Since starting my research internship at CSIS I haven’t really focused much on issues I really love, namely, human rights. Instead, I’ve been trying to delve into more political analysis. However, I wanted to do a piece that would combine my interest in international law, my passion for human rights and my knowledge of the Russia/Eurasia region. The following post is a repost of a piece for the CSIS REP blog a few weeks back.
Mikhail Khodorkovsky, former Russian oligarch and oil tycoon, was once the richest man in Russia. His criminal trials have been two of the most publicized and controversial trials in the history of the Russian Federation. Having already languished for nearly 3,000 days behind bars, Khodorkovsky’s case was recently reviewed in March by Prosecutor General Yuri Chaika. But in early April, President Dmitry Medvedevrejected a pardon for the jailed businessman, going against the recommendations of an expert panel that said Khodorkovksy should be freed. Is Khodorkovsky such a political threat to Putin that he must continue to remain imprisoned?
Like the rest of Russia’s class of super-rich businessmen, Khodorkovsky profited from Boris Yeltsin’s aggressive privatization campaign—in particular the loans-for-shares deals—during the mid-1990s following the collapse of the Soviet Union. Due to high inflation and investor uncertainty, just a few bidders—the soon-to-be oligarchs—bought up large holdings in former state-run industries such as energy and telecommunications, thanks to their connections, capital and confidence. Yeltsin tolerated the rise of the oligarchs because he needed political support. In exchange for their support, which helped Yelstin’s re-election in 1996, the oligarchs received economic incentives and appointments to positions in the Kremlin. Thus, the privatizations of the 1990s came with an implicit obligation: the oligarchs, the new owners of Russia’s prize assets would get the wealth, but could not oppose the Kremlin.
In the wave of privatizations, Khodorkovsky snapped up the fertilizer company Apatit in 1994. A year later he acquiredYukos Oil for $300 million, putting him in charge of Russia’s second-largest oil company. He also amassed political influence, becoming Yeltsin’s Deputy Fuel and Oil Minister. Khodorkovsky used his wealth and political sway to develop Yukos into an empire, with 100,000 employees and over $11 billion in revenues by 2002. In 2003, Forbes magazine ranked him as the world’s 26th richest man, estimating his private assets at $8 billion. However, by this time things had changed in Russia. Vladimir Putin became Russia’s president on December 31, 1999, and adopted a significantly different approach to the oligarchs: the oligarchs could continue to enjoy their profits, but only if they were willing to share it with Putin and his allies, and only if politics stayed off-limits.
Khodorkovsky, too, had changed his approach to Russian politics and business. He wanted to make Yukos a transparent, properly governed company, and hired the American consulting firm McKinsey & Company to overhaul the Yukos management structure and the accounting firm Pricewaterhouse to establish a meticulous accounting system (in 2007, PwC was reportedly pressured by the Russian government to withdraw ten years of Yukos audits). He also created a foundation called Open Russia and used his financial wealth to support non-governmental organizations, and human rights groups. Khodorkovsky also began to fund opposition political parties. Putin may have been able to tolerate Khodorkovsky’s Open Russia foundation, but he could not allow Khodorkovsky to brazenly oppose him. In February 2003, Putin summoned Khodorkovsky and other wealthy Russian businessmen to the Kremlin, where Khodorkovsky stood up to Putin and lambasted the Kremlin for corruption.
On July 2, 2003, Khodorkovsky’s business partner Platon Lebedev was arrested. And on October 25, 2003Khodorkovsky himself was arrested on charges of embezzlement, tax evasion and fraud. The charges included three counts related to his acquisition of Apatit and three violations related to his involvement with Yukos, including tax evasion and embezzlement. While there were some indications that the 2004 trial was politically motivated—Khodorkovsky had been financing political opposition groups at a time when Putin’s priority was to centralize power by bringing Russia’s major businesses under Kremlin control—there was some substance to the tax evasion case. Khodorkovsky, however, was not the only oligarch guilty of tax evasion. But he was one of the few being prosecuted. Like the other oligarchs of the 1990s, Khodorkovsky “happily appropriated state property, paying little or nothing at all for it; like the rest of them, he allowed company managers to siphon off profits and even property,” wrote Masha Gessen in a recent piece for Vanity Fair. After eleven months of proceedings, Khodorkovsky was convicted of violating six articles of the Criminal Code of the Russian Federation, and he and Lebedev were sentenced to nine years imprisonment in prison colonies in Russia’s interior. Following his sentencing, Yukos was dismantled and its successful product division Yuganskneftegas was bought at auction by Baikal Finance Group, which was acquired by state-owned Rosneft shortly after the sale.
The case brought against Khodorkovsky in the second trial that began in March 2009 and ended in December 2010 drummed up charges to keep the former oil tycoon imprisoned, accusing Khodorkovsky and Lebedev of embezzling all oil produced by the three Yukos production subsidiaries between 1998 and 2003, worth $25 billion. It also accused the pair of embezzling shares held by a Yukos subsidiary in one of the production companies and five other companies, and laundering the proceeds of the sale of the allegedly embezzled oil and the shares in the indirect subsidiaries. Khodorkovsky and Lebedev were sentenced to fourteen years imprisonment.
Khodorkovsky’s supporters have always insisted the trial was an attempt by Putin’s administration to punish the oil tycoon for his political aspirations, which of course, the Kremlin denies. Is Mikhail Khodorkovsky a criminal, guilty of embezzling funds and neglecting to pay his taxes, or is he a political prisoner, the victim of the machinations of Putin? Or is he both?
Few actually doubt Khodorkovsky’s guilt; according to a poll by VTsIOM, 44 percent of Russians believe he is serving a sentence for committing real economic crimes. What is in doubt, however, is the process the State used to convict him. This was emphasized in the recent European Court of Human Rights (ECtHR) Chamber judgment in the caseKhodorkovskiy v. Russia (Application no. 5829/04). Khodorkovsky complained to the court that he was detained unlawfully and for too long in appalling conditions and that the charges against him had been politically motivated. The Court ruled in favor of Khodorkovsky on eight out of fifteen claims, finding that Russia had violated his rights under theEuropean Convention on Human Rights (ECHR) on several instances, including, among others, two violations of Article 3 as regards the conditions in which he was kept in court and in the remand prison and four violations of Article 5(4) as regards to procedural flaws related to Khodorkovsky’s detention.
However, the ECtHR did not go so far as to find a violation of Article 18 (limitation of rights for improper purposes) as regards to the claim that Khodorkovsky’s prosecution was politically motivated. The Court observed that while the case might raise some suspicion as to what the real intent of the Russian authorities might have been for prosecuting him, claims of political motivation behind prosecution could not be substantiated due to a lack of incontestable proof: “A mere suspicion that the authorities used their powers for some other purpose than those defined in the Convention is not sufficient to prove that Article 18 was breached” (Para. 255). Moreover, the Court stated that “it is not sufficient for this Court to conclude that the whole legal machinery of the respondent State in the present case was ab intio misused, that from the beginning to the end the authorities were acting with bad faith and in blatant disregard of the Convention. This is a very serious claim which requires an incontrovertible and direct proof. Such proof . . . is absent from the case under examination” (Para. 260).
Similarly, in the recent judgment of OAO Nefteyanaya Kompaniya Yukos v. Russia (Application no. 14902/04), the ECtHR ruled that Russia violated three articles of the ECHR, including Yukos’ right to a fair trial. However, just as in the individual case of Khodorkovsky, the Court found that there was no violation of Article 18. The Court concluded there was no indication that the State had misused the judicial proceedings with a view to destroying the company and taking control of its assets.
The ruling in these two cases is somewhat perplexing, as human rights organizations including Amnesty Internationaldeclared Khodorkovsky and Lebedev prisoners of conscience after the two businessmen’s convictions on money laundering were upheld for the second time. “Whatever the rights and wrongs of Mikhail Khodorkovsky and Platon Lebedev’s first convictions there can no longer be any doubt that their second trial was deeply flawed and politically motivated,” said Nicola Duckworth, representing Amnesty International. Indeed, Khodorkovsky is no less guilty than any of the “robber baron” oligarchs of the 1990s. However, he was selectively targeted for prosecution by the Putin regime because of his politics. Not only was Khodorkovsky a target of selective justice, but the manner in which his case was handled and how he was treated by the Russian authorities amount to no justice at all.
Ultimately, the importance of the Khodorkovsky case is that it reflects how Russia is ruled—particularly under the leadership of Vladimir Putin, who as of May 7th is president once again. The arrest, conviction, and subsequent treatment of Khodorkovsky and Lebedev raise concerns about due process and the rule of law in Russia, particularly about the judicial independence of courts. Khodorkovsky is a glaring example of Putin’s unforgiving brand of vendetta politics. Moreover, his desire to see a democratic, transparent Russia is a thorn in Putin’s side. In his last statement before his second sentencing, Khodorkovsky said that he was ready to die in jail for his belief that Russia should become a country of “freedom and rule of law, where the law stands higher than [the interests of] bureaucrats… where the secret services defend the people and the law. It is difficult for me, as for anyone, to live in jail and I don’t want to die here. But if it is needed, I won’t hesitate. My beliefs are worth my life.”
Such sentiments have resonated with the nascent opposition movement in Russia. The wave of protests over the last several months in Russia and the emergence of a political opposition are serious challenges to Putin’s authority. So is Khodorkovsky. Putin may not be able to imprison hundreds of protesters (yet), but he can keep Khodorkovsky in jail. As long as Khodorkovsky remains a political threat, and as long as Putin is in power, the man who was once Russia’s richest oil tycoon will not be set free.
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