Russian Oil Tycoon Convicted of Fraud | Business| Economy and finance news from a German perspective | DW | 16.05.2005
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Russian Oil Tycoon Convicted of Fraud

A Russian court convicted former Yukos Oil head Mikhail Khodorkovsky of four of seven charges on Monday. The judge will continue reading the lengthy verdict Tuesday.


Faces up to ten years behind bars

The arrest and trial of one of Russia's most powerful oligarchs has shaken investor confidence and put the rule of law in Putin's Russia under the international microscope. Khodorkovsky and Platon Lebedev, his deputy in the Yukos Oil Company, were arrested in 2003 on charges of massive fraud and tax evasion, and have been on trial since June 2004. They each face up to 10 years in prison.

Yukos Oil, once Russia's most profitable oil company, has since been dismantled by the Kremlin after failing to pay $27.5 billion (34.7 billion euros) in back taxes. The company's oil fields, among other assets, have gone up for auction.

Political martyr

Khodorkovsky has dismissed the trial as a fraud since his arrest in October 2003. The powerful oil tycoon was said to have harbored political ambitions to run against Putin, and funded Putin's political opponents. His lawyer, Robert Amsterdam, said his client's arrest and trial was the culmination of a vicious campaign by Putin to eliminate political opposition.

Combo: der russische Öl-Miliardär Mikhail Khodorkovsky Firma Yukos und der russische Präsident Wladimir Putin

Putin allegedly saw in Khodorkosvky a potential political opponent

Outside of the courtroom in Moscow, supporters and opponents gathered in anticipation of the verdict. Khodorkovsky lawyer Sanford Saunders was pessimistic upon entering the court room Monday morning.

"Mr Khodorkovsky and Mr Lebedev will be convicted today … and the verdict will not represent the evidence," Saunders told television cameras.

West skeptical

Demonstration für Michail Chodorkowski Jukos

Demonstrators outside the Moscow courtoom, with photos of Khodorkovsky in the background

In his closing statements, Khodorkovsky has said the trial "was contrived" by the Kremlin "with the aim of taking for themselves the most profitable oil company in Russia."

Russian officials on April 27 postponed the verdict on the trial, which wrapped up on April 11. Opponents said Putin was trying to avoid tough questions as he welcomed world leaders, including President George W. Bush, to Moscow to commemorate the 60th anniversary of the end of WWII on May 9.

The Western world has kept a close eye on the trial. US Secretary of State Condoleezza Rice said after a visit to Moscow in April that "people are really watching (the trial) for signals that indeed there is rule of law in Russia."

Germany market-oriented

Germany's Chancellor Gerhard Schröder seems less perturbed by the case. The chancellor, who has a close working relationship with Putin, has said that it wasn't unusual for the state to prosecute someone for tax evasion. Following summits with Putin in the past year, he said that he has confidence that a just result will be reached.

Messe Hannover Bundeskanzler Gerhard Schroeder, links, laeuft am Sonntag, 10. April 2005, hinter dem russischen Praesidenten Wladimir Putin

Schröder has a close relationship with the Russian president

German gas companies have watched the smashing of Yukos with interest. Utility giants E.On and RWE already have stakes in Russia's vast and profitable energy sector, and have looked at the auction of Yukos assets with interest.

Khodorkovsky lawyer Amsterdam said market access has steered Schröder's ambivalence towards Khodorkovsky's fate.

"The German chancellor worked as an accomplice to the Kremlin's theft," Amsterdam said in an interview with Berliner Zeitung in April.

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