pushed out of the public arena. But they won't be able to do that even if they reject his appeal."

Khodorkovsky's supporters have said they would hold "people's elections" in the district regardless of whether he is allowed to run, and encourage supporters to write in his name on the ballot if he is not registered.

Starikov said that prison officials sent Khodorkovsky's application to take part in the election to the district's elections commission last week. But as of Monday, it was not clear whether his documents had reached their destination. An elections commission official said Monday that his application had not yet been received, Interfax reported.

Starikov said his team would hand in other application documents Monday and said they expected to start collecting signatures for Khodorkovsky's registration Wednesday.

Khodorkovsky told the court he had been unable to choose a lawyer to replace Padva in time for Monday's hearing because his cell had been quarantined since late last week, preventing him from meeting with his lawyers. An inmate ill with an infection had been deliberately held in three cells on his floor, including his and Lebedev's, after which all three cells had been quarantined, he said. Drel said the tactics used to keep Khodorkovsky from talking with his lawyers were akin to those "in the Middle Ages."

State prosecutor Dmitry Shokhin again accused Khodorkovsky of dragging out proceedings and called for an immediate start.

After judges granted Khodorkovsky time during a recess to consult with Drel, Denis Dyatlev and Yelena Levina, the tycoon said a document presented to the court by Shokhin saying Padva would be incapacitated for at least a month was false. He said the lawyers had been in contact with Padva and that he had said he could be ready to come to the court by the end of the week.

If "extreme circumstances" ruled out Padva defending him, then the only other lawyer capable of doing so, Khodorkovsky said, was Yury Shmidt, another seasoned and experienced lawyer.

Khodorkovsky reiterated Monday that none of his other lawyers -- including Drel, Levina and Dyatlev -- were ready to conduct his defense as they had not been given enough time to acquaint themselves with the case in its entirety. Instead, he said, each of them had had time only to look at different parts of the trial record.

At one point during Monday's hearings, the judges appeared intent on making sure the three lawyers represented Khodorkovsky, stating before a brief recess that none of the participants in the hearings, including Khodorkovsky, had any objection to the lawyers' defending him.

Khodorkovsky told the judges after the break that he refused to have the three lawyers represent him. "I did not give my consent for them to participate, and I refuse their services in this appeal," he said.

By Catherine Belton
Staff Writer
The Moscow Times, 9.20.2005

Will Russia Bungle Its Oil Bonanza?

For five years, the managers of Russia's richest oil fields in western Siberia increased output by 14 percent annually, overcoming decades of Soviet neglect by fixing leaks, replacing pumps and charting better geological maps. Then it stopped. In the year after the Yuganskneftegaz production unit's effective renationalization, it will ship the same 52 million tons, or 385 million barrels, of crude that it did in 2004, according to the new owner's projections even as supply remains extremely tight around the world. The fields straddle five of the best-producing reserves in Russia. The state- owned Rosneft won them in January after the state took control as partial payment for a $28 billion back tax claim against Yukos, then Russia's largest private oil company. Their takeover came as a defining moment in President Vladimir Putin's policy of imposing Kremlin control over Russia's oil and natural gas that led to a partial renationalization of the industry, one of the world's largest energy suppliers. The subsequent drop in growth at Yuganskneftegaz from 14 percent to zero comes as an ominous sign that Russia may bungle its recent nationalization of companies, analysts say. And the production unit's troubles come as the state- controlled company Gazprom is poised to buy the privately held Sibneft Russia's fifth-largest producer, with more than 900,000 barrels a day from Roman Abramovich, a Russian tycoon now based in London. The deal could raise the Kremlin's control to one-quarter of all Russian oil production, according to 2004 production figures. The drop in production after years of surging growth partly stems from pipeline bottlenecks and high taxes across the industry. Still, whatever the causes, it threatens to undermine Russia's efforts to reinvent its energy companies as international oil majors. That transformation would depend on their ability to deliver energy as promised. Russia's emerging energy plan, articulated by Putin in speeches over the summer, would give it the ability to raise output during times of crisis and the reliability to supply even the world's largest consumer, the United States, in the years ahead. Yet, industry-wide, production growth is forecast to drop from a five-year average of 7.8 percent to 3 percent this year and remain at this level until Russia builds additional pipelines, said Christopher Weafer, chief strategist at Alfa Bank. "Russia has to show that it's not just a big energy partner, but a potentially much bigger energy partner, particularly to the United States," Weafer said. The stakes are high. Russia is already the world's second- largest oil exporter after Saudi Arabia. Russian Energy Ministry projections cited by the U.S. Energy Department show crude exports rising to a possible 5.5 million barrels a day this year, from 5.14 million barrels in 2004, and reaching 6.2 million barrels a day by 2015. Most of Russia's oil is now exported to Europe. But by 2010 Russia is expected to be exporting energy directly to the United States across both the Pacific and Atlantic Oceans, sending oil from offshore wells near Sakhalin Island to the West Coast, and liquefied natural gas and oil from the Arctic to the East Coast. "Without additional investment, the U.S.A. could be importing up to 50 million tons of Russian oil annually," Putin told a gathering of U.S. business leaders earlier this summer. Russian oil "would increase and improve the security of the world economy, including America." Russia's energy clout has become central to its foreign policy, with business and government leaders from China to Germany gleefully greeting Putin's promises of new energy. Earlier this month, Russia and Germany agreed to lay a gas pipeline under the Baltic Sea. Gazprom and American and European companies are in talks about developing the Shtokmanovskoye gas and gas condensate field in the Barents Sea, rated one the world's five largest, for export to the United States. But the respect Russia gains from energy depends on its ability to deliver.

"When a thief steals your car he doesn't immediately know how to drive it," said Alexander Shadrin, a spokesman for Yukos, after Rosneft's acquisition of Yuganskneftegaz. "Until they figure out how to use it, it will be a mess." Sergei Kupriyanov, a spokesman for Gazprom, brushed aside criticism of inefficiency, and a spokesman for Rosneft, who declined to be identified by name, attributed the leveling of production growth at Yuganskneftegaz to mismanagement under Yukos. Carl Granger, a Houston-based oil engineer who worked on the fields in 2002 under contract with Yukos, presented a different picture. Yukos engineers ramped up production by replacing Soviet pumps, tweaking controls and clearing out older wells, spending money and buying foreign equipment as needed, he said. The production unit also developed a new field.

"The potential was incredibly high compared to what was done before," Granger said. "And there are still thousands of wells like that out there."

International Herald Tribune via RedNova, 9.20.2005

Hearing Postponed on Oil Tycoon's Appeal

A hearing Monday for jailed oil tycoon Mikhail Khodorkovsky's appeal of his tax evasion and fraud conviction was postponed a day amid wrangling over who would lead his defense.

The Moscow City Court had announced a postponement Sept. 14 after Khodorkovsky's lawyer, Genrikh Padva, failed to appear in court for health reasons. The prosecutor presented a letter, which it said was signed by Padva's doctor and informed the court that the lawyer would be unable to leave the hospital for at least a month.

Khodorkovsky has said his lawyers were not given enough time to prepare for the appeal of his conviction and nine-year prison sentence. His lawyers allege the hearings were speeded up to thwart his parliamentary bid in a December by-election for the University District of Moscow. Khodorkovsky sent his application to compete in the race last week.

"Everyone knows that registration for the University District elections opened today. The authorities have assigned the Moscow City Court the task of not allowing Khodorkovsky to register, and this explains everything," said Anton Drel, one of three defense lawyers who attended Monday's hearing, but election officials said they had not yet received his registration papers.

Once received, the election commission has five days to accept or reject the bid, said Ivan Starikov, a senior member of the liberal Union of Right Forces, who is heading Khodorkovsky's campaign staff.

The court ruled that the three should represent Khodorkovsky - in spite of his contention that none of them has a grasp of the entire case. The judge said Khodorkovsky had voiced no objections to their services.

But Khodorkovsky refused to allow the three to represent him.

"I did not agree to the participation of the lawyers ... and I refuse their services in the appeal process," Khodorkovsky said.

Each has studied only individual volumes of papers, he said.

"Normal people aren't capable of absorbing 400 volumes of case documents" in the limited time they've been provided, Khodorkovsky said.

He also challenged the prosecutor's information on Padva, saying he had been told the lawyer might be able to take part in the hearing within a few days. If not, he said, then he would agree to the services only of lawyer Yuri Schmidt.

Khodorkovsky told the court that he had been unable to meet with his lawyers since last week's hearing because a sick prisoner had been moved through three of the cells on his floor in Moscow's Matrosskaya Tishina jail, and jail authorities had declared them under quarantine - a tactic Drel called "something out of the Middle Ages."

Khodorkovsky said he could not tell whether the quarantine was punishment for an interview he recently gave from inside prison.

He had been able only to sit in his cell and watch television, he told the court.

The prosecution of Khodorkovsky and the partial renationalization of Yukos, the oil company he founded, has been called a Kremlin drive to rid itself of the tycoon, who sponsored opposition parties in 2003 parliamentary elections. President Vladimir Putin, however, has cast the case as a justified probe into a corrupt businessman and his empire.

Associated Press via Forbes, 9.19.2005

Key Yukos Witness Found in Hospital

By Catherine Belton, Moscow Times 5/9/05
Sep 5, 2005, 07:22

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The whereabouts of Antonio Valdes Garcia, the former director of Yukos trading company Fargoil, were not known until Friday, when Interfax reported that he had been admitted to a hospital in August after sustaining head injuries, a concussion and multiple leg fractures.

Valdes Garcia, a dual Russian-Spanish citizen, was last reported to have been detained at a Moscow airport on June 10.

After his detention, former associates said that Valdes Garcia was voluntarily returning to Moscow to give evidence to prosecutors in a money-laundering investigation into Yukos. He believed he would gain protection in return for cooperation, the associates said.

Prosecutors have said they are preparing a second criminal case against Yukos founder Mikhail Khodorkovsky, who is serving a nine-year prison sentence after being convicted of tax evasion and fraud in a highly politicized trial. Prosecutors allege that Fargoil was part of a scheme to launder $10 billion in oil revenues.

The cause of Valdes Garcia's injuries was unclear. While a source told Interfax that all his teeth had been knocked out, it was impossible to determine the extent of his injuries during a brief visit to room 301 in the orthopedic ward of the Russian Academy of Sciences Hospital in southern Moscow.

Valdes Garcia, who is in his early 30s but appeared younger, was drawn, pale and disoriented when a reporter entered his room after receiving directions from a hospital warden during visiting hours.

A thickly built guard who wore a pistol on a holster belt said that his charge would not be giving any interviews. Valdes Garcia pulled a corner of his bed sheets over a badly bruised eye, but no other injuries were visible.

Dressed in a T-shirt and shorts, the guard refused to give his name or say who his employer was. He claimed to be a male nurse, medbrat, and later just brat, or brother. The guard refused to answer any more questions and escorted the reporter out of the hospital.

A spokesman for the Prosecutor General's Office declined to comment Friday.

Two sources familiar with the situation, who requested anonymity because of the ongoing investigation, said Valdes Garcia had been put into a witness protection program after his arrival in Russia in June. One of the sources said the witness protection program was being run by the Federal Security Service.

The other source confirmed the Interfax report that Valdes Garcia had been admitted to the hospital about three weeks ago.

Interfax reported that he had first been admitted to a hospital in Istra, a town northwest of Moscow. The news agency reported that the hospital had confirmed he had been in the trauma ward from Aug. 7 to Aug. 19 before being transferred to Moscow.

A nurse at the Russian Academy of Sciences Hospital in Moscow said by telephone on Friday that Valdes Garcia had been admitted on Aug. 7.

Some time after his detention, Valdes Garcia's lawyers lost contact with him, the second source said, and when the authorities finally informed the lawyers that he was in the hospital, they said his injuries had been sustained when he fell out of a window trying to escape the detention center.

"When they found him in hospital, he had a fractured skull, a concussion, and it looked like his face had been severely pummeled. It didn't look like he'd just fallen out of a window," the source said.

"As far as I understand, he was in a special unit for people under state witness protection. But I don't think it's anything like the houses you are provided with in Arkansas or something in the States. He has been kept in solitary confinement and it seems he was regularly watched."

Lawyers for Valdes Garcia could not be located over the weekend.

The Spanish Embassy on Sunday said it had been unable to locate him.

Miguel Ortiz, the diplomat in charge of the case, said the embassy had last inquired into Valdes Garcia's well-being after his June arrest. Prosecutors told him the embassy had no say over Valdes Garcia because he had entered the country on his Russian passport, Ortiz said.

"He crossed the border as a Russian citizen, and that means there's little we can do," he said. "If he received these injuries while in detention, that's another matter. ... We will do everything we can for him."

It was unclear on Sunday whether Valdes Garcia was still in the Russian Academy of Sciences Hospital.

When asked about his condition, a nurse in the orthopedic ward on Sunday said that hospital records showed that Valdes Garcia had been discharged on Friday evening and that his records had been archived and were unavailable.

(The Moscow Times via Ocnus.net)

Jailed Russian Oil Tycoon Says He Plans to Run for Parliament

By STEVEN LEE MYERS
Published: September 1, 2005
MOSCOW, Aug. 31 - Prison has done little to silence Mikhail B. Khodorkovsky, the former oil tycoon who received a nine-year sentence three months ago. He has published jailhouse treatises, granted interviews and issued regular statements through his lawyers. Now he plans to run for Parliament.

Seizing on a legal loophole, Mr. Khodorkovsky, Russia's most famous prisoner, on Wednesday announced an improbable effort to win elected office in a special parliamentary election in December. Despite his conviction on charges of fraud and tax evasion, a verdict that some here believe was orchestrated by President Vladimir V. Putin's government, officials acknowledged that technically he had the right to run.

Whether he actually will get the chance appears doubtful, but Mr. Khodorkovsky's announcement indicated that his conviction had done nothing to moderate his public opposition to the government or his efforts to position himself as a prisoner of conscience.

Mr. Khodorkovsky, 42, remains a polarizing figure, a man who amassed enormous wealth in shady privatization deals in the 1990's before refashioning himself as a Western-style executive devoted to transparency and philanthropy.

A victory in the district, considered a liberal one, would not be inconceivable. A national opinion poll conducted after his conviction found that 8 percent of those who responded would consider voting for him if he ran for president.

Mr. Khodorkovsky - recently transferred to a cell with 15 other prisoners in Matrosskaya Tishina prison here in what his lawyers said was retaliation for his jailhouse pronouncements - opened his campaign with a sharply worded critique.

"The current Kremlin regime has exhausted itself," he said in a statement published on his Web site, at www.khodorkovsky.ru, "and its days are numbered."

So, too, may be Mr. Khodorkovsky's candidacy.

Under the law, he can run for office because his conviction is not considered final until his appeals are exhausted. But after supporters began floating the idea of a Khodorkovsky campaign, the authorities announced that his first appeal would be heard on Sept. 14, well before the filing deadline.

One of his lawyers, Yuri M. Schmidt, said in a telephone interview that the authorities had accelerated the timetable, leaving little time to prepare an effective appeal, let alone mount a campaign. "In reality, there is no hope," Mr. Schmidt said.

The chairman of the national election commission, Aleksandr A. Veshnyakov, said Wednesday that Mr. Khodorkovsky could run, but in remarks cited by Russian news agencies, he suggested that even if he were to register and win election, he would lose his seat in Parliament once his conviction was upheld, and that he would have to remain in prison.

Even so, Mr. Khodorkovsky's supporters vowed to press ahead, if only symbolically. Ivan V. Starikov, a member of the liberal Union of Right Forces, said supporters would collect many times the 5,500 signatures required to qualify Mr. Khodorkovsky as a candidate to represent District 201 in Moscow.

That alone, Mr. Starikov said, would show the depth of public opposition to his prosecution. "Under any outcome, even if he is not allowed to register, it will be his moral victory," Mr. Starikov said in a telephone interview.

In his periodic statements from prison, Mr. Khodorkovsky has sounded repentant, philosophical at times, but above all defiant.

"We were born in a country where half of the population has been in jail," he wrote in an exchange of letters published on his Web site on Aug. 1. "We are direct descendants of the Gulag. How can you function without handcuffs? In time, our minds and souls will break free from this heritage of imprisonment; then our hands will be free as well."

(The New York Times, 9.1.2001)