27 October 2003 21:15
Jailed - but is Russia`s richest man guilty only of funding Putin`s political opponents?
RUSSIA'S RICHEST man awoke yesterday in a cramped cell in Moscow's notoriously filthy and overcrowded
Matrosskaya Tishina prison.
The 40-year old business tycoon, Mikhail Khodorkovsky, has swapped his villa in the Moscow suburb of Zhukovka for a
grimy jail cell shared with four other inmates. And he is expected to spend at least the next two months in his new
quarters while Russian prosecutors pursue an expanding inquiry into alleged fraud, tax-evasion and theft of state
property by his Yukos business empire.
Mr Khodorkovsky's supporters are crying foul, accusing Russian authorities of political intimidation of an
oligarch who finances the liberal opposition, less than two months before elections. President Vladimir Putin, suspected
of personally approving the arrest, has said nothing.
Mr Khodorkovsky was flown to Moscow after being arrested by masked and armed security agents who surrounded his
private jet on a Siberian runway. "They rushed aboard the plane shouting, `FSB [successor to the KGB], drop your
weapons'," said Alexander Shadrin, a Yukos spokesman. "They used special forces in the same way they
would deal with a terrorist attack." The tycoon was allegedly handcuffed, hooded and kicked by the agents as they
bundled him away.
The arrest on Saturday, the most daring move so far against President Putin's political opponents, was the
culmination of five months of cat- and-mouse harassment of Yukos by prosecutors whose target is the oligarchs.
The Russian authorities yesterday showed no signs of treating Mr Khodorkovsky - whose personal wealth is estimated at
pounds 6.5bn - any differently from the other prisoners in Matrosskaya Tishina prison.
"There are no grounds for any preferential treatment of accused Khodorkovsky," Yuri Kalinin, the Deputy
Justice Minister, said. "And it is not in the law."
He did add that instead of being in a 15-bunk cell, Mr Khodorkovsky was confined to a five-person room.
Yukos, the world's fourth-largest oil company, said the charges against its chief executive were absurd.
"We do not doubt for a moment that the entire investigation is politically motivated," a Yukos spokesman said,
complaining about the tycoon being forced to share his cell.
The American ambassador to Moscow, Alexander Vershbow, also expressed concern at the arrest, saying it could raise
serious doubts among foreign investors if they believed that Russian law was being used selectively.
Matrosskaya Tishina is known to human rights campaigners as the worst of Russia's infamous pre-trial detention
centres, where tuberculosis, Aids and hepatitis are reportedly rife. Originally built as a temporary holding centre for
up to 2,500 prisoners, the north-east Moscow building, surrounded by high barbed-wire-capped walls, currently houses
3,500.
Two of Mr Khodorkovsky's chief lieutenants have been in prison since July, and a third top aide has fled the
country. Another top Yukos official, Platon Lebedev, is already in Matrosskaya Tishina, having been arrested in July. He
and Mr Khodorkovsky are accused of "inflicting damage on the Russian state in excess of $1bn [pounds 600m]".
The charges against Mr Khodorkovsky, which include fraud, forgery, theft and tax evasion, could lead to a 10-year jail
sentence. The allegations relate to the murky decade-old privatisation of a state fertiliser company, but experts say
that the assault is aimed at punishing Mr Khodorkovsky for his backing of opposition parties for parliamentary elections
due to be held on 7 December.
"This is clearly an effort by people at the top to demonstrate that tycoons should think twice before involving
themselves in politics," said Irina Zvigelskaya, of the independent Centre for Strategic and Political Studies.
In recent weeks police have raided a Yukos-funded orphanage, the offices of the chief lawyer handling the
company's defence and the country dachas of several of the firm's executives. Last Thursday prosecutors took
over a Moscow public relations firm representing the liberal Yabloko party, confiscating computers, documents and funds.
Yabloko representatives said that the seized materials were a "crippling loss" to the party's election
campaign. Mr Khodorkovsky has openly supported Yabloko, which is the main liberal opposition party. Some experts say the
oil tycoon has secretly funded the Communist Party as well, with the aim of preventing pro-Kremlin parties from gaining
a majority in the state Duma.
"Khodorkovsky doesn't hide his interest in politics," says Alexei Kondaurov, a Yukos executive who is
running for parliament on the Communist Party ticket. "He knows the success of business depends upon the growth of
democracy and civil society in Russia".
Besides backing opposition parties, he has funded human rights groups and paid $100m to establish a pro-business
"humanitarian university" in Moscow. A foundation owned by Mr Khodorkovsky recently purchased the weekly
Moskovsky Novosti newspaper and appointed Yevgeny Kiselyov, an outspoken Kremlin critic, as its editor.
Experts say a Kremlin faction of former KGB officers, close to President Vladimir Putin, has been orchestrating the
assault on Yukos. Some suggest that they may be squeezing Mr Khodorkovsky to prevent him from selling a share of his oil
empire to a foreign corporation. Both ExxonMobil and ChevronTexaco have expressed interest in buying a 25 to 40 per cent
stake in Yukos, a deal that could permanently place Yukos beyond the reach of Kremlin machinations.
"I believe politics are the key motivation in this anti-Yukos campaign, but there are a good many people within
the elite who also hope it could lead to the re-division of Yukos's property," says Ms Zvigelskaya.
Mr Khodorovsky is a former apparatchik in the Soviet Young Communist League who moved into banking as the Soviet
Union collapsed. Milking his Kremlin contacts, he arranged for his Bank Menatep to buy Yukos's assets from the
state for around $300m in 1995. The company's market value is now over $30bn. Despite the dubious origins of his
empire, Mr Khodorkovsky has been praised for adopting Western-style standards of corporate governance, transparency and
shareholder rights. Yukos was the first large Russian company to make public its accounts, production figures and
ownership structure.
Last month Yukos merged with the smaller Sibneft firm, owned by the tycoon Roman Abramovich, creating Russia's
biggest oil company, producing 5 per cent of the country's GDP. Russia's "oligarchs", who are
estimated to control about 70 per cent of its economy, were warned off political involvements after Mr Putin came to
power three years ago. Two that continued to defy the Kremlin, Boris Berezovsky and Vladimir Gusinsky, were charged with
crimes dating back to the 1990s, stripped of their property and hounded into exile.
The legal assault on Yukos began with the arrest of Mr Lebedev, a Bank Menatep kingpin, who was charged with
defrauding the state of $280m in the 1994 privatisation of the Apatit fertiliser factory. A Yukos security official,
Alexei Pichugin, was also jailed, charged as an accomplice to murder.
Another billionaire Yukos shareholder, Leonid Nevzlin, fled to Israel last month. Last week a leading company
executive, Vasily Shakhnovsky, was charged with evading a total of $1m in taxes.
Russia's Union of Industrialists and Entrepreneurs, which speaks for the oligarchs, appealed to the President to
end his silence on the Yukos affair, warning of "irrevocable consequences" for Russia's already fragile
business climate. Early indications suggested that Yukos's stock will plummet when Moscow's stock exchange
opens today.
"It's not just about Yukos, it's part of the general attack on democratic gains since Putin came to
power," Mr Konduarov says. "We see in this situation that Russia is still only a half-civilised
society."
Leading article, page 14
ENEMIES OF THE STATE?
BORIS BEREZOVSKY
Age: 57
Worth: $3bn
Based in: London
Granted political asylum by a UK court last month. Media baron Berezovsky was declared Russia's richest man in
1997. Prosecutors want him for alleged fraud involving Lada cars. Fled Russia three years ago.
VLADIMIR GUSINSKY
Age: 51
Worth: $400m.
Based in: Israel
Freed this month in Greece, after a court rejected Russia's extradition request to face charges with Mr
Berezovsky. The former cab driver made vast sums from municipal funds on foreign exchange.
ROMAN ABRAMOVICH
Age: 36
Worth: $5.7bn
Based in: London
Facing a possible $2bn criminal lawsuit in the US over his role in the battle for Russia's aluminium industry.
He bought control of Chelsea football club for pounds 140m in July, and spent pounds 100m buying star players.
VLADIMIR POTANIN
Age: 42
Worth: $1.8bn
Based in: Moscow
Said to be investing pounds 120m in Arsenal's new stadium. Potanin was deep into privatisation of Russia's
oil industry. President of Interros, a giant holding company which accounts for 2.5 per cent of Russia's GDP.
VAGIT ALEKPEROV
Age: 53
Worth: $1.3bn
Based in: Moscow
As the Soviet Union broke up in 1991, he was the first deputy minister of fuel and energy of the USSR, a position he
used to get into the business himself. He became head of the Lukoil company, Russia's biggest oil producer.
Hugh Macleod
[UKIR [UK & Ireland Intelligence Wire]] |
RUSSIA IN FACTS
