(COMTEX) B: Russians Ponder Fate of Fallen Oil Tycoon ( AP Online )
MOSCOW, Apr 26, 2005 (AP Online via COMTEX) -- Jailed oil tycoon Mikhail
Khodorkovsky will hear his verdict Wednesday in the biggest trial in Russia's
post-communist history - a case that has alarmed foreign investors, roiled oil
prices and called into question President Vladimir Putin's commitment to
democracy.
Few people are betting on an acquittal. The key question appears to be whether
Khodorkovsky - accused of tax evasion and fraud - will be kept in prison long
enough to prevent him from being a factor in the 2008 presidential elections.
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.
Even so, many investors will be relieved once the sentence is read, simply
because the case served as a persistent reminder of the Kremlin's selective
commitment to free-market practices.
"They (the Kremlin) are in a deep hole," said Cliff Kupchan, a former U.S. State
Department official now with the New York-based think-tank Eurasia Group.
"They're going to dig a couple feet deeper tomorrow and hopefully, God willing,
that's it."
The case is viewed as part of a Kremlin drive to neutralize Khodorkovsky's
political ambitions and cement state control over the oil sector.
What began with the tycoon's being rousted at gunpoint from his private jet in
October 2003 led to escalating tax claims against Yukos. Then 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.
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."
While Putin has repeatedly described the case as a just investigation into a
corrupt empire, the probe could have been launched against any of hundreds of
businessmen in Russia's cutthroat post-Soviet marketplace - rather than one
financing opposition parties.
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.
State Prosecutor Dmitry Shokhin has called for Khodorkovsky, 41, to receive the
maximum 10-year sentence. Together with business partner Platon 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.
Putin's advisers suggested there could be some hope for the men. Andrei
Illarionov, an outspoken Kremlin economic aide, said Putin's state-of-the-nation
address Monday contained hints that jail was not inevitable.
"By maintaining the independence of the court from the executive authorities, a
correct and fair ruling may be handed down, freeing the two citizens being
investigated from tax terrorism," Illarionov was quoted by the Interfax news
agency as saying.
But Kupchan said he expected Khodorkovsky to serve enough time to put his
release date beyond presidential elections in 2008. Putin cannot run for a third
term but is expected to steer a successor into the Kremlin.
Defense lawyer Yury Schmidt said Khodorkovsky was "calm and conducting himself
bravely" ahead of the verdict that the lawyer expects will be "unjust."
"The authorities didn't start this to acquit Khodorkovsky," Schmidt told The
Associated Press. "I don't believe the judge can counter the will of the
Kremlin."
By ALEX NICHOLSON
Associated Press Writer
Copyright 2005 Associated Press, All rights reserved
-0-
*** end of story ***
Market Data 
Markets 
AI
