Yukos Trial Ends With Applause

The Moscow Times ^ | 04-12-2005 | Valeria Korchagina

[sergey1973]

In an impassioned and at times emotional appeal, Mikhail Khodorkovsky on Monday closed his defense with a 39-minute address to the court that left his relatives, lawyers and even reporters applauding and some supporters wiping away tears.

The verdict for Khodorkovsky and his business partner Platon Lebedev is to be delivered at noon on April 27, Judge Irina Kolesnikova said after Khodorkovsky's speech was over. Both men face up to 10 years in prison, the maximum sentence demanded by prosecutors on charges of fraud, embezzlement and tax evasion.

Addressing the court from the defendants' cage he has shared for the past 10 months with Lebedev, Khodorkovsky once again denied any wrongdoing Monday and said that the case against him was a piece of "pulp fiction" written by prosecutors and masterminded by state officials who wanted to gain control of Yukos, the company he led until his arrest in October 2003.

[sergey1973]

I'm not a fan of Khodorkovsky and I am perfectly aware that he gained control of YUKOS (or the assets that became YUKOS) through shady privatization deals under Yeltsin in 1990's. However, I am sure that he was arrested not because of the deals made in 1990's, but because he started to manage YUKOS Business affairs honestly and transparently according to internationally recognized standards. I think that Khodorkovsky simply got tired of paying bribes to those in power and he wanted to make YUKOS into an honest and Internationally Respectable oil company. He also started financing NGO's that were opposing Putin Regime. That's why I think he became target of persecution breaking the unwritten deal between Putin and Oligarchs--stay out of politics in exchange for turning a blind eye to privatization deals of 1990's. Those businessmen who are friendly to Kremlin or who are installed by Kremlin, enjoy full immunity from any persecution as long as Putin is in power. Feel free to share your opinion. The only thing that I demand is a respect to your opponents.

[sergey1973]

PING ! YUKOS Trial update.

[STD]

A whole ring of the "usual suspects" stole everything of value in the "Post Cold War" Soviet Union. The control and influence achieved by this group of white collar criminals was financed by foreign interests. Now they want to go legitimate, it's laughable. Throw the torah at them Your Honor!

[GarySpFc]

I'm not a fan of Khodorkovsky and I am perfectly aware that he gained control of YUKOS (or the assets that became YUKOS) through shady privatization deals under Yeltsin in 1990's. However, I am sure that he was arrested not because of the deals made in 1990's, but because he started to manage YUKOS Business affairs honestly and transparently according to internationally recognized standards.

On nonsense! You have not one shred of evidence that he applied international accounting standards. Indeed, Khodorkovsky is not the issue in your mind, but rather the Kremlin and Putin's schemes to control the world. And so according to you the government should overlook tax evasion. Sorry, but I do not buy your line any more than I do Ken Lay's or Bernie Ebber's integrity.

[monday]

"I'm not a fan of Khodorkovsky and I am perfectly aware that he gained control of YUKOS (or the assets that became YUKOS) through shady privatization deals under Yeltsin in 1990's."

He took a state controlled company that was losing money due to mismanagement and turned Yukos into a modern, efficient, western style corporation.

His critics always fail to realize that Yukos' assets, as potentially great as they turned out to be, were worthless under state management because of fraudulent behavior and the utterly stupendous, colossal, incompetence of it's managers.

Khodorkovsky earned every penny of the fortune he made turning that company around and should have been rewarded with a medal by the Russian government instead of prosecuted over trumped up tax charges. Alas, Russia eats it's best and brightest.

[sergey1973]

These oligarchs did not steal anything more than the previous Yeltsin Administration allowed them to steal. Simply speaking during Yeltsin era it was simple--we let you, folks, to have the control of the oil, gas or other natural resources, and you, guys, pay us whenever we ask you. It's a bit oversimplification, but it captures the essence of what happened under Yeltsin. A number of Kremlin observers agree with it (i.e. Pavel Voshanov, Artem Borovik, Lilia Shevtsova, Andrei Piontkovskiy, etc.).

Now I have a few questions for you. Was YUKOS renationalization transparent and clear ? Where are the revenues gained from renationalization of YUKOS ? Did money go to Pensioners, Students, etc. ? Did money go for Social needs of Russia ?

[GarySpFc]

Now I have a few questions for you. Was YUKOS renationalization transparent and clear ? Where are the revenues gained from renationalization of YUKOS ? Did money go to Pensioners, Students, etc. ? Did money go for Social needs of Russia ?

Putin is using the oil monies and I presume the funds from Yukos to pay back the IMF, which in the long run will help Russia far more than what you envision. It's the difference between feeding a hungry man fish one time, and teaching him to fish. It sounds as if you still remain a socialist at heart.

[GarySpFc]

Now I have a few questions for you. Was YUKOS renationalization transparent and clear ? Where are the revenues gained from renationalization of YUKOS ? Did money go to Pensioners, Students, etc. ? Did money go for Social needs of Russia ?

Putin is using the oil monies and I presume the funds from Yukos to pay back the IMF, which in the long run will help Russia far more than what you envision. It's the difference between feeding a hungry man fish one time, and teaching him to fish. It sounds as if you still remain a socialist at heart.

[sergey1973]

Well--I heard that IMF loans were repaid long time ago ? I could be wrong though. If not, approximately how much money left to pay to IMF ? Will it cover all the revenues from YUKOS ? Not sure how my criticism of quite murky Re-Nationalization of YUKOS that Putin's own advisor Andrei Illarionov called "swindle of the year" makes me socialist. I'm just curious where did money go and where they'll be going.

Although I think to replace benefits in kind with completely inadequate compensation for struggling and dwindling WWII veteran population who is unlikely to be able to work is simply not right. It will sink them further into poverty. United States honors its own WWII veterans in many ways--not only during D-Day or Armed Forces Day--right ?

Well--sorry GarySpFc. With all due respect to you, I can't approve most of Putin Policies. I'm not pretending to be the last source of truth, but there are plenty of evidence showing that most of Putin policies won't bring anything good to Russia.

[SaltyJoe]

I'm sorry to hear about such a power struggle. It doesn't serve the economy to have such fights. Hopefully, there wasn't too much blood spilled over this. Seeing Russians attack each other over such a gigantic and resource rich continent is really disappointing. I can only equate it to Americans knocking down Bill Gates and Microsoft. It seems enigmatically foolish that liberals and "green" party pagan types hate a mutli-billlionaire who also a true believer and contributor of their earth worshiping politics.

Are these attacks over jealousy? Is it that attackers covet what is not theirs? That's the only conclusion I can see from the vitriolic hatred for self-made billionaires.

[GarySpFc]

Are these attacks over jealousy? Is it that attackers covet what is not theirs? That's the only conclusion I can see from the vitriolic hatred for self-made billionaires.

I would agree with you if they were self made billionaires, but they made their billions through stealing, with the aid of loans from the US.

[SaltyJoe]

"they made their billions through stealing"

For the Russian tycoon, did he murder or have anybody murdered to make his money?

It seems justice is served if Khodorkovsky was tried in the courts. Dennis Koslowski was given the a similar fate (Tyco). He made a great corporation (many who know business marvel at what Dennis perfected by way of money making), but he broke the law doing it. Even if it wasn't a written law, it was unethical.

Of the entire scandal it seems that avoiding taxes strikes a harder blow than any other allegation. Perhaps that's why Jesus taught us, "Render unto Caesar what is Caesar's. Render unto God, what is God's".

It's going to be interesting watching Eastern European nations with their flat rate tax. I'll wager an American penny that it works wonders.

[GarySpFc]

Well--I heard that IMF loans were repaid long time ago ? I could be wrong though. If not, approximately how much money left to pay to IMF ? Will it cover all the revenues from YUKOS ? Not sure how my criticism of quite murky Re-Nationalization of YUKOS that Putin's own advisor Andrei Illarionov called "swindle of the year" makes me socialist. I'm just curious where did money go and where they'll be going.

WRONG!

From BusinessWeek Online dated April 8, 2005

Report: Russia May Pay Club Debt in 2 Years

Russia currently owes $43 billion ($33.5 billion Euros) to the IMF.

http://www.businessweekasia.com/ap/financialnews/D89B9THO3.htm?campaign_id=apn_home_down

[GarySpFc]

Of the entire scandal it seems that avoiding taxes strikes a harder blow than any other allegation. Perhaps that's why Jesus taught us, "Render unto Caesar what is Caesar's. Render unto God, what is God's".

Everyone knows most Russian business keep two sets of books to avoid taxes. The Kremlin had an unwritten agreement with the oligarchs to leave them alone 'if' they kept clean and stayed out of politics. Khodorkovsky broke the agreement, and Putin knew where to look.

[sergey1973]

OK--I was wrong about Russia IMF Debt. However, how it justifies re-Nationalization of YUKOS using dubious means of creating a front company that no one ever heard before and then having RosNeft buying up this company. Is this an honest Business Practice ?

[SaltyJoe]

"most Russian business keep two sets of books to avoid taxes."

LOL! That's a timeless tactic used universally for all mankind!

If business owners only had to pay a flat rate tax, all of them would probably avoid politics unless politicians threaten their business. Then businesses, out of necessity, would interrupt politics as much as possible.

I'll bet that many would love to have their own business, but they hate politics. It seems that the two are inseparable bed fellows (keep your friends close and your enemies closer). Since I'm not one who's good at "playing the game", I stick to working for "the man".

[GarySpFc]

OK--I was wrong about Russia IMF Debt. However, how it justifies re-Nationalization of YUKOS using dubious means of creating a front company that no one ever heard before and then having RosNeft buying up this company. Is this an honest Business Practice ?

Yes, from a business point of view it is honest, but then I forgot you are a socialist and have very little understanding of capitalism. I have to question why you even came to America.

[sergey1973]

OK--when argument fails, labeling of people begins. How "Socialist" is it to criticize murky Nationalization of YUKOS ?

A number of observers said YUKOS Nationalization was murky and may hurt Russia's Investment Climate, including Bush Administration officials and Putin own Economic Advisor. Sorry, Garry, I'm afraid this conversation is going nowhere.

[GarySpFc]

OK--when argument fails, labeling of people begins. How "Socialist" is it to criticize murky Nationalization of YUKOS ?

A number of observers said YUKOS Nationalization was murky and may hurt Russia's Investment Climate, including Bush Administration officials and Putin own Economic Advisor. Sorry, Garry, I'm afraid this conversation is going nowhere.

There is nothing murkey about it. Yukos cooked the books, and now they have to pay the price. You cannot accept truth at face value, because of your strong bias against Putin and the Kremlin. Furthermore, I felt so strongly about Russian business I invested a large amount in a Russian mutual fund at the first of the year. It's doing just great.

[sergey1973]

I'm glad that you are successfull and I wish you all the success in future. However here are a few things.

During 1990's every single major business cooked the books--it was impossible to do business otherwise. Plus the businesses had to pay the large portions of their income to the governmental officials at all levels, so cooking books was "Modus Operandi".

YUKOS in fact stopped cooking the books and tried to make its business honest and transparent. The shares of YUKOS were sold over the counter on NYSE if I'm correct. Why would US Congress with Republican Majority held a hearing about YUKOS a few months ago if it were just a matter of cooking books ? Also there is absolutely no transparency regarding how money from oil and gas revenues are spent by the current Russian Administration. This is not simply my thoughts--a number of analysts and investigative reporters note this. I.e. here is the analysis by Dr. Ariel Cohen from Heritage Foundation--the analytical "think tank" connected to Republican Party.

http://www.heritage.org/Research/RussiaandEurasia/wm671.cfm

Here is the interesting fragment of Dr. Cohen analysis:

Monopolization of state power by a small group of Putin loyalists. They come primarily from the St. Petersburg security services and mayor’s office, where Putin worked in the early 1990s. This group has overtaken state-owned companies, the justice system and courts, and even some private companies. Russians complain that this coterie controls the “financial flows,” leaving precious little to other elites in terms of opportunities for enrichment and making the political and economic system fundamentally unfair. If this group perceives Putin to be too weak, it may attempt to remove him. However, the group’s ungainly and growing power and wealth raise the stakes for the anti-Putin coalition and increase their incentive to dilute or terminate the power of the St. Petersburg group—through the ballot box or by other means if necessary.

Also Socialism according to Meriam Webster: "Any of varios economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods". How my criticism of YUKOS Nationalization by Russian government makes me Socialist ? If I were a Socialist, shouldn't I support Nationalization and State Takeover of Businesses ? Or maybe you define Socialism differently. Anyway, Gary, I'm sorry, but I can't cheer for Putin. Putin Administration does too many things that are simply wrong morally, politically and economically. You have a right to your opinion, and I have a right to mine.