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J U S T I C E U N D E R P R E S S U R E

T H E K H O D O R K O V S K Y - L E B E D E V A P P E A L

M A Y 2 0 1 1

E X E C U T I V E S U M M A R Y

Prepared by Defense Counsel of

Mikhail B. Khodorkovsky & Platon L. Lebedev

At the end of Russias second criminal trial against Mikhail B. Khodorkovsky and Platon L.

Lebedev, on December 27, 2010 the two men were declared guilty of embezzling and launderingthe proceeds of all oil produced by Yukos subsidiaries over a six-year period.1

The

Khamovnichesky Court found the defendants guilty of having embezzled significantly more oil

than prosecutors had alleged or even attempted to prove. Lead defense lawyer Vadim V.

Klyuvgant called the trial a charade of justice. On December 30, 2010, with less than a year

remaining before completion of their existing 8-year prison terms, Khodorkovsky and Lebedev

were sentenced to an overall total of 14 years in captivity, meaning that counting time already

served they are now expected to remain in jail at least until 2017. The defense initiated appeal

procedures on December 31, 2010.2

The appeal is scheduled to be heard by the Moscow City

Court on May 17, 2011.

The appeal sets forth irrefutable grounds for reversal of the lower courts verdict and fortermination of the case. The core argument to set aside the contested verdict is that it does notidentify any acts by the appellants that constitute criminal conduct. On this basis alone, the onlyoutcome of the appeal if it is to be decided solely on an independent application of the law tothe facts would be acquittals for Khodorkovsky and Lebedev in the second case against them,clearing the way for their scheduled release in 2011. Although the trial courts failure toidentify acts constituting embezzlement or laundering is a sufficient basis to reverse the verdictand to terminate the case, the appellants supplemented their appeal with clear examples ofprejudicial due process violations. The trial court committed numerous fundamental and

irreparable violations of Russian criminal and procedural law, culminating in a defective, unjustand unlawful verdict. The appellants further note that the verdict contradicts rulings in priorYukos cases in Russian courts as well as the Russian Federations defense at the EuropeanCourt of Human Rights.

The defense is not expecting a fair ruling from the Moscow City Court. Indeed, after theissuance of the December verdict, two now-former Khamovnichesky Court employees stirredenormous public controversy in asserting that the higher-level Moscow City Court had been

1 The Khodorkovsky-Lebedev defense team has released an executive summary providing ananalysis of the Khamovnichesky Courts 689-page verdict, available at:

http://khodorkovskycenter.com/sites/khodorkovskycenter.com/files/MBK_PLL_verdict_summary.pdf.2 English translations of the appeal filings are available at http://khodorkovskycenter.com/. TheRussian originals are available at http://www.khodorkovsky.ru/.

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directing the trial judges handling of the case all along. One whistleblower stated that in factjudges of the Moscow City Courtthe same court now set to hear the appealwrote theverdict. A second whistleblower stated that the trial judge frequently met with members of theMoscow City Court, and the judge acknowledged not being the ultimate decision-maker.

The main goal of the appeal is to expose the lawlessness of this case and to reveal the disregardfor the rule of law in Russia in this case and thousands of others. The appeal also will exhaustoptions for legal redress within Russia, opening the road for Khodorkovsky and Lebedev toappeal to the European Court of Human Rights (ECHR).

Below is a summary of the principal bases for the Khodorkovsky-Lebedev appeal.

The Verdict is an Attempt to Deceive that Does Not Identify Acts Giving Rise to

Criminal Liability

The verdict seeks to substitute sheer volume for legitimate substance and createconfusion with misapplied or fabricated legal terminology intended toconceal massive judicial deceit: nowhere in the 689-page verdict are actsidentified that constitute elements of a crime.

The court failed to show any wrongful taking possession of property; notransactions for the sale of oil were found invalid; and the case file itself refutedany allegation that such transactions were not willfully and lawfully executedand consistent with the business interests of a vertically-integrated oil company.

What the verdict intentionally mischaracterizes as criminal deeds are infact descriptions of regular, lawful business activities of a vertically-integrated

oil company. To create an illusion of criminality, the verdict relies uponpatent falsehoods and ignorant, nonsensical, absurd and mutually exclusiveassertions and conclusions that contradict the law, economics and commonsense.

The verdict fails to demonstrate that there was a lack of exchange forvalue, or that damage was caused to any victim, in the Yukos oil salestransactions; on the contrary, the verdict contains data revealing that theallegedly injured partiesYukos production subsidiariesin fact receivedpayments and profits from the sales, with no evidence of any oil going

missing.

To substantiate its erroneous calculations of harm inflicted, the verdictascribes Rotterdam oil pricing to domestic transactions; this ignorestransport costs, customs duties and other expenditures creating a largedifference between domestic and international oil prices; the verdict simplyignores these realities and asserts the fallacy that the much higher Rotterdampricing was applicable domestically.

In the trials closing arguments the prosecution, citing arithmetic errors and lackof evidence, had suddenly reduced the volume of oil allegedly embezzled byapproximately one third, to 219 million metric tons valued at approximately$13.4 billion; the judge nevertheless convicted the defendants of embezzlingthe volume of oil originally alleged in the indictment: 350 million metric tonsworth over $25.4 billionirrespective of the arithmetic errors and lack ofevidence that even the prosecution conceded.

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Fundamental and Irreparable Due Process Violations Render the Verdict

Defective, Unjust and Unlawful3

The appeal court is asked by the defense to consider due process issues only ifthe court disagrees with the central, determinative argument of the appeal: thatthe verdict fails to identify acts by Khodorkovsky and Lebedev thatconstitute elements of a crime.

The verdict was issued on the basis of an investigation, indictment and casefile that failed to comply with Russian and international norms; in the pre-trial investigatory phase, the defense catalogued a series of severe abuses of theRussian criminal justice system, and asserted that these abuses were sonumerous as to be irremediable; facing charges that were both factually andlegally untenable, in March 2009 the defendants petitioned to terminate theproceedings, but the court summarily rejected the petition, making no effortthen or thereafter to cure the violations and allowing the case to proceed despite

an investigation, indictment and case file marred by illegalities.

The court deprived the defendants of explanations of the allegationsagainst them, including explanations of the circumstances to be proven and ofthe scope of the proceedings; specific and concrete questions from thedefendants were never addressed; the court thereby frustrated their ability todefend themselves effectively.

The presumption of innocence was ignored by prosecutors, who, withoutcensure by the court and even though they failed to discharge their burden ofproof or await the ruling, repeatedly declared Khodorkovsky and Lebedev to beguilty of the alleged criminal acts. Furthermore, on December 16, 2010, Prime

Minister Vladimir V. Putin publicly intervened in the case: in televisedremarks, with the judge deliberating on the verdict, the Prime Ministerdiscussed the charges and stated that Khodorkovskys guilt had been proven incourt and that he must stay in jail.

The court failed to ensure an adversarial trial; the proceedings wererepeatedly and dramatically marred by unlawfully favorable conditions andadvantages for the prosecution; the court essentially relieved the prosecutors ofthe duty to substantiate the relevance of their evidence and to prove theirallegations.

Unable to refute their germaneness, the court simply brushed away or

ignored the principal arguments and evidence adduced by the defense.

The court repeatedly refused to request or to compel third parties identifiedby the defense to produce readily-available evidence of an exculpatorynature, and failed to ensure that witnesses sought by the defense appear incourt.

3 For a more detailed summary of the extensive due process violations and incidents of official

misconduct, see: Justice under Pressure Pre-Verdict Executive Summary, pages 12-22, available at:http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/MBK_PLL_pre_verdict_trial_exec_summary.pdf.

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The defense was deprived of the opportunity to examine many witnessesand all experts but one, and to examine as evidence or add to the case fileinterviews obtained through lawfully-followed procedures.

In the verdict the court assessed witness testimony selectively and in badfaith, simply disagreeing with testimony that clearly refuted the charges.

The court allowed obviously inadmissible evidence adduced by theprosecution.

Although the trial hearings ended in November 2010, the court did not makethe complete official trial transcripts available to the defense until March

2011, well after the December 2010 verdict and sentencing; this delay, andthe absence of references to the official transcripts in the verdict, cast into doubtwhether the official transcripts were completed before the verdict was issued, orwhether they were in fact even needed by the judge given a preordainedoutcome; the delay was accompanied by a refusal to allow the defense a

reasonable amount of time to prepare objections to the official transcripts.

In the official trial transcripts, important motions by the defense were omitted,numerous admonitions and criticisms the judge directed to the prosecutionduring the trial were wiped from the record, statements spoken by theprosecution were misattributed to the defense and non-objections by theprosecution were converted into objections; when the defense filed 1,060pages of objections cataloguing the extensive inaccuracies and omissions in

this official record of the trial, the judge breezed through and dismissed the

objections in less than one day, standing by the distorted but officialtranscripts by transmitting the case file to the Moscow City Court for appeal,without ever responding to the defense to address the objections.

From the outset, the case was outside of the territorial jurisdiction of MoscowsKhamovnichesky Court, meaning that the verdict was issued by anunlawfully-composed court.

Defense pleadings regarding the politically-motivated nature of theproceedings and the unlawful interference by public officials in the

administration of justice were not assessed by the court or reflected in theverdict.

Khodorkovsky and Lebedev were held under the harsh pretrialdetention regime throughout the trial, in violation of the law as eventually

confirmed by the Russian Supreme Court in April 2011too late to be of anydirect benefit to them.

The Verdict Contradicts Dozens of Prior Yukos Rulings in Russian Domestic

Courts and Russian Federations Defense at the European Court of Human

Rights

The defense cites final rulings by other Russian courts, including higher-levelcourts, establishing that the oil sales transactions involving Yukos productionsubsidiaries were validly and lawfully executed; that the subsidiaries were notunlawfully dispossessed of the oil and in fact supplied it as contracted; thatpricing within Yukos complied with the law and did not violate anyones rights;

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that Yukos trading companies used low-tax jurisdictions only for lawful taxoptimization; and that Yukos was the owner of the oil and beneficiary of itssales.

Even the appellate court from the first Khodorkovsky-Lebedev case ruled thatacts then as now imputed to them were incompatible with embezzlementcharges.

The verdict creates a juridical Catch-22: either Yukos owned the oil, a legallysettled fact under Russian law as determined by all previous courts; or the

oil was embezzled, in which case Yukos could not have also sold the same

oil and could not have also owed taxes on the same oil sales; in findingKhodorkovsky and Lebedev guilty of embezzlement, the verdict creates amassive and irreconcilable contradiction in Russian jurisprudence.

Defending itself in separate cases before the ECHR, the Russian Federation isasserting that Yukos was the owner of the oil produced by Yukos production

subsidiaries; simultaneously however, in the second Khodorkovsky-Lebedevcriminal case, the verdict concludes that the same oil was not owned by Yukosbut rather stolen from the companys production subsidiaries by the defendants;these absurdly incompatible positionsone version for the ECHR and adifferent version for the domestic court systemare being argued concurrentlyon behalf of the Russian Federation in major parallel proceedings.

CONCLUSION

As defense counsel Alexey E. Miroshnichenko stated in the final submissions to theKhamovnichesky Court on October 28, 2010, the [s]ubstance of a court judgment, even if itbecame final, cannot be of some sacred nature. A court judgment cannot cancel or change

laws of formal logic or commonly known facts[which] do not require special proof, and

ignoring them is a fortiori unlawful and meaningless. The verdict subsequently issued inthe second criminal case against Khodorkovsky and Lebedevmost likely to be enshrined assacred by the appellate courtdoes in fact rely upon cancelling and changing laws of formallogic and commonly known facts. The verdict is a knowing and willful fictional descriptionof purported criminal conduct, devoid ofcorpus delicti, blind to the preponderance of

exculpatory evidence and built upon a bulldozing of due process . Should it be upheld asexpected upon appeal, the verdict will stand as a monumental embarrassment to the Russian

judiciary and to those state officials who seek to portray it as a valid act of justice.

May 16, 2011