J U S T I C E U N D E R P R E S S U R E ―
T H E S E C O N D K H O D O R K O V S K Y ‐ L E B E D E V T R I A L
E X E C U T I V E S UMM A R Y ―
Prepared by Defense Counsel of Mikhail B. Khodorkovsky & Platon L. Lebedev
S E P T E M B E R 3 0 , 2 0 1 1
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“For me, as for anybody, it is hard to live in jail, and I do not want to die there. But if I have to—I will not hesitate. The things I believe in are worth dying for. I think I have proven this.”
Mikhail B. Khodorkovsky, Amnesty International Prisoner of Conscience
Final Words to the Khamovnichesky Court Moscow, November 2, 2010
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TABLE OF CONTENTS
I. BACKGROUND & TRIAL OVERVIEW................................................................................ 5
Overview of Key Developments.................................................................................................. 5
Pre‐Trial Investigatory Phase...................................................................................................... 5
Charges...................................................................................................................................... 6
Prosecution’s Sham Case............................................................................................................ 6
Defense Denied Meaningful Due Process................................................................................... 6
Verdict and Sentence................................................................................................................. 7
The Appeal................................................................................................................................. 8
Transfer to Prison....................................................................................................................... 9
II. WHAT THE CHARGES AND THE VERDICT MEAN.............................................................. 9
Khodorkovsky and Lebedev Supposedly Embezzled all Yukos Oil over a Six‐Year Period............. 10
Yukos was Supposedly a Huge Sham.......................................................................................... 10
Regulatory Compliance is Supposedly Indicative of Criminal Activity.......................................... 11
III. WHY THE FACTS AND THE LAW SHOULD HAVE EXONERATED THE DEFENDANTS............ 12
Fundamental Errors and Weaknesses Exposed by the Defense................................................... 12
Former and Current Russian Government Officials Testified that Charges Were Not Credible..... 15
Other Witness Testimony........................................................................................................... 17
IV. THE APPEAL................................................................................................................... 19
V. DUE PROCESS VIOLATIONS AND OFFICIAL MISCONDUCT............................................... 19
Prosecution’s Failure to Explain Charges..................................................................................... 20
Denial of the Presumption of Innocence..................................................................................... 21
Court’s Refusal to Admit Exculpatory Evidence Presented by the Defense.................................. 22
Court’s Refusal to Assist Defense in Compelling Prosecutors to Produce Evidence or to Assist Defense in Compelling Third Parties to Produce Exculpatory Documents.................................... 22
Court’s Refusal to Exclude Illegally‐Obtained Evidence............................................................... 23
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Misrepresentation of Evidence................................................................................................... 23
Vanishing Evidence..................................................................................................................... 23
Incomplete Evidence.................................................................................................................. 24
Blocked Defense Witnesses and “No‐Shows”............................................................................. 24
Disqualification of Defense Experts............................................................................................ 26
Defense Not Allowed to Cross‐Examine Prosecution Experts...................................................... 26
Prosecutorial Mistreatment and Intimidation of Witnesses and Experts..................................... 26
Attempts to Control Testimony of Prosecution Witnesses.......................................................... 28
Use of Parallel Investigations to Circumvent Rules on Gathering Evidence................................. 28
Abuse of Investigatory and Prosecutorial Powers through Coercion of PwC............................... 28
Direct and Indirect Threats to Defense Counsel.......................................................................... 29
Denial of Defense’s Access to Official Trial Transcripts................................................................ 29
Interference in Defendants’ Access to Counsel and to Case File.................................................. 30
Extended “Pre‐Trial” Detention: Reforms Flouted by Obsessive Persecution of Defendants...... 30
Prosecutors’ Incomprehension of Case Materials....................................................................... 31
Court Without Jurisdiction......................................................................................................... 32
VI. DISMISSAL OF CRIMINAL COMPLAINT FILED SEEKING INVESTIGATION OF JUDGES AND PROSECUTORS............................................................................................................... 33
VII. IMPLICATIONS FOR RUSSIA............................................................................................ 33
VIII. CONCLUSION................................................................................................................. 36
APPENDIX: THE KHODORKOVSKY‐LEBEDEV TRIAL AND APPEAL 2009‐2011 ASSESSED AGAINST INTERNATIONAL COMMISSION OF JURISTS STANDARDS ON JUDICIAL PROCEEDINGS................ 37
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This document has been prepared by defense counsel of Mikhail Khodorkovsky, former Yukos Oil Company CEO, and of his business partner and friend Platon Lebedev. From March 2009 to December 2010 Khodorkovsky and Lebedev were subjected to a trial centering on allegations that they had embezzled the entire oil production of Yukos over the six‐year period from 1998 to 2003. This document provides an overview of the trial. Additional information is available in a series of legal summaries issued by defense counsel as the case unfolded.1 The defense counsel also publicly released extensive official trial documentation, with English translations.2 For further information, the legal defense team may be contacted via the Khodorkovsky & Lebedev Communications Center.3
— I. BACKGROUND & TRIAL OVERVIEW Overview of Key Developments In 2007, former Yukos Oil Company CEO Mikhail Khodorkovsky and his business partner and friend Platon Lebedev became eligible for release on parole under Russian law, having served half of their eight‐year sentences since being arrested in 2003 and convicted in a politically‐driven first trial that ended in 2005—while Yukos was destroyed through bogus tax reassessments, forced bankruptcy proceedings and rigged auctions.4 Given their eligibility for release on parole in 2007, or at the latest upon completion of their eight‐year sentences in 2011, new charges were sloppily manufactured and proceedings were instigated against Khodorkovsky and Lebedev to prolong their incarceration. The new charges, announced in February 2007 and brought to Moscow’s Khamovnichesky Court in a second trial that started in March 2009, were intended to keep Khodorkovsky and Lebedev isolated from Russian political and business spheres, to stain their reputations and to whitewash and distract attention from corrupt and criminal actions committed by high‐ranking Russian officials, many of whom are believed to have personally benefitted from the destruction of Yukos. Khodorkovsky and Lebedev were found guilty in December 2010. Following a failed appeal in May 2011, their imprisonment has now been extended to 2016. Pre‐Trial Investigatory Phase In the investigatory phase leading up to the second trial, the defense catalogued a series of severe abuses of the Russian criminal justice system in the new case, and asserted that these abuses were so numerous and so severe as to be irremediable. Facing charges that were both factually and legally untenable, on March 6, 2009 the defendants petitioned to terminate the proceedings. On March 17, 2009, the presiding judge, Viktor Danilkin, rejected the petition and scheduled opening hearings for a new trial to commence on March 31, 2009. On April 21, 2009, Khodorkovsky and Lebedev pled not guilty, while emphasizing that the charges remained incomprehensible and unexplained. 1 Summaries of trial proceedings periodically issued by the defense are available at: http://www.khodorkovskycenter.com/media‐center/ongoing‐persecution‐second‐trial. 2 Available at: http://www.khodorkovskycenter.com/legal‐documents. 3 Details available under the “Contact” tab at: www.khodorkovskycenter.com. 4 More information about the Yukos Affair is available at www.theyukoslibrary.com. The expropriation of Yukos is now the subject of the highest‐stake proceedings in international arbitration history: two subsidiaries of majority Yukos shareholder GML, along with the Veteran Petroleum pension fund for former Yukos employees, are seeking redress before the Permanent Court of Arbitration in The Hague with combined claims for $100 billion in compensation for the Russian Federation’s unlawful and discriminatory expropriation of Yukos under the guise of taxation measures. Khodorkovsky and Lebedev are not involved in those proceedings.
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Charges Khodorkovsky and Lebedev were accused of embezzling 350 million metric tons of oil worth over $25.4 billion and “laundering” over $21.4 billion, and embezzling $102 million in shares held by Eastern Oil Company (“VNK”, a Yukos subsidiary) and “laundering” the allegedly embezzled shares. In the prosecution’s closing arguments, the volume of oil allegedly embezzled was suddenly reduced by approximately one third, to 219 million metric tons valued at approximately $13.4 billion. By either measure, the allegations had no credible grounding either in the facts described or in the legal terms invoked by prosecutors. The indictment was a compendium of factual and legal impossibilities. Both in the indictment and at trial, the prosecutors failed to connect any conduct by the defendants to any viable legal theory of criminal liability. Instead the charges were sustained purely by prosecutorial diktat. Prosecution’s Sham Case The prosecution’s presentation of its case, which ran from April 21, 2009 to March 29, 2010, resembled a poorly‐organized fishing expedition rather than logically structured proceedings actually proving the occurrence of any elements of crime. Despite filling time by reading from a 188‐volume case file, and parading numerous witnesses into court, prosecutors were unable (and did not even try) to prove how it was possible that Yukos covered its operating costs, invested heavily in capital expenditures and acquisitions and paid taxes and dividends when the entire oil production of Yukos over a six‐year period was being stolen, as alleged in the indictment. The prosecution’s witnesses proffered either no testimony germane to the accusations, or testimony that actually contradicted the accusations. Despite having over 11 months to read documents and question witnesses in court, the prosecutors plainly failed to prove their charges. This did not prevent prosecutors from proclaiming in their closing arguments that they had proven the guilt of the defendants—while being unable to sum up precisely how they supposedly did so. Defense Denied Meaningful Due Process In the face of official misconduct and due process violations, as the trial unfolded the defense presented highly substantiated motions for the recusal of prosecutors and of the judge—to no avail. Appearances of an adversarial trial were for the most part cosmetic efforts by the authorities to portray the process as legitimate. The defendants were permitted to speak in court almost without restrictions, but the judge blocked their lawyers from introducing exculpatory documentary evidence and refused to hear many witnesses and experts. The defense was allowed to file motions and objections, but the vast majority of these motions and objections were routinely denied or ignored. These motions and other defense pleadings were posted online by the defense, along with English translations, illustrating the absurdities of the process that was unfolding. The “case‐closed” mentality of the prosecutors ultimately reigned in the courtroom, given the judge’s biased handling of the multitude of due process violations that marked the proceedings. The defense’s protestations over the contradictions and outright irrationality of the case were brushed aside by prosecutors and the judge, who refused to address these issues directly. Independent observers visiting the trial described the proceedings as evocative of the works of Kafka and Gogol and an embarrassment to Russia. Nevertheless, despite each successive setback, the defendants made every effort to engage with prosecutors and the court, and they presented a vigorous, methodical, and meticulously substantiated defense from April 5 to September 22, 2010. Irrespective of the efforts of the defense, which were notably bolstered by the candor of former and current government officials who supported the defendants through in‐court testimony, the
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proceedings continued to be undermined by unfair and unlawful decisions and maneuvers that irreparably frustrated Khodorkovsky’s and Lebedev’s rights to a fair trial. A feeling of futility reigned in the courtroom as the defense presented its closing arguments in what had become a mock judicial process devoid of meaningful adversarial engagement on the substance of the case. Verdict and Sentence The reading of the verdict was initially scheduled for December 15, 2010 but a note posted on the courtroom door that day announced a postponement to December 27, 2010. The next day, December 16, 2010, Prime Minister Vladimir Putin publicly intervened in the case during his annual nationally‐televised question‐and‐answer session. With the judge still deliberating on the verdict, the Prime Minister directly mentioned the current charges and stated that Khodorkovsky’s guilt had been proven in court and that he must stay in jail. On December 27, 2010, Khodorkovsky and Lebedev were declared guilty of embezzling and laundering the proceeds of all oil produced by Yukos subsidiaries over a six‐year period.5 The court found the defendants guilty of having embezzled even more oil than prosecutors had alleged, ignoring the prosecution’s reduction during closing arguments of the volume of oil allegedly embezzled.6 In convicting the defendants of massive embezzlement, the court notably ignored both the uncontested profitability data of Yukos’s production subsidiaries, and the true market prices of oil in Russia. The court thus avoided proof of the absence of the harm that would have had to have been suffered for the embezzlement charges to have any validity. Sales of oil by the subsidiaries to Yukos trading companies were deemed to constitute embezzlement simply insofar as the oil was sold at a price less than the export spot price. This concocted theory of embezzlement ignored market pricing in Russia as well as industry‐standard, lawful procedures for
5 A full English translation of the 689‐page verdict is available at: http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/2010%2012%2027%20%20MBK‐PLL%20Verdict‐en.pdf. The original Russian text is available at: http://khodorkovsky.ru/files/_docs_/20ac84a43628a035f172b334f4f60bd4/2010.12.27._Prigovor_MBH‐PLL.doc. Regarding the VNK share allegations, a separate 189‐page decision was issued simultaneously with the verdict on December 27, 2010, concluding that the share swap transactions constituted embezzlement. The court prepared this decision in violation of Russian law, because the statutory time limit for prosecuting the defendants had expired ten years after the now‐disputed VNK share swap agreements had been executed in 1998. In the trial’s closing arguments, the prosecution had finally agreed with the defense that the VNK charges were time‐barred, but nevertheless asked the court to find the defendants guilty on those charges without any sentence. The court did precisely as asked, ignoring the legality of the VNK share transactions, which had followed appropriate company procedures, were endorsed by the Russian Minister of State Property and cleared investigatory scrutiny between 1999 and 2001. Khodorkovsky and Lebedev were declared guilty nonetheless, but without punishment, due to the expiry of the statute of limitations. A full English translation of the VNK decision is available at: http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/2010%2012%2027%20%20MBK‐PLL%20Judgment%20on%20VNK‐en%20(2)_0.pdf. The original Russian text is available at: http://khodorkovsky.ru/files/_docs_/20ac84a43628a035f172b334f4f60bd4/2010.12.27._Post._o_prekr.ug.dela_MBH‐PLL_v_chasti_VNK.doc. 6 In the trial’s closing arguments the prosecution, citing arithmetic errors and lack of evidence, had suddenly reduced the volume of oil allegedly embezzled by approximately one third, to 219 million metric tons valued at approximately $13.4 billion. The judge nevertheless disregarded the prosecution’s belated bid for a modicum of credibility, and convicted the defendants of embezzling the volume of oil originally alleged in the indictment: 350 million metric tons worth over $25.4 billion—irrespective of the arithmetic errors and lack of evidence that even the prosecution conceded.
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corporate functioning undertaken by Yukos, involving a downstream and upstream structure of production subsidiaries and domestic and foreign operating companies. Rather than referring to openly‐verifiable historic domestic prices for Siberian oil, the verdict ascribed the Rotterdam price to domestic transactions, in order to argue that the much higher Western price ought to have been applied. This ignored transport costs, customs duties and other expenditures that make up the difference between the price of oil in Siberia and the price of oil in Rotterdam. The verdict simply brushed away these realities, with the judge stating that he did not agree that oil prices differ on domestic and global markets.7 The 689‐page decision is a hodgepodge of texts setting forth unsupported factual and legal assertions that fail to validate the finding of guilt. The document is marked by obvious errors of fact and of law, unsupported leaps of logic, internal incoherencies, and major inconsistencies with the findings of other cases adjudicated by the Russian courts. Despite the closely‐watched nature of the case surrounding the most high‐profile prosecution in Russia, in the decision the court openly ignored applicable procedural and substantive laws as well as fundamental tenets of economics, established facts and common sense. The trial judge evidently could not contravene the instigators of the trial, and he failed to mask the enormous lacunae and sloppiness of the prosecution’s case. On December 30, 2010, with less than a year remaining before completion of their existing prison terms, Khodorkovsky and Lebedev were sentenced to an overall total of 14 years in captivity. Counting time already served their release was therefore pushed from 2011 to 2017. The Appeal The defense initiated appeal procedures on December 31, 2010. The appeal was heard by the Moscow City Court—and rapidly dispensed with in a ruling on May 24, 2011 that confirmed the lower court’s guilty verdict, although the sentencing was reduced by one year. Khodorkovsky and Lebedev are now scheduled for release in 2016, on the 13th anniversaries of their respective arrests. Although the trial hearings ended in November 2010, the court did not make the complete official record of the proceedings available to the defense until March 2011, well after the December 2010 verdict and sentencing. This long delay cast into doubt whether the official record had been completed before the end of the trial, or whether it was really even needed by the judge in the preparation of a preordained verdict. On April 25, 2011, the defense filed 1,060 pages of objections cataloguing the extensive inaccuracies and omissions in the official record of the proceedings. Among the objections: important motions by the defense were omitted from the trial transcripts; the numerous admonitions and criticisms the judge directed to the prosecution throughout the trial were wiped from the record; all defense allegations that the prosecutors were criminally liable for their pursuit and handling of the case were also absent from the record; words were attributed to the defense when in fact they were spoken by the prosecution; and non‐objections by the prosecution were converted into objections. Judge Danilkin apparently breezed through and dismissed these defense objections in less than one day, standing by his official record of the proceedings and sending the case to the Moscow City Court for scheduling of the appeal. On April 27, 2011, Russian media reported—before any official notice to this effect had been received by the defense—that the Moscow City Court had scheduled the appeal hearing for May 17, 2011. On that date the appeal hearing was postponed by one week, to May 24, 2011.8 The short duration which the appeal court had to examine the extremely voluminous case
7 As stated on page 616 of the verdict. 8 The defense speculated that the delay was politically‐motivated: because on May 18, 2011 President Medvedev was scheduled to showcase the Skolkovo Innovation Center and to hold a major press conference,
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file—approximately one month—means that the materials in the file, and the defense’s arguments, were not subject to substantive review or real consideration. On May 24, 2011, the day that their appeal failed, Amnesty International declared Khodorkovsky and Lebedev to be Prisoners of Conscience.9 Transfer to Prison In June 2011, Khodorkovsky was sent to Penal Colony No. 7, near the town of Segezha in the region of Karelia, bordering Finland. The colony is located on the west coast of Lake Vygozero, on the route of the White Sea‐Baltic Canal. The canal was constructed in the Soviet era by forced labor of gulag inmates, during which over 10,000 prisoners died according to official figures. Meanwhile, Lebedev was transferred to Penal Colony No. 14 in the city of Velsk in the neighboring region of Arkhangelsk. II. WHAT THE CHARGES AND THE VERDICT MEAN In the verdict issued on December 27, 2010, the defendants were convicted on allegations of physically seizing and taking into their possession the entire crude oil production, over six years, of the three Yukos production subsidiaries: Yuganskneftegaz, Samaraneftegaz and Tomskneft. This embezzlement was alleged to have occurred at the wellhead, with the three subsidiaries thereby allegedly victimized. The size of the damage incurred was calculated as the amount of allegedly embezzled crude oil multiplied by the export price of the crude oil, known as the Rotterdam crude oil spot price. The differences between the export Rotterdam crude oil prices and the amounts Yukos production subsidiaries were paid by their parent based on domestic prices for unprocessed wellhead output were ruled to be criminally wrongful underpayments tantamount to embezzlement. The vertically‐integrated structure of Yukos was considered to be a massive criminal enterprise and the corporate structures used by the company to export oil were considered to be engaged in money laundering. In a separate decision delivered by the court simultaneously with the verdict, the VNK share swap agreements were deemed as charged to involve embezzlement and “laundering” of shares by the defendants.10 The verdict featured various untenable suppositions: that Khodorkovsky and Lebedev supposedly embezzled from Yukos production subsidiaries all Yukos oil over a six‐year period; that Yukos was supposedly a huge sham; and that regulatory compliance is supposedly indicative of criminal activity. Each of these suppositions is described below.
the appeal hearing delay was likely an effort to avoid marring the presidential events with negative news about Khodorkovsky and Lebedev. 9 Amnesty International stated that for several years now Khodorkovsky and Lebedev “have been trapped in a judicial vortex that answers to political not legal considerations” in courts unable or unwilling to deliver justice. See http://www.amnesty.org/en/news‐and‐updates/russian‐businessmen‐declared‐prisoners‐conscience‐after‐convictions‐are‐upheld‐2011. 10 Regarding the decision pertaining to the VNK share allegations, see footnote 5. Detailed analysis of the misguided VNK share allegations is beyond the scope of this summary. More information is available through the contact information referenced in footnote 3.
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Khodorkovsky and Lebedev Supposedly Embezzled all Yukos Oil over a Six‐Year Period The core theory of the prosecution’s case was that, between 1998 and 2003, Khodorkovsky and Lebedev, as leaders of an “organized criminal group”11, (1) embezzled on a grand scale by taking into their possession from Yukos production subsidiaries all oil produced by them at the wellhead; and (2) “laundered” the supposedly criminally‐obtained oil through re‐sales and other transactions within Yukos’s consolidated corporate structure. Khodorkovsky and his associates are determined on page 72 of the verdict to have taken possession of all of the oil produced by Yukos from 1998 to 2003, and on page 74 to have distributed this “stolen and legalized property” amongst the co‐conspirators. These determinations are made notwithstanding: (1) the physical impossibility of taking into possession and distributing such quantities of oil; (2) proof to the contrary in the records of Transneft, showing that the allegedly embezzled oil was in fact sold by Yukos and transported through the state pipeline network; (3) that Yukos production subsidiaries were paid domestic prices for the oil subject to inter‐company oil sale‐and‐purchase agreements; and (4) that not a single incident of oil disappearance or of the defendants taking possession of the oil was presented to the court by prosecutors or otherwise discovered by the judge. The credibility of the verdict is further undermined by simultaneously asserting on page 13 that Yukos was “factually not the purchaser of the oil” from the production subsidiaries, and on page 660 that the “oil transferred into the factual ownership of [Yukos]”. Yukos was Supposedly a Huge Sham To sustain the legal fiction that embezzlement occurred, in the verdict the judge subscribes to the audacious, untenable and unproven prosecution theory that the entire corporate structure of Yukos was a huge criminal sham organized by a group led by Khodorkovsky and Lebedev to embezzle oil from Yukos production subsidiaries. The verdict is in effect describing the greatest success story of Russia’s oil industry as if it had been nothing better than a petroleum Ponzi scheme. Routine and legal management decisions and corporate procedures, including, in particular, allocation of profits within a major vertically‐integrated oil company, are characterized as embezzlement committed by an “organized criminal group” led by Khodorkovsky, Lebedev and others. On page 300 of the verdict, the judge asserts: “The commission by the defendants of theft by way of embezzlement…is confirmed by oil sale‐and‐purchase agreements…” Yet he does not explain how an embezzlement conviction can be based upon oil sale‐and‐purchase agreements that involved appropriate exchange for value, without injury sustained by the seller. On page 78, the verdict admits that production costs were covered from proceeds of sales, even though those sales transactions supposedly constituted theft. The judge theorizes that the defendants compensated the subsidiaries for production costs only to continue stealing from them, yet he does not identify any theft that actually occurred: “With the objective of concealing the committed theft... [Khodorkovsky and Lebedev] accounted [the proceeds from the stolen oil] on the accounts of Russian companies, so as to ensure compensation of the cost of production of expenses [sic] by enterprises and organizations [producing oil], the payment of taxes on their behalf on
11 Under Russian law, the charge of acting through an “organized criminal group” extends the statute of limitations for the charges and increases potential penalties upon conviction. Furthermore, by labeling Khodorkovsky and Lebedev as leaders of an “organized criminal group”, the acts of others are imputed to them regardless of whether the others are charged. There is also a stigmatism attached to being a member of an “organized criminal group”, thus promoting the prosecution’s goal of portraying Khodorkovsky and Lebedev as pernicious criminals.
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account of these monetary funds, having in so doing the objective of ensuring replacement of the oil production for its further theft…” According to the verdict, on page 133: “The guilt [of the defendants in the theft of the oil] is confirmed by data demonstrating that [they] took active part in building up the vertically‐integrated structure of [Yukos], establishing control over the activity of the company and distributing its capital…”; and, on page 140: “The court connects the building up of the vertically‐integrated structure of management of [Yukos] with the intent of the defendants to…[commit] theft of the oil…” On page 669, the verdict states that expenditures on acquisitions of “operational assets, field development and modernization of operational capacities were imperative to Khodorkovsky and Lebedev to ensure the production and refining of the oil being stolen by them” because “increasing the company’s production volumes…corresponded to their mercenary aspirations to receive ever greater profit…”, while page 670 continues with the assessment that through “the payment of dividends, to which a very insignificant part of the profit received was directed, Khodorkovsky and Lebedev concealed the committed theft of [all] the oil [produced]…” (The “insignificant” dividends in fact amounted to 16.6% of profits, or some $2.8 billion.) Meanwhile, on page 674 of the verdict, the judge asserts that the acquisition of oil from Yukos subsidiaries “was covered up by the introduction of the term ‘output’, under the guise of which the oil produced by the subsidiary enterprises was acquired…” As far as the court is concerned, the development of a Russian and global oil major is in and of itself obvious evidence of criminal intent. Such cynicism and presumed guilt undermine the credibility of the court and reflect poorly upon the Russian judiciary. The verdict in effect establishes a judicial assumption that criminal intent exists in the Russian entrepreneurial DNA.12 Regulatory Compliance is Supposedly Indicative of Criminal Activity On page 612 of the verdict, the court asserts: “Dual‐entry bookkeeping was maintained at [Yukos] for accounting profit received: the first, under RSBU [Russian Accounting Standards]—for the shareholders, the tax and regulatory agencies, in which a minimum amount of profit was accounted; the second—for the auditors and foreign investors, in which the profit received as the result of the theft of the oil was also accounted…” First, the judge appears to have erroneously used the standard accounting term “dual‐entry bookkeeping”, when from the context it is clear he means to assert that “two sets of books were maintained”. Second, it is naïve to assert that the co‐existence of RSBU reporting and US GAAP reporting is somehow improper or indicative of criminal activity; on the contrary, the judge seems to be unaware that in order to comply with rules of the Russian Ministry of Finance and Russian
12 The impact of the artificial criminalization of legitimate business activity is an increasingly prominent issue raised by advocates of a new push for legal and economic reforms in Russia. From 2000 to 2009 some 15% of Russia’s registered businesses faced criminal charges, with a significant proportion of these cases resulting from corrupted officials abusing the law to facilitate unlawful seizures of property. The repression of legitimate business in Russia through fabricated criminal cases has become a serious obstacle to Russia’s modernization. See: http://www.novayagazeta.ru/data/2011/044/14.html and http://www.novayagazeta.ru/data/2011/044/13.html (both in Russian). The issue was highlighted by Khodorkovsky in his last words to the Khamovnichesky Court on November 2, 2010, available in English at: http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/Last%2520Word%2520of%2520MBK%2520‐%2520Final%2520%2528English%2529%25202nd%2520November%25202010.pdf and in the original Russian at: http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/MBK%20Last%20Word%20RUSSIAN.pdf.
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taxation authorities, both sets of reports were required. Third, the court’s admission of “profit received as the result of the theft of oil” exposes the recurring theme of the trial: that no harm was proven to ground the allegations of embezzlement. Shortly thereafter, on page 613 the verdict states: “Khodorkovsky and Lebedev maintained dual financial accounting [under RSBU and US GAAP] and concealed the consolidated financial statements from shareholders, for which they published it exclusively in the English language…” Along with the assertion on page 612 that meeting multiple reporting requirements is somehow improper or indicative of criminal activity, the court reveals not only naïveté but also incompetence to hear a case requiring an understanding of the basics of legal and regulatory compliance for large corporations. Adding to the absurdity, just four pages later, on page 617, the verdict concedes the exact opposite of what is stated on page 613: “In order to safeguard interests of shareholders, a bilingual version of the Yukos.ru website was created on which that information [consolidated statements] was posted in accordance with international standards.” In a further artificial criminalization of legitimate business practices, on page 616, the verdict states that “the sale price for oil sold by [Yukos] production enterprises indicated in sale‐and‐purchase agreements was not a transfer price, but an internal corporate price of [Yukos]…” The verdict plays with words to obfuscate reality—denying that Yukos engaged in the same transfer pricing that was and is lawfully practiced by other Russian and international energy majors, including state‐controlled Rosneft.13 Furthermore, because the “internal corporate price” does not compare to inappropriately‐applied global benchmark prices for oil, the court finds proof of a “wrongful seizure” by the defendants “not involving exchange for value” (as stated on page 72 of the verdict). III. WHY THE FACTS AND THE LAW SHOULD HAVE EXONERATED THE DEFENDANTS In the course of the trial, the defendants and their counsel exposed fundamental errors and weaknesses surrounding the allegations leveled in the indictment. The defense invoked applicable law, broadly‐known facts, common sense and oil industry norms, and brought relevant evidence and witness and expert testimony to the court’s attention. Even though prosecutors and the court went to great efforts to exclude exculpatory facts, to block documents and witnesses, and to ignore the substance of the defense’s arguments, by the end of the trial the judge had no credible basis for a guilty verdict—although this did not prevent the issuance of such a verdict all the same. Fundamental Errors and Weaknesses Exposed by the Defense Among the fundamental errors and weaknesses surrounding the charges that were exposed by the defense14 and unresolved by the prosecutors or the judge at trial:
13 Rosneft, meanwhile, has not been attacked by the authorities for not selling oil internally or domestically at Rotterdam prices. This reveals not only the artificial nature of the criminalization of Yukos’s operations, but also the discriminatory and unlawful treatment of Yukos compared to other oil companies in Russia. 14 More information on these fundamental errors and weaknesses is available in a short briefing paper entitled “The Kafkaesque Prosecutions of Mikhail Khodorkovsky and Platon Lebedev”, available at: http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/MBKFactSheetKafkaesque%2014%2009%202009.pdf.
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• The impossibility of the defendants physically seizing 350 million metric tons of oil at the wellhead—meaning all production of the Yukos subsidiaries for 6 years; not a single incident of oil disappearance or of the defendants taking possession of the oil was presented to the court by prosecutors. The prosecution’s sudden reduction of the amount of allegedly‐embezzled oil by about one third, as alleged during closing arguments yet ignored by the judge in his verdict, involves quantities that are just as impossible and just as unproven.
• The prosecutors and the court neglected the outcome of the first Khodorkovsky‐
Lebedev trial and the tax proceedings against Yukos, in which the same oil that is now alleged to have been embezzled was in fact punitively and unlawfully taxed in order to drive Yukos into bankruptcy. If the oil was owned and sold by Yukos to generate taxable revenues, as established in those prior domestic proceedings, and as argued by the Russian Federation in ongoing Yukos‐related proceedings abroad, then how can prosecutors in this case simultaneously allege that the oil was in fact not owned and sold by Yukos but rather embezzled by Khodorkovsky and Lebedev?
• The prosecutors invented “injured parties”—Yukos production subsidiaries—and the
alleged theft of oil from them sustained the conviction against Khodorkovsky and Lebedev, despite these subsidiaries’ profitability and full compensation of their production costs. The judge disregarded responses the court received to enquiries it sent to the former Yukos production subsidiaries, which demonstrated their profitability with data for proceeds of sales against costs of production.15 Though massive embezzlement was said to have occurred, neither at trial nor in the verdict was the concomitant harm to these supposedly injured parties established.
• The impossibility of the embezzlement charges could have been proven had the
prosecutors or the court examined certain records of Transneft, the state‐owned monopoly that tightly controls the movement of oil through Russia’s pipeline network. These records indicate that the allegedly embezzled Yukos oil was in fact legitimately sold and transported through the state pipeline network.
• In addition to examining the Yukos production subsidiaries, the prosecutors or the
court likewise could have examined financial operations recorded on the books of several other companies and banks—which prove that the entire oil production of Yukos over a period of six years was sold, not embezzled.
• The prosecutors and the court ignored or dismissed the fact that Yukos covered
massive operating expenses and invested heavily in capital improvements and acquisitions and paid dividends—again, all financial operations recorded on the books of several companies and banks—when all oil as the primary source of the funds necessary for these operations was allegedly stolen.
• The prosecutors and the court confused property rights in crude oil, and the crude oil
itself, neglecting that a transfer of ownership rights can occur without the oil physically
15 Indeed, the verdict contradicts itself by admitting on page 132 and on page 674 that from 2000 to 2003, production subsidiaries received proceeds of 297.7 billion rubles and profits of 50.5 billion rubles. No one challenged the historic data submitted by production subsidiaries to the court in 2010—including data from state‐controlled Rosneft reporting on Yukos production assets it acquired through forced bankruptcy auctions—that clearly reported the data for proceeds of sales against costs of production. The court itself included documentary proof of these data in the case file, while not taking such information into account.
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changing hands. The object of the alleged embezzlement was never definitively identified.
• The prosecutors and the court also stubbornly neglected basic chemistry: confusing
the value of wellhead liquid—full of impurities—with the value of crude oil. • To arrive at their wildly inflated alleged sums embezzled, the prosecution incorrectly
asserted that the price of crude oil in Russian production regions is comparable to prices of crude oil in Rotterdam, and that the higher foreign prices ought to have been charged in domestic transactions (ignoring transport costs, customs duties and other expenditures that add value between the price of oil in Siberia and the price of oil in Rotterdam). The judge simply accepted this obvious fallacy as fact.
• The prosecutors and the court ignored the validity of lawful contracts made between
the Yukos production subsidiaries and their parent company. • The prosecutors and the court also ignored industry‐standard inter‐company sales that
are used for lawful tax optimization within vertically‐integrated oil companies. Furthermore, in a string of previous court rulings involving Russian tax authorities and competition regulators, some of which were successfully entered into the evidentiary record of this trial, the structuring of Yukos transactions with production subsidiaries was scrutinized and judicially approved.
• The prosecutors and court further neglected that Yukos’s vertically‐integrated
structure was planned and approved not by an imagined rogue or criminal group, but rather by the Russian government itself, with support from the Kremlin, through a deliberate policy aimed at rescuing and developing Russia’s moribund oil industry in the 1990s. Official government records prove this—but were ignored by the court.
• The prosecutors neglected that the management and control structures of Yukos could
never have permitted the company’s entire production of oil to be embezzled. • When the embezzlement charges were brought in 2007, prosecutors pressured
PricewaterhouseCoopers (PwC) to withdraw their approval of a decade of Yukos audits, since observers worldwide could see the obvious incompatibility between the auditors’ reports and the prosecutors’ charges against Khodorkovsky and Lebedev.16
• The charges of “laundering” were shown by the defence to be completely empty.
Prosecutors and the judge used the term “laundering” presumptively, amateurishly and erroneously—for example, asserting the legal nonsense of “laundering of crude oil.” The verdict failed to establish fundamental elements of “money laundering” in criminal law: that a crime occurred and that the defendants acted to conceal the proceeds of that crime. If prosecutors were intent on a “trial by headline”, they may have succeeded in stigmatizing the defendants by having terms such as “embezzlement” and “laundering” associated with their names; but in the end the trial failed to prove either “laundering” or any predicate offense.
16 For more on PwC’s role, see pages 18, 22, 24, 27 and in particular “Abuse of Investigatory and Prosecutorial Powers through Coercion of PwC” on pages 28‐29.
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Former and Current Russian Government Officials Testified that Charges Were Not Credible In addition to comprehensive presentations in court by both Khodorkovsky and Lebedev, which destroyed the indictment piece by piece17, a succession of testimonies from widely‐respected former and current government officials dealt heavy blows to the credibility of the prosecution’s case: • On May 24, 2010, Russia’s former Prime Minister Mikhail Kasyanov testified that the
Kremlin had ordered Khodorkovsky’s arrest because Khodorkovsky had angered then‐President Putin by funding opposition parties without presidential approval. Kasyanov’s testimony was based on information he was privy to as prime minister, including face‐to‐face discussions with then‐President Putin. Kasyanov further testified that at the time of the allegedly illegal activities involving Yukos, all Russian oil majors shared three attributes: vertical integration, the use of transfer pricing and preferential tax treatment in certain specially‐legislated zones. He noted that Yukos was consistently one of the largest taxpayers in the Russian Federation, and that the company had its oil production and sales closely monitored by the government. When asked about whether the oil embezzlement charges were credible, he declared: “Absolutely not!”
• On June 1, 2010, former Soviet and Russian Central Bank chief Viktor Gerashchenko
derided the charges, calling them “utter nonsense”. He noted that if the defendants were guilty as charged, Yukos could never have grown to preeminence in the Russian oil industry, and foreign oil majors such as Exxon, which examined Yukos “to the last detail” would not have made multi‐billion‐dollar offers for significant stakes in the company. Gerashchenko became Yukos chairman in 2004, the year after Khodorkovsky and Lebedev were arrested, and held the position as the company was dismantled through forced bankruptcy proceedings that benefitted state‐controlled oil company Rosneft. He noted that none of the companies that acquired Yukos assets—including Rosneft—ever complained about alleged large‐scale embezzlement, and that no one in government ever suggested that massive amounts of crude oil had disappeared or been embezzled. Gerashchenko boldly confronted the prosecution, exclaiming: “Why are you doing this foolishness?”
• On June 21, 2010, German Gref, Chief Executive of Sberbank and Russia’s economic
development and trade minister from 2000 to 2007, testified that as minister he would have been aware if massive crude oil embezzlement at Yukos had been taking place as charged, in the vicinity of 20% of Russia’s annual production. Regarding the prosecution’s erroneous assertion that Russia’s domestic pricing of crude oil was comparable to international market prices, Gref stated: “To purchase at the same prices as in Rotterdam—impossible.”
• On June 22, 2010, Viktor Khristenko, Russia’s Industry and Trade Minister since 2008,
testified that he was unaware of any proof of the large‐scale embezzlement prosecutors alleged in their charges against Khodorkovsky and Lebedev. Prior to serving as Industry and Trade Minister, Khristenko had served as Industry and Energy Minister from 2004. From 1997 to 2004 he served as Deputy Finance Minister, Deputy Prime Minister and briefly as acting Prime Minister. From 2000 to 2008 he served as Chairman of Transneft, the state pipeline monopoly. Khristenko was asked whether
17 A summary of Khodorkovsky’s testimony is available at: http://www.khodorkovskycenter.com/news‐resources/stories/witness‐testimony‐summary‐mikhail‐khodorkovsky. A summary of Lebedev’s testimony is available at: http://www.khodorkovskycenter.com/news‐resources/stories/witness‐testimony‐summary‐platon‐lebedev.
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Yukos, its production subsidiaries or, now, Rosneft—the new owner of Yukos assets—ever reported that some 60 million metric tons per year of crude oil had gone missing. Khristenko answered: “No, I am not aware that something like this ever happened.” Khristenko was also asked about transfer pricing. He noted that as a matter of government policy the subject has been ever‐present since the late 1990s, due to the consequences of transfer pricing on the federal and regional budgets, and on minority shareholders, but that from his point of view transfer pricing practices were neither mysterious nor illegal.
This lineup of distinguished former and current Russian government officials not only challenged the legitimacy of the trial, but also demonstrated the mounting opposition within Russia’s elites over the continued abuse of law enforcement and judicial powers in the campaign against Khodorkovsky and Lebedev. Nevertheless, ultimately the verdict brazenly obfuscated and misrepresented testimony delivered in court by such witnesses. For example, in multiple passages of the verdict18 Judge Danilkin cites both Gref and Khristenko to support misguided and misapplied judicial ruminations about corporate transfer pricing practices of vertically‐integrated oil companies.19 The judge’s treatment of Gerashchenko’s testimony is illustrative of the methods he employed to filter out information that favored the defendants. On page 623, the verdict states: “The testimony of V.G. [sic] Gerashchenko [asserting the absence and impossibility of embezzlement as charged]…is assessed by the court as untrue because…[he] was not an eyewitness of the commission of the embezzlement and laundering of the oil…” On this same basis, however, the judge would have had to dismiss the testimony of every witness who testified at the trial, including those called by the prosecution, because none of them were eyewitnesses of the alleged embezzlement and laundering of oil. The judge did not address Gerashchenko’s statement that if the charges had any validity, Yukos could never have grown to preeminence in the Russian oil industry, and foreign oil majors such as Exxon which exhaustively examined Yukos would not have made multi‐billion‐dollar offers for significant stakes in the company. Nor did the judge address Gerashchenko’s statement that none of the companies that acquired Yukos assets through forced bankruptcy auctions—including Rosneft—ever complained about alleged large‐scale embezzlement, and that no one in government ever suggested that massive amounts of crude oil had disappeared or been embezzled. Rather, the judge avoided such difficult indictment‐deflating realities by branding Gerashchenko’s testimony “untrue”, on the grounds that Gerashchenko was not an eyewitness of alleged embezzlement that was in fact witnessed by no one at all.
18 Pages 285, 610, 615‐16, 649‐50 and 675. 19 It should be noted that the indictment includes no charges of unlawful transfer pricing, and that Yukos’s tax optimization strategies were in compliance with evolving transfer pricing rules.
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Other Witness Testimony Over a six‐month period beginning at the end of September 2009, the prosecution paraded 51 witnesses into the courtroom. Their testimony was marked by prosecutorial coercion, manipulation, and, notwithstanding the foregoing, irrelevance to the allegations against Khodorkovsky and Lebedev. In the course of in‐court questioning, some of the prosecution witnesses refuted the arguments of the indictment, for example testifying that Yukos production subsidiaries were indeed paid for their crude oil—undermining a fundamental prerequisite of the embezzlement and therefore money laundering charges against the defendants. Even the state‐appointed Yukos bankruptcy receiver asserted that Yukos was well‐organized and efficiently produced and sold large volumes of oil. Regarding the disputed VNK share exchange, one witness testified that Khodorkovsky’s efforts to protect VNK’s assets were well‐founded.20 Given the prevailing climate of fear after well‐known cases of the authorities torturing, incarcerating or prosecuting people to extract false testimony in Yukos‐related cases or to punish those who support Khodorkovsky and Lebedev,21 many potential witnesses stayed away from the trial. The law does not empower the defense to compel witnesses to testify or third parties to produce documents, and therefore efforts to compel witnesses or production of documents depend upon the court’s discretion. Despite these disadvantages, 30 witnesses sought by the defense appeared in court and provided testimony underlining the absurdity of the charges. The sole defense expert permitted to participate in the proceedings was Wesley Haun, a U.S. specialist in energy industry management who came to the stand on May 31, 2010, notwithstanding a pejorative declaration by prosecutor Gyulchekhra Ibragimova, who stated: “We don’t care what a foreign citizen will tell us.” Haun testified that Yukos was comparable with other Russian and international vertically‐integrated oil companies, and that Khodorkovsky’s actions were consistent with “company leadership intent on building a model company that would achieve sustained growth and long term profitability.” Having carefully examined the structure and operating procedures of Yukos, Haun stated that Khodorkovsky’s reorganization and management of the company benefited all shareholders, the production subsidiaries, as well as the Russian Federation, and was consistent with industry standards, custom and practice. He stated that the charges brought against the defendants are disproved by the commercial achievements of Yukos: the company’s performance statistics and growth would have been impossible had crude oil been embezzled as charged. He further noted that the prosecutors erred in comparing the price of wellhead liquid to the end user price of crude oil. Unsurprisingly, the prosecution successfully motioned to have Haun’s written expert report excluded from the evidentiary record.22 Jacques Kosciusko‐Morizet served on the Yukos board of directors from 2000 to 2004. Kosciusko‐Morizet is a member of France’s senior business elite, having served as vice president of the bank Crédit Lyonnais. He also served as France’s deputy minister of international trade. As an
20 The defense catalogued over three hundred discrepancies in the transcripts and audio tapes of this witness’s interrogations. The court nevertheless allowed the prosecutors to submit the transcripts into the trial record. 21 See for example the prominent cases of Svetlana Bakhmina, Vasily Alexanyan and Antonio Valdes‐Garcia, described at: http://www.khodorkovskycenter.com/history‐background/other‐key‐individuals. 22 Haun’s report was nonetheless made public by the defense, and it is available at: http://www.khodorkovskycenter.com/news‐resources/stories/specialist‐testimony‐summary‐wesley‐haun. In the verdict, the judge avoided any substantive consideration of Haun’s in‐court testimony. On page 618 of the verdict the judge simply echoed arguments prosecutors presented at trial, stating that the court believed that Haun is not a specialist in Russian law; that Haun did not work at Yukos; and that he obtained information about the company from publicly‐available sources. Haun’s testimony was therefore deemed “untenable” by the judge.
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independent director Kosciusko‐Morizet had direct knowledge of both Khodorkovsky and Yukos. Kosciusko‐Morizet was formally interviewed as a witness by defense counsel in Paris in February 2009. Over the objections of prosecutors who sought to exclude his written statement automatically because the interview took place in a foreign country, defense counsel were permitted to read Kosciusko‐Morizet’s transcribed statements in court. This was the first and last documented witness declaration that the judge allowed the defense to read in its entirety into the trial record. Kosciusko‐Morizet also appeared in court on June 8 and 9, 2010 for questioning and cross‐examination. According to Kosciusko‐Morizet: • Examined from any perspective, the accusations against Khodorkovsky and Lebedev
were “complete nonsense.” Yukos oil “moved from the production companies through the downstream marketing companies in a manner consistent with the best industry practices and was sold by the production companies at a fair and reasonable price…Yukos increased its revenues and profits by becoming a more efficient and better operated company that better managed its assets.”
• On the basis of his direct involvement in the Yukos‐PwC relationship, Kosciusko‐
Morizet ridiculed the assertion in the indictment that Khodorkovsky and Lebedev deceived PwC, and called this excuse by the auditors for withdrawing their endorsement of a decade of Yukos audits “completely disingenuous.” Kosciusko‐Morizet said that PwC’s turning against Yukos was “very damaging for PwC’s reputation, for the audit profession in Moscow and for international confidence in the Russian business environment.” He further noted that he had spoken with a number of PwC partners who were embarrassed by the behavior of PwC Russia in withdrawing its approval of Yukos audits for the ten years from 1995 to 2004.23
In light of the damage inflicted upon the credibility of the charges by expert Haun and witness Kosciusko‐Morizet, the prosecution and court subsequently invoked the thinnest of pretexts to avoid repeats of the spectacles of these first individuals who came at the request of the defense to Khamovnichesky Court—from verbally attacking the interpreter and his credibility to blocking defense witnesses and experts and refusing to examine their reports and declarations. In the verdict, any in‐court testimony that supported the defendants was ultimately disregarded by the judge on flimsy or nonsensical grounds. Such facts and views presented by witnesses were simply brushed away without thorough consideration, usually by challenging the credibility of people even after they were approved to appear in court and sometimes adding suggestions of perjury motivated by past employment relationships. Not a single prosecution witness was subjected by the judge to the credibility tests that he so vigorously applied to defense witnesses. As for conspicuously absent witness testimony: not a single of the production subsidiaries that were alleged “injured parties”—supposedly failing to have received proper payment in exchange for their output—testified in court.
23 For more on PwC’s role, see pages 14, 22, 24, 27 and in particular “Abuse of Investigatory and Prosecutorial Powers through Coercion of PwC” on pages 28‐29.
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IV. THE APPEAL The defense initiated appeal procedures on December 31, 2010, the day after sentencing. These initial filings were supplemented through April 2011.24 The appeal documents set forth irrefutable grounds for reversal of the lower court’s verdict and for termination of the case. The core argument to set aside the contested verdict was that it did not identify any acts by the appellants that constituted criminal conduct. On this basis alone, the only outcome of the appeal if it was to be decided solely on an independent application of the law to the facts would have been acquittals for Khodorkovsky and Lebedev in the second case against them, clearing the way for their scheduled release in 2011. Although the trial court’s failure to identify acts constituting embezzlement or laundering was a sufficient basis to reverse the verdict and to terminate the case, the appellants supplemented their appeal with complaints about the numerous fundamental and irreparable violations of due process that culminated in a defective, unjust and unlawful verdict. The appellants further noted that the verdict contradicted rulings in prior Yukos cases in Russian courts as well as the Russian Federation’s lines of defense in Yukos‐related proceedings abroad. The defense was not expecting a fair ruling from the Moscow City Court. The appeal nonetheless was pursued to expose the lawlessness of the case and to reveal the disregard for the rule of law in Russia that infected these proceedings and that infects thousands of others. Also, by exhausting hopes for legal redress within Russia, the road would be opened for Khodorkovsky and Lebedev to appeal to the ECHR. The appeal was heard by the Moscow City Court—and rapidly dispensed with in a ruling on May 24, 2011 that confirmed the lower court’s guilty verdict.25 V. DUE PROCESS VIOLATIONS AND OFFICIAL MISCONDUCT Marred by due process violations and incidents of official misconduct, the proceedings failed to comply with fundamental norms of fairness and justice. These due process violations and incidents of official misconduct were committed either by the prosecution or the court, or by both in tandem. For the vast majority of instances of prosecutorial abuses and misconduct, the court passively or actively condoned the ongoing miscarriage of justice. This raised doubts as to the judge’s capacity to render a verdict independent of pressure from the prosecutors and, behind the prosecutors, the powerful instigators of the case. As broadly expected, in his verdict the judge failed to cure or even to take into consideration these legal transgressions. By his acts and omissions in the handling of the case, Judge Danilkin became complicit in and responsible for the official misconduct and due process violations that the prosecutors brought to the trial. Any independent court would have dismissed the case and terminated the trial on the basis of the gross prosecutorial misconduct that occurred, or on the basis of the plain facts and legal reasoning advanced by the defense. Furthermore, a credible guilty verdict could not be built upon the deficient legal and evidentiary grounds provided by the prosecution. The prosecution failed to
24 The appeal filings are available http://www.khodorkovskycenter.com/legal‐documents. 25 An English translation of the Moscow City Court’s ruling is available at http://www.khodorkovskycenter.com/legal‐documents. The original Russian text is available at: http://khodorkovsky.ru/cassation/.
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connect any acts of the defendants with anything whatsoever that is proscribed in Russian criminal law. Nor did the prosecution elaborate any plausible theory of criminal liability. Unable to explain or offer any proof, the guilty verdict is not anchored in properly applied law and facts, and clearly is motivated by reasons alien to justice.26 In assessing the Khodorkovsky‐Lebedev proceedings against international standards outlined in the Trial Observation Manual for Criminal Proceedings of the International Commission of Jurists, the overwhelming extent of the due process violations is readily apparent.27 In nineteen categories assessed for compliance vs. breach, the Khodorkovsky‐Lebedev proceedings were marred by breaches in at least fourteen of the categories: right to a fair hearing; presumption of innocence; right to be informed promptly of the charge; right to defense, including access to documents or counsel and lack of interference with counsel; right to an interpreter and to accurate translations; right to equality of arms; right to call and examine witnesses; exclusion of evidence elicited by illegal means, including torture or ill‐treatment; right to be tried without undue delay; principle of legality of criminal offences; prohibition of the retroactivity of criminal law; prohibition of double jeopardy; right to a public and reasoned judgment; and right not to be punished otherwise than in accordance with international standards. In one category not technically breached—right not to suffer a heavier penalty than the one applicable at the time the criminal offence was committed and right to benefit from a lighter sentence subsequently introduced by law—the compliance is moot if one considers that the penalties and sentences imposed upon the defendants were for criminal offences that were not in fact proven to have occurred. In the four remaining categories—right to a public hearing; right to be present at trial; right not to be compelled to confess guilt or to testify; and right to appeal—minimal requirements were satisfied—yet evidently only misleadingly to create the appearance of a legitimate trial. For instance, the defendants were permitted to speak in court almost without restrictions; but the judge ignored the substance of their statements, blocked their lawyers from introducing exculpatory documentary evidence and refused to hear many witnesses and experts. Likewise, illusions of adversarial process and legitimacy were created by allowing the defense to file motions and objections to serious procedural violations; however the judge routinely quashed or simply failed to react to the defense pleadings. Considering the futility created by the preponderance of due process violations, the few fair trial rights that the defendants did enjoy were gutted of meaning.
— The following are examples of due process violations and official misconduct that marred these proceedings: Prosecution’s Failure to Explain Charges When Khodorkovsky entered his “not guilty” plea in April 2009, he emphasized that the charges were incomprehensible to him despite asking in vain for explanations and clarifications for over two years.
26 Incidentally, it is telling that in the verdict the judge failed to address numerous factual errors made by investigators and prosecutors about the most elementary of facts. These errors could have been corrected in reference to the evidentiary record, repeated submissions from the defense, and obvious or publicly verifiable information. From erroneous statements of key dates in the corporate development of Yukos to the purported existence of a “Gibraltar Island”, where prosecutors presumably meant to refer to the UK overseas territory firmly attached to Europe, the numerous examples of such errors undermine the judge’s credibility and are indicative of his deference to the prosecution, lack of independence—and pure sloppiness. 27 See appended chart: “International Commission of Jurists Standards on Judicial Proceedings— Khodorkovsky‐Lebedev Trial 2009‐2010”, on pages 37‐38.
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Nowhere did the indictment set forth the elements of any alleged crime or succeed in connecting any specific evidence to the allegations. On the contrary, the charges were an artifice of criminalization of lawful and widespread business practices. They stubbornly ignored legal and factual realities ranging from the fundamental definition of “crime” to the highly regulated structure and operation of vertically‐integrated energy companies. Judge Danilkin just brushed aside requests for explanations of the allegations, claiming he had no power over the prosecution to compel them to explain the charges. As a result, the defense had to fight against multiple mutually exclusive allegations. Even the subject matter of the embezzlement charges was confused by the prosecution who could not make up their minds whether oil, oil proceeds or rights to oil sale contracts were allegedly embezzled by the defendants. They were silent on the method, time and place the alleged crimes were committed. As a result, the defense was forced to defend against multiple, mutually‐exclusive allegations in fear that the prosecution could change its legal theory at the end of the trial. Since the indictment was first issued in February 2007, all pleas by the defendants and motions by their counsel to have the charges clarified were rebuffed by investigators, prosecutors and judicial authorities. Denial of the Presumption of Innocence Even though prosecutors produced no evidence that actually proved any crime, they repeatedly declared Khodorkovsky and Lebedev to be guilty of the alleged criminal acts, and the judge never censured the prosecutors for doing so. The Russian Constitution and the European Convention on Human Rights affirm the principle that everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law. The Russian Constitution adds that an accused shall not be obliged to prove his innocence. However, in fact, the burden of proof in this case was borne by the defense from the start, to prove the absurdity of the charges; rather than on the prosecution to prove guilt. When Lebedev protested unlawful treatment, a prosecutor said his efforts to defend himself were “useless” and added, “just as we have planned, so will we proceed.” Meanwhile, in court and through the state‐controlled Russian media, Khodorkovsky was portrayed as a dangerous criminal, locked up in a glass booth surrounded by machine gun‐toting guards. To further add to the demonization of Khodorkovsky in the media, Prime Minister Putin publicly compared Khodorkovsky with Al Capone and Yukos with Enron. In their undisguised treatment of the defendants being guilty as charged, prosecutors insulted the Khodorkovsky and Lebedev on numerous occasions, stating for example that Khodorkovsky’s opinion did not matter to anyone except his defense lawyers and his cheering fans in the courtroom (April 21, 2009); or responding to Lebedev’s due process concerns by stating that his entreaties were “useless” and adding, “just as we have planned, so we will proceed” (April 27, 2009); or calling the defendants “so‐called political prisoners” (June 9, 2009). In response to Lebedev’s reminder that in 2007 the Swiss Federal Tribunal ordered Switzerland’s prosecutors not to cooperate with their Russian counterparts on the Yukos case due to grave politically‐driven human rights infringements, a prosecutor retorted: “So what?” (July 28, 2009). When the defendants asked to view case materials, a prosecutor objected to passing a case volume into the locked and heavily guarded aquarium‐like glass booth where they were being kept in the courtroom, stating “they could destroy the evidence!” (June 4, 2009) Prosecutors repeatedly made contemptuous and sarcastic statements about the defendants in open court, displaying a blatant lack of dignity and respect.
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Court’s Refusal to Admit Exculpatory Evidence Presented by the Defense The court repeatedly denied allowing evidence presented by the defense to be added to the case file. The defense fruitlessly asked that exculpatory evidence in its possession be considered. Examples included: RSBU financial reporting of Yukos production subsidiaries—certified by PwC and never withdrawn28; Yukos’s US GAAP financial statements, which were missing from the case materials introduced into the trial record for several of the years relevant to the allegations; numerous sworn declarations from individuals formerly affiliated with Yukos and with knowledge directly relevant to the charges; Yukos documentation describing production and sales processes and capital expenditures; legal explanations of Yukos’s international corporate structure; and reports of the state‐appointed Yukos bankruptcy administrator. Meanwhile, in contrast, investigators and prosecutors were consistently and repeatedly allowed to add materials to the case file as they wished. Court’s Refusal to Assist Defense in Compelling Prosecutors to Produce Evidence or to Assist Defense in Compelling Third Parties to Produce Exculpatory Documents Throughout the trial, the court repeatedly refused to request or to compel the production of evidence held and concealed by the prosecution, and to request or to compel third parties identified by the defense to produce documents of an exculpatory nature. Of particular note, the defense was denied access to evidence gathered in a parallel case which was extensively used by investigators and prosecutors as a means of circumventing procedural rules and safeguards in the present case. The judge denied defense requests to compel the prosecution to provide the defense access to files from that parallel case—even though that case was a major source of materials accepted into the trial record in the present case. Furthermore, the defendants—and even the court itself—were denied access to wiretap recordings being described by the prosecution at the proceedings. Defense attempts in July 2009 and again in November 2009 to have the recordings submitted to the court were rebuffed by investigators and the Federal Security Service (“FSB”), and the judge was unable to compel the production of the recordings in question. Defense counsel asserted not only that a UK wiretap by the FSB was unlawful, but also that transcripts provided by prosecutors should be checked against the recordings, given the prosecution’s established pattern of distorting evidence in the case.29 The concealment of the recordings raised serious questions not only about the real probative value of the prosecution’s transcripts, but also more broadly about the motives and methods of work of the investigators and prosecutors, and the incapacity of the judge to compel the production of evidence held by the authorities. With respect to third parties, a case on point is Transneft. The court refused to subpoena and to take into account Transneft records sought by the defense. The defense asserted these records would indicate that the allegedly embezzled Yukos oil was in fact legitimately sold and transported through the state pipeline network. Likewise, publicly available Russian government documents from the 1990s, demonstrating government policy geared towards the development and functioning of Yukos as a vertically‐integrated energy company, were not sought out by the court from official sources for
28 For more on PwC’s role, see pages 14, 18, 24, 27 and in particular “Abuse of Investigatory and Prosecutorial Powers through Coercion of PwC” on pages 28‐29. 29 In a similar effort by the defense to confirm the accuracy of a prosecution transcript, on February 26, 2010, after the defense successfully pleaded to have the court play back an audio recording of the interrogation of witness Gitas Anilionis, major discrepancies were revealed between the audio recording and the official prosecution transcript.
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inclusion in the case materials. Despite many efforts, the defendants were unable to enter such germane exculpatory evidence into the official case record and therefore could not use such documents in the interrogation of witnesses. Court’s Refusal to Exclude Illegally‐Obtained Evidence The court allowed prosecutors to submit evidence illegally obtained through unlawful searches and seizures. Despite the fact that this evidence did nothing to prove the charges, as a matter of principle and procedure the defense petitioned for exclusion of over 500 illegally‐obtained documents. Initially the defense’s requests for exclusion of this evidence were deemed premature—then when the defense repeated a request for exclusion at the end of the defense phase of the trial, the request was denied. Misrepresentation of Evidence In verbally presenting Yukos audit documents, the prosecution changed the words “income” and “taxes paid” to “debt” and “taxes owed”. In several instances the prosecutors falsely stated that documents bore authentication marks such as stamps and signatures, where in reality no such marks existed. In other instances signatures of the same people were different from one document to another. Multiple versions of documents were presented, with no indication of which, if any, was the final version. The prosecutors described a letter allegedly from Lebedev, yet failed to mention that—as the court saw when Lebedev insisted the item be examined—the original letter was crossed out by hand with a large “X”, several phrases were also crossed out, there were several handwritten additions of unknown origin, the letter lacked a date and signature, and the prosecution’s “True Copy” stamp was missing the required signature. Numerous documents of unknown origin were presented, having been printed from computer drives for which the chain of custody was unclear. In several instances the prosecutors gave partially or completely inaccurate descriptions of document contents. As an example, in summarizing a document of South Petroleum Ltd., a prosecutor simply asserted that the document showed that “defendants were taking funds from that company”, even though the document showed nothing of the sort. The prosecutors failed to explain what relevance the document had to the proceedings at all. A further example, also unexplained by the prosecution, was the assertion that the defendants embezzled a volume of oil in 2003 that in fact exceeded the actual sum produced by almost two million metric tons. In yet another example, one document presented by the prosecutors contradicted the indictment by revealing that the founding capital of the Russian company Fregat was over 154 million rubles—not the 14 rubles stated in the indictment. Furthermore, in arguing that Khodorkovsky and Lebedev should be kept in strict pre‐trial isolation, the prosecution asserted that a Siberian court had determined that Khodorkovsky should be held in such conditions to prevent him from destroying evidence or intimidating witnesses; there was in fact never any such ruling in a Siberian court. Vanishing Evidence A regional federal court decision relevant to the substance of the proceedings—and helpful to the defendants—was transmitted by the regional federal court to the prosecutors in Moscow. The Privolzhskiy Region Federal Arbitrazh Court confirmed that it sent the entire case file to the prosecutors. However, when asked to produce the case materials in court, the prosecutors simply stated that they had never received them, and refused to confirm whether they had requested the materials at all. The judge was unable to compel the prosecution to produce the sought‐after decision, and apparently dropped the matter despite protestations of the defense.
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Incomplete Evidence In many cases the prosecutors announced they were presenting a document “in full”, but in fact only read the title of the document or a few selected sentences. Sometimes the first and last pages of a document would be read, but nothing in between, thus leaving it up to the defense to come back to these documents several months later in order to provide the court the proper context of the materials. The defense was then accused by the prosecution of delaying the proceedings. Documents such as sales contracts were ostensibly read “in full”—but in reality only cursory or irrelevant details of the document were provided, with no mention of who were the parties or what was being sold. Shareholder meeting agendas were summarized, with no information on actual decisions taken at the meetings—and no indication of whether Khodorkovsky or Lebedev even participated. Company procedures were described in part—omitting information about the rigorous controls in place that would have prevented the alleged embezzlement. Sections of an independent legal analysis of the acquisition and consolidation of Yukos shares were read—though the full approval of those share transactions by the Russian competition authority was not mentioned. The prosecution likewise skipped over parts of a PwC memorandum they presented, which stated that the Russian government approved of the privatization and consolidation of Yukos.30 Some documents abruptly ended mid‐sentence, with an unknown number of missing pages. When prompted by the defense to engage on the relevance of any given document, the prosecutors refused, and stated that the judge was free to assess the materials—in his chamber, rather than in open court with the benefit of the adversarial process. Blocked Defense Witnesses and “No‐Shows” From the outset of the proceedings, the defense was at a significant disadvantage compared to the prosecution with respect to bringing witnesses to court, because the prosecution failed to attach the defense witness list to the indictment as required under Russian law. The judge failed to remedy this omission during the preliminary hearings. As a result, at the beginning of the defense phase of the trial, the defense, unlike the prosecution whose list of witnesses was attached to the indictment, needed to petition the court with respect to every single witness they sought to call to the proceedings, to request that the court subpoena each individual. The attendant procedural and practical hurdles borne by the defense in bringing witnesses to the proceedings meant that the defense was unnecessarily and unlawfully disadvantaged. Numerous potential key witnesses live outside of Russia, including former Yukos managers and employees who fled their home country out of fear of unjust prosecution and who have since been granted political asylum abroad. Several of these potential witnesses offered to provide testimony from outside of Russia, answering questions from the prosecution or the defense, for example through video conferencing with the courtroom. The court rejected these offers. In contrast, investigators questioned people abroad through international judicial channels without those witnesses being required to return to Russia. The court did not allow the defense to submit into evidence sworn declarations obtained from certain witnesses whom prosecutors sought to exclude because they were either accused or suspected in other criminal investigations. Yet, in a blatant double standard, when requested by the prosecution the court allowed witnesses, criminally accused or suspected, to testify in court or to have their interrogation transcripts entered into the evidentiary record.
30 For more on PwC’s role, see pages 14, 18, 22, 27 and in particular “Abuse of Investigatory and Prosecutorial Powers through Coercion of PwC” on pages 28‐29.
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For example, the court not only rejected the defense’s request to summon Bruce Misamore, Chief Financial Officer of Yukos from 2001 to 2005, to the proceedings, but also refused to enter his 53‐page questionnaire into the evidentiary record. Misamore’s questionnaire had been produced in strict compliance with Russian law. Nevertheless, the court agreed with the prosecution’s argument that Misamore’s words had to be excluded from the proceedings because he was a suspect in another investigation. Russian law contains no prohibition that would block someone from testifying just because that person is a suspect in another case, whether concerning prosecution or defense witnesses. Moreover, earlier in the proceedings, the prosecution requested and the court allowed it to enter into evidence interrogation transcripts of Alexei Golubovich and Alla Karaseva, respectively a suspect and an accused in other cases. Furthermore, the court allowed the prosecution to question Ilya Yurov, an accused in another criminal case, as a witness in this trial. However, contrary to fundamental common sense and principles of due process, the court agreed to be willfully blind to testimony from the Chief Financial Officer of the company central to the allegations against Khodorkovsky and Lebedev. The court further refused to enter into evidence sworn declarations of other foreign witnesses, including Michel Soublin (Misamore’s predecessor as Yukos Chief Financial Officer from 1999 to 2001, and subsequently Chairman of the Finance Committee of the Yukos Board of Directors until 2004), Frank Rieger (Vice President of Yukos RM, which oversaw refining and sales, from 2000 to 2002, and subsequently Financial Controller for the Yukos group of companies through 2005), Bernard Loze (Member of the Yukos Board of Directors from 2000 to 2006, Chairman of the Board’s Corporate Governance Committee and Member of the Board’s Nominating Committee from 2000 to 2001, and Member of the Board’s Corporate Governance and Nominating Committee from 2002 to 2006), Sarah Carey (Member of the Yukos Board of Directors from 2000 to 2004) and Michael Hunter (former President of Dart Management Corporation and former head of Yukos’s minority shareholders coalition). Whereas in violation of Russian procedural law the prosecution was allowed to introduce into the evidentiary record interrogation transcripts of witnesses made during a secret parallel investigation, the defense’s written questionnaires of key witnesses taken abroad, in strict compliance with Russian procedural law and directly relevant to the allegations, were rejected by the court. The prosecution argued that the Russian defense lawyers’ right to collect evidence was limited to the territory of Russia and the defense violated the law by obtaining witnesses’ statements abroad. When the defense requested the court’s assistance in obtaining witness testimony abroad pursuant to bilateral treaties for mutual assistance in legal matters, the court again sided with the prosecution and refused to assist the defense in its efforts. This was yet another instance of procedural inequalities disadvantaging the defense. In addition, the court denied the defense’s efforts to obtain testimony from Prime Minister Putin, Deputy Prime Minister Igor Sechin (who is concurrently Chairman of Rosneft) and Finance Minister Alexei Kudrin. These officials do not enjoy legal immunity from being called to testify in court. The judge ruled that the defense’s motions to have the men appear as witnesses were “premature”—yet in the end the time never became “ripe” and the defense was not allowed an opportunity to question them in court. Meanwhile, Sergey Bogdanchikov, former Chief Executive of Rosneft, was summoned by the court but did not appear. Rosneft was the main beneficiary of the dismantling of Yukos, and along with Sechin, Bogdanchikov is widely considered to have been one of the key figures behind the officialdom’s onslaught against Khodorkovsky. The judge denied a defense motion to re‐issue a summons for Bogdanchikov to appear at the proceedings. Of 93 individuals summoned to appear pursuant to requests from the defense, only 13 of them attended the proceedings pursuant to a summons—and the majority of the “no‐shows” did not even explain their absence to the court. The court made no efforts to compel the witnesses to appear in court.
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Disqualification of Defense Experts An important aspect of the defense strategy entailed bringing to court a series of qualified experts to explain the factual and legal basis of why the charges against Khodorkovsky and Lebedev were meritless and absurd. The defense sought both Russian and foreign experts who could speak authoritatively to the court in piercing through the ambiguities and generalities of the indictment. These experts were to reveal not only that the prosecutors made enormous errors in drawing up the charges, but also to what extent the prosecution of the case was handled by officials lacking even the basic expertise required in formulating allegations related to the activities of a major player in the energy industry. The prosecutors and the judge clearly did not want to confront—or be confronted with—the expert testimony that the defense had lined up. Despite the seemingly unassailable experience, knowledge and reputation of each of the experts that the defense sought to bring to the stand, prosecutors repeatedly demanded their disqualification citing irrelevant or invented pretexts. Prosecutors even assailed the credentials of the interpreter retained for non‐Russian‐speaking foreign experts, even though the interpreter selected was among the most experienced of the profession. The judge overwhelmingly validated the prosecution’s assertions, leading to a string of disqualifications of both Russian and foreign specialists. The court made it abundantly clear that regardless of the educational background, professional experience and skills possessed by an expert, he or she could ultimately be barred from testifying in the Khodorkovsky‐Lebedev trial if they were being brought to court by the defense. Out of eight experts that the defense sought to bring to the court, only the first to appear in court for testimony was permitted to stand for questioning—and the court refused to include his written report in the evidentiary record, as it was prepared in advance of the trial and before the court agreed to qualify him as an expert. In contrast, the prosecution experts’ reports were automatically allowed into the trial record, irrespective of the fact that they too were prepared in advance of the trial, and without the defense being allowed to cross‐examine the authors. Various flaws in those reports were all thus automatically allowed into the trial record. Defense Not Allowed to Cross‐Examine Prosecution Experts The court did not permit the defense to cross examine prosecution experts despite the significant number of flaws in their reports pointed out by the defense. On four occasions the defense motioned the court to summon prosecution experts for cross‐examination. On every occasion the motion was denied, leaving the assertions of prosecution experts in the trial record untested by the defense. When the defense motioned for the exclusion of prosecution expert reports due to substantive flaws and procedural violations, and because the defense had been denied the right to cross‐examine the authors of the reports, these motions were denied. Two further motions, requesting the production of materials used by prosecution experts in their analyses, were also denied. Prosecutorial Mistreatment and Intimidation of Witnesses and Experts The prosecution intimidated witnesses and experts in court in the course of their presentations and cross‐examinations. Directly or indirectly, the witnesses and experts were routinely threatened with criminal prosecution, insulted and interrupted. Hints were made that they could share criminal liability if they were connected to Khodorkovsky and Lebedev. Shameful incidents of prosecutorial mistreatment of witnesses and experts occurred in open court, concerning witnesses Tatyana Lysova, Viktor Gerashchenko, Jacques Kosciusko‐Morizet, Farid Khamidullin and Stephen Wilson, and experts Kevin Dages, Laura Hardin, John Romanelli, Natalya Lopashenko and Elena Rossinskaya. Prosecutors
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frequently became emotional in their opposition to defense witnesses and experts, raising their voices or shouting, stepping far outside the bounds of professional and courteous behavior. On August 12, 2010, Stephen Wilson, a former international tax director at PwC and former Head of International Tax at Yukos, testified that the vertically integrated structure of Yukos reflected international norms and laws, and that it was not possible for Khodorkovsky or Lebedev to have embezzled Yukos oil or siphoned off sales proceeds.31 Although Wilson’s testimony directly challenged the validity of the charges, in response prosecutors avoided the substance of the testimony. Instead, Prosecutor Valery Lakhtin insinuated that Wilson had underpaid his own personal Russian income taxes, and aided Khodorkovsky and Lebedev in embezzlement and laundering activities. Immediately after his appearance, as Wilson tried to leave the courtroom, two investigators attempted to serve him with papers summoning him for interrogation by Investigator Tatiana Rusanova in connection with a secret parallel case. Rather than address the serious questions raised in Wilson’s testimony, prosecutors brazenly attempted to intimidate not only Wilson, but any other potential witnesses with the courage to speak out in defense of Khodorkovsky and Lebedev. On August 31, 2010, former Yukos executive Vladimir Pereverzin confirmed on the witness stand that the prosecution had offered him a chance to avoid a prison sentence if he testified against Khodorkovsky and Lebedev. Pereverzin was serving a sentence on charges analogous to those that Khodorkovsky and Lebedev were facing, having been convicted in a curiously separate trial for allegedly acting illegally with the two men and others in embezzling Yukos oil. Pereverzin told the court that he was offered probation in return for testifying against the defendants. His testimony echoed the treatment of former Yukos vice president and legal department head Vasily Alexanyan, arrested in April 2006 and held in pre‐trial detention until January 2009—Alexanyan refused to provide false testimony against Khodorkovsky and Lebedev in exchange for desperately‐required medical treatment.32 In yet another example, Frank Rieger, a German national and former senior Yukos official who was no longer working for the company in 2006, was detained for interrogation by investigators and pressured to agree to prepared statements implicating Khodorkovsky in the theft of billions of dollars. He refused. The prosecution’s actions in manipulating its witnesses should also be considered in light of the indirect threats that the witnesses faced. Since 2004, investigations of various Yukos‐related matters were indiscriminately launched, paused, restarted or dropped by investigators. Potential witnesses in a new case against Khodorkovsky and Lebedev were directly or indirectly pressured by the authorities in an attempt to corral a group of pliant witnesses and to accumulate whatever documents that could possibly be presented as evidence against Khodorkovsky and Lebedev. Against this backdrop, it is all the more remarkable that the prosecution’s witnesses were unable to provide a scintilla of evidence to prove the absurd embezzlement charges now being faced by Khodorkovsky and Lebedev.
31 For more on PwC’s role, see pages 14, 18, 22, 24 and in particular “Abuse of Investigatory and Prosecutorial Powers through Coercion of PwC” on pages 28‐29. 32 At the Russian Supreme Court on January 22, 2008, Alexanyan testified that when he was being denied medical treatment in detention, Salavat Karimov, former chief investigator in the Khodorkovsky‐Lebedev cases, told him: “[t]he leadership of the Prosecutor General’s Office understands that you must have medical treatment, maybe even not in Russia, you have a grave situation…We must have your testimony, because we can’t support those charges that we’re making against Khodorkovsky and Lebedev. If you give evidence that suits the investigation, then we’ll release you.” Alexanyan, who had already been diagnosed with HIV infection and who developed lymphatic cancer while being refused medical treatment in detention, further testified: “But I can’t perjure myself, I can not frame innocent people, I refused to do this. And I think that no matter how horrible my condition may be right now, the Lord will protect me, that is why I did not do this, I can not buy my life like that…”
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Attempts to Control Testimony of Prosecution Witnesses When the testimony of the prosecution’s own witnesses began to veer away from the prosecution’s line of argument, prosecutors sought to replace live testimony with transcripts of prior out‐of‐court interrogations that they desired to be inserted into the court record. In certain instances, rather than properly cross‐examine their own witnesses, prosecutors simply asked a few brief stock questions before asking the court to accept out‐of‐court interrogation transcripts as evidence. Over repeated objections by the defense, the court allowed the reading of interrogation transcripts into the court record even when the prosecutors could not, as required by law, point to any material contradictions between in‐court testimony and the statements made in the out‐of‐court interrogations as transcribed. Perhaps afraid of what live witnesses might say on the stand, the prosecutors clearly preferred scripted statements prepared under controlled conditions—in some cases witnesses stated that they had been asked to sign documents prepared by interrogators who had drafted supposed summaries of their interrogations. Yet even using these out‐of‐court interrogation transcripts as a crutch in their cross‐examinations, the prosecutors seemed more concerned about appearing to bulk up the court file rather than actually proving their charges—in any event, none of the transcripts contained proof of the allegations against the defendants. Use of Parallel Investigations to Circumvent Rules on Gathering Evidence One of the prosecution’s favored means of avoiding the obligations of due process—for example to circumvent rules on gathering evidence—is the use of parallel investigations. Even if these parallel investigations never result in cases going to trial, they provide opportunities for law enforcement authorities to employ any means necessary to gather evidence, including the threats of criminal prosecution, detention and torture to extract false statements. Numerous witnesses called by the prosecution in the Khodorkovsky‐Lebedev trial revealed on the stand that they had been interrogated in parallel investigations opened by investigators. Some of these parallel investigations were conducted for secret cases; others led to convictions in trials that should instead have been joined with the Khodorkovsky‐Lebedev proceedings. Efforts by the defense to ask questions shedding light on the parallel investigations were cut off by the court. In numerous cases witnesses asserted that due to non‐disclosure agreements signed with investigators, they were not permitted to reveal information about the parallel investigations. Abuse of Investigatory and Prosecutorial Powers through Coercion of PwC33 Many observers considered the endorsement of a decade of Yukos audits by PwC to be strong proof of Khodorkovsky’s and Lebedev’s innocence and the absurdity of the embezzlement charges. Until June 2007, PwC publicly stood by its 1995 to 2004 Yukos audits. When the Russian authorities attacked PwC over the audits in court in December 2006, PwC stated: “We will vigorously defend our position and reputation both in court and in dialogue with government authorities which are empowered to regulate [the] auditing profession.” In January 2007, PwC insisted that its Yukos reports were “properly prepared to present, in all material respects, the company’s financial position and financial results in accordance with the relevant Russian accounting standards” and that PwC “concluded these audits according to the highest professional and ethical standards strictly in compliance with Russian [law] and best [auditing] practices.”
33 For more on PwC’s role, see pages 14, 18, 22, 24 and 27.
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PwC was then subjected to police raids, partners were threatened with imprisonment for their work on Yukos, and legal proceedings unrelated to Yukos were brought against the firm. When PwC suddenly reversed itself and withdrew its decade of Yukos audits in June 2007, the firm’s aforementioned problems evaporated—even those problems ostensibly unrelated to Yukos. A broadly‐cited threat hanging over PwC as it adamantly defended its Yukos reporting—that the firm’s Russian license could be revoked—has not been raised again by officials since PwC backed down, and Yukos‐related investigations into the firm appear to have ceased. PwC asserted that the audits were pulled due to “new” information on Yukos that they received from prosecutors. However, documents and witness statements prove that the information provided by prosecutors was not new to PwC, and that in any case the issues raised did not affect the overall validity of the audits. The Khodorkovsky‐Lebedev defense team has asserted since 2007 that PwC’s unusual and unconventional reversal was made in response to coercion and threats from Russian authorities. The Wall Street Journal and Financial Times undertook separate independent investigations into PwC’s actions, and obtained documents disproving PwC’s assertion about “new” information justifying the withdrawal of the audits. Both newspapers published major reports on the matter on September 7, 2010.34 Direct and Indirect Threats to Defense Counsel Shortly after the authorities began to attack Yukos in 2003, lawyers acting for the company or for Khodorkovsky and Lebedev routinely endured unlawful searches and the confiscation of privileged and confidential documents. Lawyers were threatened with disbarment or prosecution without valid cause, as a form of intimidation and vengeance for defending Khodorkovsky and Lebedev. Prosecutors went as far as to implicate defense counsel themselves with criminal liability due to their professional association with the defendants. The prominent cases of Svetlana Bakhmina and Vasily Alexanyan—two lawyers who were incarcerated and, in the case of Alexanyan, subjected to torture while he was terminally ill—revealed the cruel depths to which the authorities could act with impunity. These incidents created fearful precedents for the lawyers working on the case. In the run‐up to the trial, prosecutors suggested that the defense counsel’s due process‐related interventions should be assessed against “ethical” and “professional” requirements—essentially threatening disbarment. Such was the response to the defense’s reasoned and legally‐grounded objections to prosecutorial misconduct in trying to hold the prosecution to the standards and requirements of the law. Prosecutors regularly branded such threats during the course of the trial as well, particularly when tensions rose in the courtroom over defense protestations of injustice. These barely veiled threats of punitive treatment weighed against all counsel representing Khodorkovsky and Lebedev. Through a statement made on September 29, 2010, Prosecutor Lakhtin—in scorning international counsel and foreign witnesses—revealed the position of Russian law enforcement authorities: that anyone who assists in the defense of Khodorkovsky and Lebedev obstructs justice and undermines the foundations of the state. Denial of Defense’s Access to Official Trial Transcripts Citing the Russian Criminal Procedure Code, which stipulates that official trial transcripts are to be prepared within three days of court sessions, the defense repeatedly motioned the court to provide copies of the trial’s official transcripts. In April 2010, the defense argued that delays of several days
34 “PwC under scrutiny over Yukos audits”, and accompanying articles, The Financial Times (Europe), September 7, 2010; “Oil tycoon’s defense says auditor caved to pressure”, and accompanying article, The Wall Street Journal Europe, September 7, 2010. The worldwide editions of the Financial Times and the US edition of the Wall Street Journal published versions of these reports with slightly different headlines.
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or even several weeks could be understandable, but that there was no credible justification for the court not having provided a single official trial transcript to the defense since October 2009. In May 2010, some additional official trial transcripts were provided to the defense, but only covering the proceedings up to November 2, 2009. From May 2010 until the end of the defense phase of the trial, on September 22, 2010, the defense was provided no further official trial transcripts for the proceedings past November 2, 2009. Only on September 24, 2010 was the defense team provided with additional official trial transcripts—yet only for the period from November 3, 2009 to January 20, 2010. Even as the defendants began to deliver final arguments to the court on October 27, 2010, they remained deprived of official trial transcripts for the last nine months of the trial. The court did not make the complete official record of the proceedings available to the defense until March 2011, well after the December 2010 verdict and sentencing. This long delay cast into doubt whether the official record had in fact been completed before the end of the trial, or indeed whether it was really even needed by the judge in the preparation of a preordained verdict. Among the concerns that the defense sought to address through access to the official trial transcripts was the court’s habit of excluding the full text of motions and in‐court statements, which instead were summarized along the following lines: “Khodorkovsky made a statement to the court, objecting to actions of the presiding judge.” The exclusion of the defense’s legal reasoning from the official transcripts was a brazen distortion of the trial record, and it was all the more unfair considering that prosecutors were permitted to insert documents into the official transcripts as they desired. More broadly, official trial transcripts are a key tool that defense lawyers refer to in formulating their arguments and ensuring a robust defense strategy as a case unfolds, and in particular when formulating closing arguments. Interference in Defendants’ Access to Counsel and to Case File In the courtroom, the defendants were constantly locked in a heavily guarded aquarium‐like glass booth, making it difficult for them to consult with defense counsel and to view case materials. Documents, notes and even media clippings passed by counsel into the aquarium were under constant surveillance by armed guards. Meanwhile, in the defendants’ Moscow detention facility, their lawyers were repeatedly barred from visiting them in their isolation cells with a laptop computer containing a digitized version of the case materials. Prison officials ignored an unequivocal ruling by the Russian Supreme Court agreeing with Lebedev’s lawyers that they should be permitted to bring electronic media into the isolation cell. Extended “Pre‐Trial” Detention: Reforms Flouted by Obsessive Persecution of Defendants From December 2006 to June 2011, Khodorkovsky and Lebedev endured harsh conditions of physical restraint imposed under “pre‐trial” detention rules. With minimal exposure to fresh air and direct sunlight and inadequate opportunities for exercise, the “pre‐trial” detention regime becomes extremely difficult physically and psychologically, particularly over extended periods. The situation was especially hard during Moscow’s 2010 heat wave, when cell temperatures hovered at 50 degrees Celsius (122 degrees Fahrenheit). Pre‐trial detention is considered to be an exceptional form of incarceration, which is why the judge presiding over the trial had to rule every three months to extend the duration of the detention measures. The last extension expired on November 17, 2010. After that Khodorkovsky and Lebedev should have benefitted from comparatively relaxed conditions of incarceration, but they did not. They remained in “pre‐trial” detention until June 2011, when they were transferred from Moscow to northern Russian prison colonies after their failed May 24, 2011 appeal.
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Added to the two years spent in pre‐trial detention before the end of their first trial and appeal, Khodorkovsky and Lebedev have spent a total of approximately six and a half years detained under these strict conditions of isolation, compared to just approximately one year in the less restrictive conditions of incarceration to which they were entitled under law. Because Khodorkovsky and Lebedev were concurrently serving their eight‐year sentences handed down in 2005, the situation was described as “double bars”—a compounded punishment not grounded in law. These detention measures were inconsistent with Russian criminal procedure law, the Russian Constitution and Russia’s international obligations under the European Convention on Human Rights, as confirmed by Russia’s Constitutional Court, the Presidium of Russia’s Supreme Court, and the ECHR. Furthermore, since April 2010, under amendments to Russia’s Criminal Code and Criminal Procedure Code, courts can no longer order detention as a pre‐trial measure of restraint for allegations of certain economic crimes, such as those alleged against Khodorkovsky and Lebedev. The April 2010 reforms resulted from President Dmitry Medvedev’s efforts to make Russia’s criminal justice system more humane and to halt abuses by officials exploiting the criminal justice system to attack legitimate businesses. Nevertheless, in the most high‐profile and closely‐watched trial in Russia, the court openly ignored the recently‐amended law. This was an affront to President Medvedev’s highly‐publicized efforts to reform Russia’s criminal justice system and to address the country’s “legal nihilism.” In May 2010, Khodorkovsky launched a hunger strike to raise awareness that the Russian justice system was failing to implement the reforms.35 Asserting that President Medvedev’s reform goals were being blatantly undermined, and that a dangerous precedent was being set, Khodorkovsky vowed to continue his hunger strike until President Medvedev had been seized of the matter. The hunger strike ended after two days, following public declarations that the Chair of the Russian Supreme Court and President Medvedev were to evaluate the situation. Finally, in rulings on April 15 and September 13, 2011, the Supreme Court of Russia handed rare victories to Khodorkovsky and Lebedev, agreeing that the Khamovnichesky Court had acted unlawfully in prolonging their harsh pre‐trial detention conditions. With their trial over, the Supreme Court’s rulings came too late to benefit Khodorkovsky and Lebedev after nearly four and a half consecutive years in pre‐trial detention, but these were important moral victories that will serve as precedents for thousands of others detained in unlawful conditions in Russia. Khodorkovsky and Lebedev had pursued their appeals on this issue to highlight and to oppose the widespread practice of corrupt authorities abusing powers of pre‐trial detention. Prosecutors’ Incomprehension of Case Materials The credibility of the case was undermined not only by its lack of a legal basis or grounding in common sense, and by the multitude of due process violations, but also by obvious prosecutorial incompetence, as repeatedly pointed out by the defense. The prosecutors sometimes read documents apparently without understanding that in fact the documents undermined their own position. Several documents showed that company income was earned, dividends were paid, various large‐scale purchases or loans were made, oil was transported through government‐controlled pipelines, and massive sums were paid in taxes—rendering impossible the large‐scale embezzlement allegations against the defendants. The prosecutors
35 Khodorkovsky’s open letter to the Chairman of the Supreme Court of the Russian Federation announcing the hunger strike is available at: http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/17_May_2010_Khodorkovsky_Open_Letter_Hunger_Strike.pdf.
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demonstrated only a superficial comprehension of the documents they considered pertinent to the case. They often had trouble pronouncing relevant words, repeatedly misstated numbers, and always shirked away from any discussion of the substance of the materials. Printed e‐mail message chains were read backwards, starting with the most recent message, confusing the chronology and contents. Other documents were also read backwards—starting with the last page rather than correcting an erroneous reverse collation. A spreadsheet was read down column‐by‐column rather than across row‐by‐row, rendering virtually unintelligible the contents of the document and demonstrating that the prosecutor did not understand the meaning of the information. When Tatyana Lysova, the editor‐in‐chief of the Russian business daily Vedomosti, came to the witness stand in May 2010, Catherine Belton of the Financial Times observed that prosecutors “appeared not to understand some of the simplest points she made” about basic rudiments of the functioning of publicly‐traded companies, the calculation of their value and the consolidation of their finances in international accounts. Belton described the “apparently stunned” reaction of the prosecutors to Lysova’s testimony before they reverted to impugning Lysova’s credentials as their only retort to her testimony.36 Court Without Jurisdiction The case was is in fact outside of the jurisdiction of Moscow’s Khamovnichesky Court. Pursuant to the Constitution of the Russian Federation, no one may be deprived of the right to have their case heard by that court and that judge under whose jurisdiction the case has been accorded by law. The European Convention on Human Rights similarly enshrines the right to proceedings in a tribunal established by law. The issuance of a verdict by an unlawfully composed court is an unconditional ground for its repeal, directly prescribed by the Code of Criminal Procedure of the Russian Federation. Indeed, it is prescribed by the rules on territorial judicial jurisdiction that a case shall be subject to being heard by a court at the place of the commission of the alleged act, and if several acts are alleged, then at the place of the commission of the most recent or the gravest of them. If the act was begun in one place and ended in another, then the case shall be heard by a court at the place where it ended. In the second case against Khodorkovsky and Lebedev, not a single one of the alleged acts, including the gravest involving alleged money laundering, was committed, or begun, or ended in the jurisdiction of Moscow’s Khamovnichesky Court. While the prosecution made references to actions of members of the law firm ALM Feldmans, located in the jurisdiction of Moscow’s Khamovnichesky Court, who were said to have participated in the alleged acts imputed to Khodorkovsky and Lebedev, no members of that firm were defendants in the present case, and none of the acts alleged in the indictment terminated in the firm’s premises. The legally‐prescribed procedure that would have permitted a change in territorial jurisdiction was not initiated or applied to allow the case to be heard before the Khamovnichesky Court. Under these circumstances, for want of jurisdiction, the Khamovnichesky Court lacked the competence prescribed by law for adjudicating the case against Khodorkovsky and Lebedev. Despite numerous objections by the defense and attempts to recuse the “specially appointed” judge, the court proceeded with the trial.
36 See: http://blogs.ft.com/beyond‐brics/2010/05/26/russia‐prosecutors‐versus‐the‐press‐in‐khodorkovsky‐trial/.
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VI. DISMISSAL OF CRIMINAL COMPLAINT FILED SEEKING INVESTIGATION OF JUDGES AND PROSECUTORS
In parallel to the appeal proceedings, on May 17, 2011, Khodorkovsky, Lebedev and their lawyers filed a complaint to Russian authorities asserting that the instigation, handling and outcome of the second trial were so flawed as to be criminal in nature. Pointing to the verdict’s irrefutable contradictions of law, obvious falsifications and mischaracterizations of facts and evidence, and irreconcilable internal inconsistencies, Khodorkovsky and Lebedev slammed “the guise of criminal judicial proceedings” and demanded a criminal investigation into the perpetrators of the trial.37 In addition to an abundance of evidence from the trial proceedings, this complaint was further buttressed by candid post‐trial accounts given by two court whistleblowers. In an interview with Gazeta.ru released on February 14, 2011, Natalia Vasilyeva, an aide to Judge Danilkin and press secretary of the Khamovnichesky Court, spoke out about the verdict. Vasilyeva stated that Judge Danilkin’s first draft of the verdict had been reviewed and rejected by outside judicial officials, who replaced the text with their own, and that Judge Danilkin had to consult with those officials throughout the two‐year trial. The Economist described Vasilyeva’s widely‐reported comments as “explosive”, and quoted her as saying that “everyone in the judicial community understands perfectly that this is a rigged case, a fixed trial.”38 In a surprising departure from norms of judicial behavior, Judge Danilkin publicly engaged in the controversy through media interviews, denying Vasilyeva’s account and threatening legal action against her.39 On April 15, 2011, a second official who worked at the court during the trial corroborated Vasilyeva’s account. Igor Kravchenko, a former court administrator, stated in an interview with Novaya Gazeta that Judge Danilkin, speaking about the Khodorkovsky‐Lebedev case, had admitted: “I don’t decide this.” Referring to outside judicial officials who had no lawful basis to interfere in the trial outcome, the judge was quoted by Kravchenko as having said: “Whatever they say, that’s what will be.” Kravchenko also stated that Judge Danilkin consulted with the Moscow City Court when questions arose on how to handle the case. On June 20, 2011, the Investigative Committee of the Russian Federation dismissed the complaint, brushing off Vasilyeva’s and Kravchenko’s accounts. On June 21, 2011, the three Moscow City Court judges who ruled on the Khodorkovsky‐Lebedev appeal held an unprecedented news conference to justify their ruling. These coordinated actions by the Investigative Committee and the panel of judges sought to discredit the assertions made by whistleblowers Vasilyeva and Kravchenko. VII. IMPLICATIONS FOR RUSSIA Three predominant themes emerge from the verdict, transcending this case to be of systemic importance to Russia: (1) Legitimate entrepreneurial activity is subject to artificial criminalization by corrupt
state officials;
37 See: http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/2011%2005%2017%20%20Report%20of%20Crime.pdf. 38 See: http://www.economist.com/blogs/easternapproaches/2011/02/khodorkovsky_case. 39 Meanwhile, senior Russian presidential adviser Veniamin F. Yakovlev, formerly Chair of the Russian Supreme Arbitrazh Court, called for Vasilyeva’s account to be thoroughly examined by judicial authorities. See: http://en.rian.ru/russia/20110224/162743489.html.
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(2) Application of the law is non‐uniform and contradictory; (3) Property rights, contract rights and human rights are not protected from political
diktat and raiders acting with the collusion or complicity of law enforcement and judicial authorities.
The artificial criminalization of legitimate entrepreneurial activity by corrupt state officials constitutes a major restraint on economic growth and modernization in Russia. Since 2003, a group of powerful and corrupt figures in Russia have developed and honed corporate raiding methodologies in the course of their treatment of Khodorkovsky and Lebedev and the forced bankruptcy of Yukos. These methodologies are now being replicated throughout Russia by other state officials who take their cues from the very public handling of the Yukos Affair. The Russian judiciary is legally required to ensure the uniform application of Russian law. Uniformity in the application of the law is a fundamental tenet of the rule of law and prerequisite for justice, as well as a driver of economic development, particularly in countries with legal systems transitioning towards reliability and stability. The Khodorkovsky‐Lebedev verdict, however, is a showcase of non‐uniform and contradictory application of the law. The verdict contradicts prior Yukos cases in Russian domestic courts, as well as the Russian Federation’s lines of defense in Yukos‐related proceedings abroad. The punitive taxes that bankrupted Yukos were validated in Russia by numerous rulings in cases brought before the courts. In those cases the structuring of Yukos transactions with production subsidiaries was scrutinized and judicially approved. The determination of who owned Yukos oil was also recognized by the courts: according to all other courts in Russia, Yukos owned and sold that oil, and Yukos was therefore subject to taxation of its resulting revenues. Leaving aside arguments over the unfair and irrational punitive taxation of Yukos, these court decisions nevertheless stand today as Russian jurisprudence that cannot, under Russian law, be contradicted by inverse logic in other court rulings. The new criminal allegations against Khodorkovsky and Lebedev therefore created a juridical Catch‐22: either Yukos owned and sold the oil, a legally settled fact under Russian law as determined by all previous courts; or Khodorkovsky and his alleged co‐conspirators embezzled the oil, in which case it could not have also been sold and taxed by Yukos. In finding Khodorkovsky and Lebedev guilty, the court created a massive and irreconcilable contradiction with an entire corpus of previous judgments of the Russian judiciary.40
40 Even elemental findings of fact made by the Khamovnichesky Court contradict those of other courts. On page 458 the verdict states: “It has been established by the court that practically the entire volume of the [stolen] oil was sold by [Yukos] on its own behalf to the benefit of Routhenhold [Holdings Ltd.], which was under the control of the members of the organized group…” Yet, in a parallel Yukos case dealing with many of the same germane facts, the court’s verdict stated: “…Routhenhold was created and operated exclusively for the benefit of [Yukos]…” (as stated on page 100 of the Moscow Basmanny Court verdict of March 1, 2007 in the case against former Yukos executives Vladimir Malakhovsky and Vladimir Pereverzin). These contradictory findings do not prevent Judge Danilkin from relying on the very same parallel ruling to assert on page 630 of his verdict that the “unsustainability of the defense counsel’s arguments is also corroborated by the verdict of the Basmanny District Court of the City of Moscow…regarding V.G. Malakhovsky and V.I. Pereverzin.” Other standing court rulings that contradict Judge Danilkin’s findings on Yukos oil ownership and sales include the decisions of the Moscow Commercial Court of May 26, 2004, October 11, 2004 and December 16, 2004. A decision of the Moscow Commercial Court of April 21, 2005 that confirmed the massive Sibneft acquisition by Yukos is likewise incompatible with Judge Danilkin’s findings.
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At the ECHR, a claim for unlawful expropriation was brought against the Russian Federation by former executives of Yukos, not involving Khodorkovsky or Lebedev.41 In those proceedings, the Russian Federation defended the legality of punitive taxes on oil they asserted was owned and sold by Yukos, claiming that Russian tax authorities made punitive re‐assessments of Yukos on the basis that oil bought by Yukos trading companies “in fact” belonged to Yukos. As a result, Yukos was assessed to corporate profit tax as if it, and not the trading companies, had made the trading companies’ profits. Because of the tax authorities’ assertion that Yukos was the owner of the oil produced by Yukos production subsidiaries, the company was further charged value added tax on export sales which would have normally been exempt. Simultaneously however, in the latest criminal proceedings against Khodorkovsky and Lebedev, the verdict concluded that the same oil was not owned by Yukos but rather stolen from the company’s production subsidiaries by the defendants. The incompatible positions—one version for the ECHR and a different version for the Khamovnichesky Court—were thus absurdly argued concurrently on behalf of the Russian Federation in major parallel proceedings. The Khodorkovsky‐Lebedev case and the broader Yukos Affair have underlined the ongoing vulnerability of property rights, contract rights and human rights in Russia. These rights are tenuous and may be revoked by others acting with the collusion or complicity—whether passive or active—of law enforcement and judicial authorities. The potential emptiness of legal guarantees, even constitutional guarantees, undermines economic development, political stability and social peace in Russia.
41 See: www.theyukoslibrary.com. Separately, the Russian Federation is fighting a series of applications from Khodorkovsky and Lebedev concerning flagrant and persistent violations of their human rights; see: http://www.khodorkovskycenter.com/legal‐persecution/european‐court‐human‐rights‐cases.
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VIII. CONCLUSION This trial was watched in Russia and around the world for answers to several important questions. Would the “tax terrorism”, state‐backed raiding of private property and trampling of human rights of recent years be validated and continued? If the court could ignore both facts and laws and render a judgment “on order”, would that not signal to law enforcement and judicial authorities across the country that they can do the same, with impunity? What messages would a guilty verdict send about the competence and independence of the Russian justice system and the prospects of President Medvedev’s desire to stamp out “legal nihilism”? What would be the effects on foreign investors, foreign governments and in foreign or international tribunals? As posited by Khodorkovsky, would the court “understand that it is a court, and not a cheap instrument for raiders and corruptioneers? Will it help the President and the country?” In his initial reaction to the verdict, Khodorkovsky juxtaposed a series of assertions that illustrated the core absurdities of the verdict, noting that the Khamovnichesky Court made all of the following contradictory findings in a single judgment: • Yukos bought the oil, but Yukos did not buy the oil because Khodorkovsky and Lebedev
embezzled it. • The sellers gave that oil away without payment, but the sellers gave that oil away in
exchange for money. The sellers gained profits from those oil sales and thereby suffered direct harm from the embezzlement of that oil.
• Yukos published its profits, thereby concealing those profits from shareholders. • Yukos did not have profits, but it spent its profits on dividends, taxes and investments. In the most high‐profile trial in Russia, closely observed by legal experts, entrepreneurs, investors, the general public and media all over the world, the court openly ignored applicable procedural and substantive laws as well as basic notions of fairness.42 This is testament to the power of those corrupt officials who zealously seek to justify their seizure, control and ownership of Yukos assets and to isolate Khodorkovsky and Lebedev from Russia’s business and public spheres—and to keep them in jail as long as possible believing this will help them to achieve these goals. The verdict is a knowing and willful fictional description of purported criminal conduct, devoid of corpus delicti, blind to the preponderance of exculpatory evidence and built upon a bulldozing of due process. On December 27, 2010, Khodorkovsky’s lead defense lawyer Vadim Klyuvgant described the trial as “a charade of justice”. Upheld as expected upon appeal, the verdict stands as a monumental embarrassment to the Russian judiciary and to those state officials who seek to portray it as a valid act of justice. The trial and its verdict were an open challenge and indeed an affront to President Medvedev’s highly‐publicized efforts to develop the rule of law, to reform Russia’s criminal justice system and to fight government corruption. The outcome of this case was a triumph of corrupt officials controlling Russia’s law enforcement and judicial bodies, and a setback for an entire country that aspires yet continually fails to modernize.
42 On September 20, 2011, the International Bar Association’s Human Rights Institute (IBAHRI) released a report based on its observation of the trial. The IBAHRI was the only organization with a full‐time independent observer at the trial. Severely critical of the numerous critical failings of the proceedings, the IBAHRI report concludes that “this trial was not fair”. See http://www.ibanet.org/Article/Detail.aspx?ArticleUid=61CF8166‐7CDF‐4159‐B52A‐9D8AC162D677.
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A P P E N D I X
I N T E R N A T I O N A L C O MM I S S I O N O F J U R I S T S S T A N D A R D S O N J U D I C I A L P R O C E E D I N G S 43
—
K H O D O R K O V S K Y ‐ L E B E D E V T R I A L A N D A P P E A L 2 0 0 9 ‐ 2 0 1 1
STANDARD COMPLIANCE BREACH SOURCE
Right to a fair hearing X ICCPR Art. 14(1); ECHR Art. 6(1); UDHR Arts. 10,11; BPIJ
Prin. 5,6
Right to a public hearing X ICCPR Art. 14(1); ECHR Art. 6(1); UDHR Arts. 10,11
Presumption of innocence X
ICCPR Art. 14(2); ECHR Art. 6(2); UDHR Art. 11(1); GP Guid. 13(b),14; SMR R.
84(2); BPD Prin. 36; Rec. R Prin. 26,27,30
Right to be informed promptly of the charge
X ICCPR Art. 14(3)(a); ECHR Art. 6(3)(a); BPD Prin. 10
Right to defense, including access to documents or counsel and lack of
interference with counsel
X
ICCPR Art. 14(3)(b); ECHR Art. 6(3)(b), 6(3)(c); UDHR Art. 11(1); BPL Prin. 1,5‐8; SMR R. 93; BPD Prin. 18; Rec. 2000 Prin. I(5)(7)
Right to an interpreter and to accurate translations
X ICCPR Art. 14(3)(f); ECHR
Art. 6(3)(e)
Right to be present at trial X ICCPR Art. 14(3)(d); ECHR
Art. 6(3)(c)
Right to equality of arms X
ICCPR Art. 14(3), 14(3)(e); ECHR Art. 6(3)(d); UDHR Art. 10; BPIJ Prin. 6; Rec. R
Prin. 29
Right to call and examine witnesses
X ICCPR Art. 14(3)(e); ECHR
Art. 6(3)(d)
Right not to be compelled to confess guilt or to testify
X ICCPR Art. 14(3)(g); BPD Prin. 21; CAT Arts. 13,16
Exclusion of evidence elicited by illegal means, including torture or ill‐
treatment
X GP Guid. 15,16; BPD Prin. 27; Rec. R Prin. 28; CAT
Arts. 15,16
43 International standards applicable to trial proceedings as listed in Trial Observation Manual for Criminal Proceedings – Practitioners Guide No. 5, International Commission of Jurists, Geneva, 2009.
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Right to be tried without undue delay
X ICCPR Art. 14(3)(c); ECHR Art. 6(1); BPD Prin. 38; Rec.
R Prin. 24(c)
Principle of legality of criminal offences (nullum
crimen sine lege) X
ICCPR Art. 15; ECHR Art. 7(1); UDHR Art. 11(2)
Prohibition of the retroactivity of criminal law
X ICCPR Art. 15(1); ECHR Art.
7(1); UDHR Art. 11(2)
Prohibition of double jeopardy (ne bis in idem)
X ICCPR Art. 14(7); ECHR Art.
4, Protocol 7
Right to a public and reasoned judgment
X ICCPR Art. 14(1); ECHR Art.
6(1); UDHR Art. 10
Right not to suffer a heavier penalty than the one
applicable at the time the criminal offence was
committed and right to benefit from a lighter sentence subsequently introduced by law
X ICCPR Art. 15(1); ECHR Art.
7(1); UDHR Art. 11(2)
Right not to be punished otherwise than in accordance with
international standards
X
ICCPR Arts. 6,7,10,11; ECHR Art. 3; UDHR Arts. 3,5,9; SMR R. 8,33,56‐83; BPTP Prin. 7; BPD Prin. 1,3,6; CC 5,6,8; CAT Arts. 1,2,16
Right to appeal X ICCPR Art. 14(5); ECHR Art. 2, Protocol 7; UDHR Art. 8
Acronyms used: United Nations and Regional Treaty Standards ICCPR – International Covenant on Civil and Political Rights ECHR – European Convention for the Protection of Human Rights and Fundamental Freedoms and its Protocols CAT – Convention against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment United Nations Declaratory Instruments Standards UDHR – Universal Declaration of Human Rights BPL – Basic Principles on the Role of Lawyers GP – Guidelines on the Role of Prosecutors SMR – Standard Minimum Rules for the Treatment of Prisoners BPTP – Basic Principles for the Treatment of Prisoners BPD – Body of Principles for the Protection of All Persons under Any Form of Detention or Imprisonment CC – Code of Conduct for Law Enforcement Officials Regional Declaratory Instruments Standards Rec. 2000 – Recommendation 2000 (21) on the Freedom of exercise of the profession of lawyer of the Committee of Ministers to Member States of the Council of Europe Rec. R. – Recommendation No. R (2000) 19 of the Committee of Ministers to Member States of the Council of Europe on the role of public prosecutors in the criminal justice system