Jailed Russian tycoon Khodorkovsky faces verdict in test case

By Steve Gutterman

MOSCOW (BestGrowthStock) – Jailed former oil tycoon Mikhail Khodorkovsky faces a verdict next week in a second trial whose outcome will test the Kremlin’s readiness for reform and shape Russia’s political climate ahead of a 2012 presidential vote.

After an unexplained postponement that deepened suspicions of government interference in the fate of a prominent Kremlin foe, a judge is to start reading out the verdict on Monday, with Khodorkovsky confined to a glass-and-steel courtroom cage.

Once Russia’s richest man and head of its biggest oil producer, Yukos, Khodorkovsky is serving the final year of an eight-year term imposed in a fraud and tax evasion trial that marked a key event in Vladimir Putin’s 2000-2008 presidency.

Prosecutors say he stole $27 billion from Yukos production subsidiaries through pricing schemes and want him sentenced to six more years in prison. Supporters call the charges absurd and say anything but an acquittal would be a travesty of justice.

Putin cast the debate in his own stark terms last week, evoking U.S. financial schemer Bernard Madoff to suggest that 150 years would be a fitting sentence for Khodorkovsky if Russian law allowed it.

“A thief must sit in jail,” Putin told a nationwide TV audience of millions.

Putin has insisted he was talking about Khodorkovsky’s existing conviction, not the present trial. But his remarks deepened the widely held belief that the Khodorkovsky’s fate will be decided in the Kremlin. His lawyers accused Putin of exerting influence and threatened legal action.

“Putin cannot let him go free, even if he wanted to, which he clearly does not,” said political analyst Dmitry Oreshkin.

“This is a personal vendetta of Putin’s.”

Khodorkovsky’s criticism of Putin in an newspaper article published on Friday deepened the sense of such a rivalry.

He made no mention of his trial, but said he felt both “irritation” and “pity” for Putin and that corruption had increased tenfold since Putin took power.

Despite the personal animus, Khodorkovsky’s fate may hinge on pragmatic Kremlin calculus: Can Russia, which needs foreign investment and expertise to wrench its economy away from overreliance on energy exports, afford to keep him behind bars?

Khodorkovsky, 47, fell foul of the Kremlin during Putin’s first term after he aired corruption allegations, challenged the state’s clout in decisions on oil exports and quietly funded opposition parties.

CORRUPTION

After his arrest in 2003, Yukos was bankrupted by back-tax claims and its assets sold off, most ending up in state hands. In a Siberian prison, he became a symbol of Putin’s determination to assert control over Russia and its riches.

Western governments were uneasy; but some investors hoped it meant Putin — who had promised a “dictatorship of law” — would tackle other tycoons in a frontal assault on corruption.

That never happened. Magnates who have avoided friction with the Kremlin have thrived, and — like foreign visitors who wrote about Russia in tsarist times — global indexes rank it among the worst countries in terms of perceived corruption.

Putin, Russia’s most powerful politician, dominates what officials call a ruling tandem with Medvedev even though as prime minister, he is the president’s subordinate. Both men say they will decide together who will run for president in 2012.

Medvedev has championed a progressive Russia underpinned by the rule of law, and said improving a justice system marred by corruption and political influence is a crucial step.

But with little progress visible, Kremlin critics dismiss his statements as window-dressing for Putin’s continued rule.

A guilty verdict for Khodorkovsky would reinforce those doubts. A six-year sentence would keep him in jail until late 2017 — close to the end of the next president’s six-year term.

Alexander Rahr, a Russia specialist at the German Council on Foreign Relations, said Putin’s tough talk and the call for six more years were likely aimed at frightening Khodorkovsky into admitting his guilt — the perfect outcome for Putin, who has something to lose from a long sentence or an acquittal.

While a six-year sentence would hurt Russia’s already battered image, Rahr said Putin and Medvedev likely fear that releasing Khodorkovsky could set him up for a political career and bolster lawsuits accusing Russia of expropriating investments with their state takeover of Yukos assets.

“Just letting him go or acquitting him is very dangerous” for the Kremlin, Rahr said.

It could take the judge days or weeks to read out the verdict, possibly leaving the sentence unclear until after the end of Russia’s winter holidays on January 10.

(Additional reporting by Alissa de Carbonnel; editing by Ralph Boulton)

Jailed Russian tycoon Khodorkovsky faces verdict in test case