Russian Oil Tycoon Awaits Trial Verdict

MOSCOW -- Mikhail Khodorkovsky, whose Yukos oil company was dismantled by the state during the 19 months he has spent in jail, is to hear the verdict against him Monday in the most closely watched trial of post-Soviet Russia. His politically charged trial on charges of fraud and tax evasion has been widely seen as Kremlin revenge for the support that Russia's one-time richest man gave to opposition parties and a move to stifle his perceived political ambitions. The case raised intense questions about President Vladimir Putin's commitment to the rule of law and shook investor confidence in Russia, even as booming oil revenues gave many Russians unprecedented purchasing power. The Kremlin's sensitivity to foreign concern over the case is widely believed to be the reason the verdict was postponed without explanation April 27, just hours before it was scheduled to have been announced. Observers suggested officials wanted to put it off until after scores of foreign leaders visited Moscow to commemorate the 60th anniversary of the Allied defeat of Nazi Germany. Khodorkovsky and business partner Platon Lebedev, whose verdict also is to come Monday, are charged with rigging a privatization auction in 1994, stripping profits from a major fertilizer component maker, illegally using onshore tax havens to slash Yukos' tax bills and dodging millions of dollars in personal income tax. Khodorkovsky was one of the so-called "oligarchs" who made vast fortunes in the 1990s through often-murky deals stemming from the privatization of state enterprises. But he later tried to shed the robber-baron image by turning Yukos into what was regarded as Russia's most transparent and best-run major company and by starting a foundation to promote civil-society initiatives. Prosecutors have called for Khodorkovsky, 41, to receive the maximum 10-year sentence. If, as expected, he is locked away until after parliamentary and presidential elections slated for 2008, markets will take a hit, analysts say. "The market would go lower, no question about it," said Peter Kizenko, a trader at Moscow's Brunswick UBS investment bank. "It will give another reason to sell Russia." A guilty verdict and stiff sentence would provide yet another reason to be leery of Russia, Kizenko said. Critics already see Putin as backpedaling on democracy and returning Russia to its authoritarian past. Khodorkovsky's lawyers claim the trial has been typified by brazen violations of due procedure: the prosecution pressured witnesses, they say, while judge Irena Kolesnikova worked in tandem with state prosecutor Dmitry Shokhin during cross-examinations. "Everything that was demonstrated by the general prosecutors and by the court during this case allows one to understand what state our court system and our law enforcement bodies are in," said Yury Korgunyuk, an analyst with the Indem think tank. "They are all departments of the presidential administration." On Friday, the prosecutor-general's office made the surprise announcement it planned to file new charges against Khodorkovsky, prompting defense lawyers to label the move as a crude attempt to ensure that Kolesnikova hands down a jail sentence Monday. "The goal was to put pressure on the judge and influence public opinion," defense lawyer Yury Schmidt said. "Public opinion, according to polls, is constantly moving in Khodorkovsky's favor ... clearly the prosecutors have this data and are trying to turn public opinion against him." Khodorkovsky was arrested in October 2003 on his jet while it sat on the tarmac of a Siberian airport. While he has been in custody, Yukos has been hit with huge back tax claims. Yukos was stripped of its giant Siberian production unit Yuganskneftegaz to pay a part of its tax bills. The company that once had a market value of $40 billion is now valued at just $2 billion; badly burned portfolio investors expect it to fall to zero. News of a new $2.3 billion bill against Yukos, awarded Friday to Yuganskneftegaz's state-owned buyer Rosneft, appeared to confirm those fears and pave the way for the transfer of Yukos' remaining assets to the state company.