"Kommersant"

Kommersant has come into possession of a memorandum written by the Russian authorities about the‘YUKOS vs. the Russian Federation’ appeal, registered in the European Court of Human Rights( number 14902/04). This document makes a sensational claim, that tax-evasion was the only penal violation in the Yukos case. This is directly at odds with the position of the Prosecutor-General’s office, which at the end of last year implicated Mikhail Khodorkovsky and Platon Lebedev in more serious crimes – embezzlement through fraud and money laundering.

Pavel Laptev, Commissioner of the Russian Federation at the European Court of Human Rights, was replying in the above-mentioned memorandum to questions put by the Court in the matter of Yukos’s appeal against the violations perpetrated against it under the European Convention on Human Rights. It was back in 2004 that the chairman of the board of Yukos-Moskva, Steven Theede, initiated the appeal, though the European Court hasn’t yet decided whether it’s admissible. The oil company, to be precise, complained that the state had illegally stolen its production unit Yuganskneftegas and had forcibly sold it to an ad-hoc company called the Baikal Finance Group. Yukos also said in its appeal that it had used tax-optimization schemes that were absolutely legal, precisely the same as those used by TNK-BP, Sibneft, Lukoil and other oil companies. Only Yukos, however, was penalized by tax-bodies. Mr. Laptev said in response to the Strasbourg Court that Russian arbitration courts had found the claims on Yukos justified as a result of unpaid taxes stemming from ‘an illegal scheme aimed at avoiding taxes’, plus penalties and legal fines (totalling 461.3 billion rubles at the time of Yuganskneftegas sale). According to him, the central chain of the above scheme was made up of companies registered in a closed political subdivision (ZATO) which provided for concessional taxation provided these companies carried out genuine operations, realization of investments and the creation of jobs.

It’s curious how the commissioner responds to the question of the Court about whether the company committed criminal actions in the tax sphere. He says that on January 30, 2004 the Prosecutor-General’s office of the Russian Federation filed a criminal case in accordance with article 199, part 2, item a and b of the Criminal Code of the Russian Federation (grand tax evasion committed by a group of people by previously concerted agreement). However, in over two-and-a-half years of the investigation there was only one other person accused in absentia - Yukos’s chief accountant Irina Golub, who was placed on the international wanted list on April 17, 2006. (She’s now living in London.) Mr. Laptev preferred not to elaborate on the rest of the criminal cases initiated by the Prosecutor-General’s office against shareholders and top managers of Yukos. In addition to ‘more serious’ charges in other criminal cases - embezzlement through fraud (up to 10 years in prison) and money-laundering (up to 15 years), there recur the same charges of tax evasion with the help of companies in a closed political subdivision (ZATO). Thus Vladimir Malakhovsky and Antonio Valdes-Garcia, the former heads of Ratibor and Fargoil (structures affiliated to Yukos), as well as Vladimir Pereverzin, a former deputy-director of Yukos’s foreign-debt department, have been charged with embezzlement and money-laundering

The case brought against them is currently being heard in the Basmanny Court. Accused in absentia are Yukos shareholder Mikhail Brudno, company lawyer Pavel Ivlev, and former Ratmir Ltd. CEO Vladislav Kartashov. (All of them have been placed on the international wanted list). Finally, Mikhail Khodorkovsky and Platon Lebedev have also recently become suspects in a case involving embezzlement through fraud and money laundering via interior offshore areas (ZATOs). According to Mr. Khodorkovsky’s lawyers, the Prosecutor-General’s office had no inclination to place the investigation of the case under a less serious article (199, tax-evasion), since the penalties under this article of the Penal Code don’t by and large entail imprisonment. The Prosecutor-General’s office is outspoken, in the meantime, about its intention to secure a sentence for the already-convicted Khodorkovsky and Lebedev that’s no less than the eight-year term they’re already serving. Yukos lawyers argue that analogous schemes for tax-amelioration were used by a large number of companies. Pavel Laptev describes the argument of Yukos’s lawyers as ‘making no legal sense’. The Russian commissioner points out that state control over the observation of tax legislation in the Russian Federation was weakened ‘for objective reasons related to the 1998 default and the process of economic reform during the transitional period’. As for the expropriation from Yukos of Yuganskneftegas and its forced sale, Laptev contends that the actions of the bailiffs were absolutely legal, and he asks the Court to rule Yukos’s appeal ‘inadmissible’, on the grounds that it hasn’t yet exhausted all means of legal protection in the Russian Federation – it hasn’t yet filed a suit, in particular, asking for the valuation of Yuganskneftegas shares to be declared invalid. Staff at the commissioner’s office have said that they never comment on documents sent to the Strasbourg Court, and Yukos lawyers, preferring to remain anonymous, have said merely that their objections to Mr. Laptev’s memorandum have been forwarded.

If the European Court of Human Rights finds the ‘Yukos vs. the Russian Federation’ appeal admissible and rules in favour of the appellant, this could well become a first step towards the release of the company’s top managers and the restitution of their collective property.

(Ekaterina Zapodinskaya, Kommersant, 30.01.2007)