Russia on Wednesday delayed the verdict in the trial of jailed oil tycoon Mikhail Khodorkovsky — the biggest judicial proceeding in Russia’s post-communist history and a case that has alarmed foreign investors, roiled oil prices and called into question President Vladimir Putin’s commitment to democracy.
Khodorkovsky, the founder of Russia’s biggest oil company, is accused of tax evasion and fraud — charges many see as political with the goal of putting him in prison long enough to prevent him from being a factor in the 2008 presidential elections.
The verdict had been expected Wednesday, but a notice posted at a Moscow courthouse said the verdict in the case of Khodorkovsky and two associates had been postponed until May 16.
There was no signature on the printed notice, which was posted inside the glass door of the courthouse where Khodorkovsky, Platon Lebedev and Andrei Krainov have been on trial for close to a year.
Charges of fraud, tax evasion
Khodorkovsky and his partner Lebedev have been charged with fraud and tax evasion. The trial is nearing an end after dragging on since June 16 in a cramped Moscow courtroom.
The verdict was to have been handed down on the day that Putin was expected in Israel in the first visit ever by a Russian or Soviet leader to the Jewish state.
The politically charged trial and the dismantling of his company, Yukos, dampened enthusiasm for investment in Russia and helped push oil prices to record highs over supply fears.
State Prosecutor Dmitry Shokhin had called for Khodorkovsky, 41, to receive the maximum 10-year sentence.
Together with Lebedev, the tycoon is charged with rigging a privatization auction in 1994, stripping profits from a major fertilizer component maker, illegally using onshore tax havens to slash Yukos’ tax bills as well as dodging millions in personal income tax.
Defense lawyer Yury Schmidt said Khodorkovsky was “calm and conducting himself bravely” ahead of the expected verdict .
Dramatic arrest
The case began with Khodorkovsky’s arrest at gunpoint at a Siberian airport in October 2003. He was whisked from his private jet and charged with failing to pay taxes. In December, the company’s 1 million barrels-a-day Yuganskneftegaz unit was auctioned off to pay a staggering $28 billion tax bill.
Khodorkovsky complained futilely from his jail cell of Kremlin interference; U.S. investors lost $6 billion as the relentless assault turned Russia’s biggest blue chip into a penny stock.
Nineteen months after Khodorkovsky’s arrest, once-thriving businesses are reeling as emboldened tax authorities conduct smaller back tax probes. Capital flight tripled last year to $7.9 billion as a result of uncertainty stoked by the Yukos case. The turmoil is blamed for cutting back GDP growth at a time when oil prices — Russia’s main commodity — are at an all-time high.
Speaking from the courtroom cage where he has sat throughout his trial, the oil magnate on Feb. 25 defiantly proclaimed his innocence and said prosecutors had fabricated the whole case against him.
“I do not consider myself guilty of a single charge,” Khodorkovsky said.
The former CEO said he had managed a successful company “and helped a number of others to rise from the ruins after the collapse of the Soviet Union.”
Rice: 'They need to be consistent rules'
Secretary of State Condoleezza Rice highlighted investors’ concerns while visiting Russia last week. She stressed that the Yukos case “has done nothing to stabilize the views of the role of the rule of law in Russia’s economic relations.”
“They need to be rules that people understand,” she said. “They need to be consistent rules.”
Khodorkovsky has resigned as CEO of the firm he founded, and Yukos has been largely dismantled.
The culmination came Dec. 19, when Yukos unit Yuganskneftegaz, responsible for 60 percent of company’s output and 11 percent of Russian oil production, was sold at government auction to an unknown company registered to the address of a bar in a provincial Russian town. The sale price was half of what Yukos and foreign auditors say it was worth. The government said Yukos owed $28 billion in back taxes.
As for ordinary Russians, a guilty verdict would evoke few tears. Khodorkovsky and his partners enjoy little sympathy with a population that was plunged into poverty after Soviet Union’s collapse and forced to watch as the elite divvied up industrial wealth in back-room deals.