Yukos vice-president walks free from court

Former Yukos vice-president Vasily Alexanyan walked free from court after the collapse of money-laundering charges against him - but that doesn't mean the political tide is shifting in the on-going saga of Russia's most controversial oil firm.

While trial judge Olga Nedelina ruled that the statute of limitations scuppered the case against Alexanyan - seriously ill and visibly frail as he appeared at Simonovsky District Court in Moscow - there was more good news for Yukos in the testimonies of Putin allies German Gref and Viktor Khristenko in the on-going embezzlement trial of Mikhail Khodorkovsky and Platon Lebedev.

But none of this should be seen as a sea change in the long running battle between Khodorkovsky and his associates, who continue to insist that the Russian government drove the hugely powerful Yukos firm into bankruptcy in order to neutralise the CEO's growing influence and enrich state-controlled oil firm Rosneft.

Alexanyan's lawyer Gevorg Dangyan said that his client’s case did not suggest that the court would soften its position on other Yukos cases, a view backed up by analysts.

“There are no serious reasons for keeping a terminally ill person in prison and Medvedev demonstrated a soft side by releasing him,”.

Across town at Khamovnichesky court, Khodorkovsky remains the star attraction as he fights claims that he stole Yukos' entire oil output from 1998 to 2003 - and his lawyer Yury Schmidt expected that to continue.

“There is a growing trend towards liberalization,” he said by telephone. “But you shouldn’t draw any far reaching conclusions from this.” He was sceptical about the significance of Gref’s and Khristenko’s testimonies, saying that the judge must have had political approval to summon them to court. Their evidence stated that they had no knowledge of the defendants embezzling 350 million tons of Yukos oil.

“They want to create an illusion, so they can say that not all of the defence’s motions have been rejected. This could be no more than a tactic.”

Lebedev’s lawyer Konstantin Rivkin called the testimonies a positive sign not just for the case but for the country, although he too cautioned about drawing premature conclusions and said that he wanted to see results before he could believe in light at the end tunnel for his client.

Analysts remain divided over what Gref and Kristchenko’s testimonies indicate. They do, however, agree that politics have been clouding the issue. Uralsib Strategist Chris Weafer and Kremlinologist Olga Kryshtanovskaya believe that the testimonies could mark a watershed, Kryshtanovskaya says that the fact that they appeared in court at all is unusual. She added that President Medvedev has spearheaded a political trend. Khordordokovsky would have this to thank, she claimed, if he was unexpectedly acquitted.

Pribylovsky agrees that if Khordorkhovsky was acquitted then it would be due to political directive, from the President. “[But] while power is concentrated in Putin’s hands there won’t be any negotiations with Khordorkovsky and I don’t see any change in his fate…. If they suddenly let him go it is an indication that Putin is losing power.”

Russian officials have consistently refuted accusations of political interference in the case.

Gerashchenko Derides Yukos Charges in Court

Former Central Bank chief Viktor Gerashchenko testified at Mikhail Khodorkovsky's trial on Tuesday that the charges against the former Yukos CEO were ungrounded.

"I think that the allegation that the oil was stolen is inconsistent," Gerashchenko told Moscow's Khamovnichesky District Court, according to a transcript published om Khordorkovsky.ru.

Khodorkovsky and his business partner Platon Lebedev, who are serving an eight-year sentence on fraud and tax evasion charges, are in trial for related charges of stealing $30 billion in oil that could bring another 22 1/2 years in prison. Khodorkovsky's supporters say the case is politically motivated.

Prosecutors objected to the presence of Gerashchenko as irrelevant to the trial Tuesday, but the court denied their request that he be barred from testifying on behalf of Khodorkovsky.

Gerashchenko, who served as chairman of the Yukos board from 2004 to 2007, after Khodorkovsky's arrest in 2003, said he had never heard of oil theft in the company. He added that Rosneft, the state-owned oil company that acquired most of Yukos' assets at bankruptcy auctions, never reported any missing oil.

Before becoming Yukos' last chairman, Gerashchenko, 72, served two stints as chairman of the Central Bank, from 1992 to 1994 and 1998 to 2002.

Meanwhile, Sberbank CEO German Gref, who has been summoned by Khodorkovsky's lawyers, said Tuesday that he did not know whether he would testify because he had not received the summons. "I think that the summons was handed over to the bank, but I haven't seen it yet," Gref said, RIA-Novosti reported.

Last month, the court also agreed to a request by Khodorkovsky's lawyers to summon Industry and Trade Minister Viktor Khristenko to testify.

Former Prime Minister Mikhail Kasyanov and Vedomosti editor-in-chief Tatyana Lysova testified last month.

Strasbourg Court to hear $98 billion Yukos vs Russia case

European Court of Human Rights is to hold a public hearings on the $98 billion case of Yukos executives against Russia on Thursday, March 4.

This case is the biggest to ever be taken to the Strasbourg court. The former Yukos executives claim that the Russian government concocted the tax evasion case against the company that caused its bankruptcy and that their rights for fair trial and private property were violated. The plaintiffs argue that the government selectively applied tax laws for political reasons, leading to the company's demise.

Yukos representatives filed the complaint to the European Court on April 24, 2004 claiming $98 billion in damages, and arguing that Yukos was "targeted by the Russian authorities with tax and enforcement proceedings, which eventually led to its liquidation," according to Associated Press. The claim is made on behalf of all the shareholders and creditors of Yukos.

This is the largest claim for damages submitted to the Strasbourg Court. $98 billion is an estimate of what Yukos would have been worth, had it not been stripped of its biggest assets, including Yuganskneftegaz in 2007. The biggest compensation the court ever awarded was in 1994 and would equal 16 million euro today, so it is very unlikely that if the decision is positive the plaintiffs will receive the compensation they were claiming.

The government filed a multi-million dollar tax claim against Yukos in 2004 that lead to the confiscation of the company's most valuable asset Yuganskneftegaz. It was later sold to state-owned Rosneft. Yukos head Mikhail Khodorkovsky, then Russia's richest man, was jailed and has since been serving an eight-year term in prison. He is currently tried for similar charges that could result in a 22-year spell in prison.

Today the Strasbourg Court will hold the first hearing on the case. Russia will be represented by 20 lawyers. The sides will present the case, list their arguments and answer any questions by the judges.

The hearing takes place days after Russian Constitutional Court ruled that the verdicts of the ECHR in Strasbourg are obligatory for Russian courts. However, experts say that in reality it is difficult to make Russia comply with the decisions. Stephen Jagusch, a partner at Allen & Overy, told The Times that: "For political and practical reasons enforcement action against Russia is not likely to be straightforward. It'll be a real problem for the claimants." The members of Council of Europe could exert pressure on Russia, but they cannot make it pay the damages.

The ECHR was established in 1959 under the auspices of the Council of Europe to deal with alleged violations of 1950 European Convention of Human Rights. It only agrees to hear about 5% of all the applications it receives. Most of the legal proceedings occur in written form, so the hearings take place only in the more complicated cases.

Last year the Court took up 219 cases from Russia and ruled against the Russian government 210 times. Three cases were settled out of court and the government was exonerated six times. In 2009 28% (33,550) of all the legal recourses were from Russia, more than from any other country.

The court is expected to publish the ruling on the Yukos vs Russia case in a few months.

The day before the ECHR hearing the former Yukos head Mikhail Khodorkovsky published an article in the Russian newspaper Nezavisimaya Gazeta, where he harshly criticized the Russian court system. He wrote that the law-enforcement agencies are "in essence a business that deals in legalizing the use of force." He also argues that there is little justice in the system. "The system is the assembly line of a gigantic factory. ... If you become raw material for the assembly line, then a Kalashnikov rifle is always produced -- that is, a guilty verdict. Any other result from the system's processing of raw material is viewed as a malfunction."

Yukos go to court

Yukos shareholders can take the Russian government to court and attempt to reclaim $100 billion in damages, their lawyers said last week.
The New York Times reported that an arbitration panel in the United States had found in favour of shareholders' claims that their assets had been improperly taken by the Kremlin as it wound up the oil firm over unpaid taxes.
That paves the way for a full court case in the US - even if any award would prove almost impossible to collect from the Russian authorities.
Tim Osborne, director of the Yukos-related holding company GML (set up by Mikhail Khodorkovsky), told the paper that the verdict would force Russia to "stand up and be counted in its merits" in court.
Nobody from the Russian government or its representatives was available to comment on the ruling, which was not published by the judges.
But in his televised Q&A call-in show, Prime Minister Vladimir Putin, who was president at the time of Yukos's demise, said the oil company's assets had been used for housing and utilities services.
Putin said that 10 million people had benefited from the proceeds of the sale of Yukos and added that the bankruptcy proceedings were carried out "according to all Russian laws".

Yukos

Businessman Mikhail Sannikov loves the smell of Yukos in the morning. So much, in fact, that's he's launching a perfume named after Mikhail Khodorkovsky's former bankrupt oil firm, Vedomosti reports.
Although the green-and-yellow triangle is a trademark now owned by Rosneft, it is only registered for oil products - in theory making it possible to transfer the brand's essence.
Sannikov admits any Yukos perfume would be unlikely to come up smelling of roses in the competitive cosmetics markets, but would highlight his belief that former Khodorkovsky's oil firm sent a nasty niff through the Russian business world.
Chopped off
International politics is behind the delay in giving a Canadian firm a license to build the PW-127 helicopter engine in Russia, according to American military news site strategypage.com.
They claim the delay is part of US pressure on Russia not to sell anti-aircraft weapons to Iran. The proposed deal, the first of its kind since Britain licensed a Rolls Royce jet engine soon after World War II, would speed the delivery of Russia's new Mi-38 helicopter.
Now the new high-speed aircraft will be delayed until at least 2012, and will use a less efficient Russian engine.
Gas simmering
Ukraine has offered to accept a $5 billion advance payment from Russia for five years of gas transit - to enable the country to pay its own gas bill.
But the plan has not been well received. Pravda.ru calls it a "ridiculous offer", noting that Russia receives no guarantees of payment beyond 2010 and adding that Ukraine has no chance of Western financial support.
Meanwhile Komsomolskaya Pravda detects the "smell" of Europe in the plan, fearing the EU may be about to provoke another politically-motivated fuel dispute.
Budget cuts call
Kremlin aide Arkady Dvorkovich believes the government has a couple of months to cut budget spending in response to the crisis.
But he said "substantial state funds" would be invested in projects to help the economy recover in the future, even as the overall expenditure falls, RIA Novosti reports.
He added that Russia's reserves must be used carefully to ensure social payments were made.
People trade
Tajik workers suffer difficult working conditions and discrimination in Moscow, but Tajik Interior Minister chief Safiullo Devonayev has no plans to slow the exodus from Dushanbe.
At a meeting between migration service staff from Russia and Tajikstan and regional officials from Samara, Devonayev explained labour export was an important part of Tajik policy.
Raging bulls
Sky high value for Facebook
Internet group Digital Sky Technology has spent $200 million on a 1.96 per cent stake in social networking website Facebook. The Russian group, which already operates the similar Vkontakte site over here, concluded a deal which values Facebook at $10 billion, more than Starbucks coffee or Safeway supermarkets. Not bad for a popular office timewaster.
Shopping nation
British supermarket giant Sainsbury's is planning to make Russia its first overseas market, according to Kommersant. The business daily's sources claim the firm has held discussions with the X5 Retail group and other Russian supermarket operators with a view to entering the market in the autumn.
Toxic assets
GDP slump
President Dmitry Medvedev has warned that the economy will shrink faster than expected, after figures showed GDP dropped 23 per cent in the first quarter of 2009. AP reports that Medvedev didn't give a revised estimate but admitted a forecast budget deficit of 7 per cent was "optimistic". Meanwhile Finance Minister Alexei Kudrin has ruled out going to the IMF, but is considering borrowing up to $7 billion next year and $10 million the year after from overseas sources.
In bad nick
Norilsk Nickel, the world's biggest producer, posted a $449 million loss after a $4.7 billion writedown on its OGK-3 power generator and some non-Russian units, Bloomberg reports. The company also took a hit on the currency markets in 2008, losing $397 in foreign exchanges, and its year-end assets of $2 billion were 50 per cent down.

Strasbourg Court Accepts $34Bln Yukos Case

The European Court of Human Rights has accepted a $34 billion lawsuit by former Yukos management against the government, apparently the largest claim ever made in the court. The claim is worth the tax collected from Yukos, the claimants’ spokeswoman Claire Davidson said in e-mailed comments Wednesday. The former managers say the charges against Yukos, once the country’s biggest oil firm, were fabricated so the government could snap up the firm. The Strasbourg-based court threw out some of the government’s key arguments against the litigation, including that Yukos no longer existed and the court lacked jurisdiction to hear the case. The court ruled that although Yukos had ceased to exist legally in 2007, the case had a lasting moral dimension. “All the more so if the issues raised by the case transcend the person and the interests of the applicant,” the court said in its decision to hear the case. The decision was made in late January but only published on the court’s web site this week. The court also dismissed the government’s argument that the claimants had failed to exhaust their appeals in Russian courts, siding with Yukos managers who said it would be hopeless to appeal in Russia. “The domestic courts consistently rejected the company’s attempts to contest the actions of the bailiffs, so the attempts would have been futile,” the court said. Human rights activists critical of the state’s onslaught against Yukos praised the court’s decision. “We welcome this decision and hope that the government will live up to its obligations under the European Human Rights Convention,” said Tatyana Lokshina of the Moscow bureau of Human Rights Watch. Former Yukos chief financial officer Bruce Misamore said the decision was good news for the company’s stakeholders. “This is an important step toward the vindication of the company’s belief in the rule of law — something it never secured in Russia,” he said in an e-mailed statement. It was unclear Wednesday when the court would actually make a ruling in the case. Davidson said the claimants had been asked to submit further information by April and noted that the case has been given priority. Kremlin spokesman Alexei Pavlov said Wednesday that he would only comment after the court made a final ruling.
Yukos managers filed the charges in 2004, when Yukos was targeted in a tax case that ultimately left the company bankrupt and several top managers in jail. Former Yukos CEO Mikhail Khodorkovsky was sentenced in 2004 to eight years in prison on charges of fraud and tax evasion, and the lion’s share of Yukos assets went to state oil company Rosneft in a series of auctions. Meanwhile, a senior federal prison official suggested that a second trial against Khodorkovsky could take place without the defendant actually being present. “Our pretrial detention facility can do a video conference with any Moscow court. This can be done if such a decision is made,” said Yunus Amayev, the head of the prison service’s branch in the Irkutsk district where Khodorkovsky is jailed, Interfax reported. Khodorkovsky’s lawyer Yury Shmidt said a court hearing without the defendant’s presence would not be legal. “I first thought this was a joke, but then these are the words of a senior prison service official,” Shmidt said by telephone from St. Petersburg. Prosecutors earlier this week filed new embezzlement and grand theft charges against Khodorkovsky and his business associate Platon Lebedev. Shmidt has called the new charges “nothing but nonsense.”

Khodorkovsky faces fresh charges

A Moscow judge has ordered ex-tycoon Mikhail Khodorkovsky to be brought from his Siberian jail to Moscow, to face trial on new charges next month.
The judge also ordered the transfer of Platon Lebedev, Khodorkovsky's former business partner, from his prison in northern Russia to the capital.
Once Russia's richest man, Khodorkovsky was jailed for nine years in 2005 for tax evasion and other offences.
The former tycoon faces new theft and embezzlement charges.
Correspondents say the Russian authorities apparently want to keep Khodorkovsky behind bars well beyond the end of his first sentence.
BBC Russian affairs analyst Stephen Eke says the case no longer generates much public interest in Russia.
Supporters of the ex-boss of Russia's disbanded oil firm Yukos say the original charges were politically motivated because Khodorkovsky had funded Russian opposition groups.
'Ridiculous allegations'
"A judge of the Khamovnichesky [Moscow] district court handed down a ruling for the transfer under guard from places of detention to Moscow in respect of Mikhail Khodorkovsky and Platon Lebedev," the press secretary of Moscow City Court, Anna Usacheva, told Interfax news agency.
"Preliminary hearings in the new trial of Khodorkovsky and Lebedev have been set for March 3," she said.
Khodorkovsky has been serving his sentence in Krasnokamensk, in the east Siberian region of Chita, close to the Chinese border, about 4,700km (3,000 miles) east of Moscow.
He remains a strong critic of the Kremlin, last year accusing Russian ex-President Vladimir Putin of having used the law to target political enemies, especially businessmen like himself.
Responding to the announcement of a new trial, his lawyers said: "The bureaucrats of the security forces have wasted many years, huge sums of state money and their own reputation by fabricating these ridiculous allegations."
Lebedev was also convicted of tax evasion at the same trial in 2005 and jailed for nine years.
Yukos, once Russia's biggest oil company, was declared bankrupt in 2006 and ceased to exist as a legal entity in November 2007.
The company had been steadily dismantled after being accused of massive fraud and tax evasion by the Russian authorities.
Yukos maintained it was the victim of a concerted political campaign by a government which wanted to discredit its executives and gain control of vital energy assets.
Russian officials deny the allegation.