National Post, by Diane Francis, 26 August 2008

Robert Amsterdam is an outspoken lawyer who defended Mikhail Khodorkovsky, the jailed oil oligarch in Russia who last week lost his bid for parole. Amsterdam (of Toronto law firm Amsterdam & Peroff ) warns that Canadian corporations, like Magna International or Petro-Canada, that do business in Russia or with Russian entities are endangering their shareholders by so doing.

He argued, as I have, in favour of a ban preventing Russians from owning Canadian entities or assets until Moscow demonstrates that foreigners are protected in its country.

Examples are commonplace. Yesterday, Moscow officially sanctioned Robert Dudley, British chief executive of a Russian-BP PLC partnership, after driving him out of the country on trumped-up charges. Dudley, an experienced oil executive, has gone into hiding.

Two weeks ago, another strategy surfaced when Prime Minister Vladimir Putin verbally attacked Moscow-listed coal giant Meschel Co. twice and shaved about $6US-billion off its stock market value, Amsterdam said.

"Putin's attack drove the stock down, then another set of comments drove it down further, which is very important for foreign investors to understand. There is a confiscatory attitude, called corporate raiding, a willingness for the state to literally raid companies. Not only the state, but people who have connections to the state," he said.

In an interview yesterday, Amsterdam encouraged Ottawa to take a stand.

"I want to hear from Mr. [Frank] Stronach and all these people in Canada who have been waving the flag and saying that Russia's a safe place to invest. What we need to understand -- for Russia to take us seriously -- is we need to understand what our values are and insist that Russia abide by those. Values such as the rule of law," he said.

Of course, Russia has never adhered to the rule of law and has gone from monarchy to Communist dictatorship to the current plutocracy.

Even so, greedy corporations ignore the obvious and the fact that things are getting worse now that Putin and his team have dictatorial control over the country.

"My advice to businesses is that if you are there or want to be, you have to plan on expropriation, so you must structure a deal so that you have very little to lose. And if expropriation doesn't happen, you're happy. You cannot gamble because it's clear they [the Kremlin and their business friends] will change the deal on you the minute it interests them," he said.

"The problem is that Canadians in energy, mining or automotive sectors, which are considered strategic by the Kremlin, must be aware of the fact Igor Sechin, one of the top three or four people in Russia, has ordered that multinationals be subject to very strict tax enforcement," Amsterdam said.

This threat hangs over the heads of all businesses, including non-strategic sectors, he added.

Instead of avoiding Russia, many corporations are still enmeshed and are naively doing so thinking that moral suasion by their home governments can protect them.

"BP invests in Russia. Then step two, because BP knows there's no rule of law in Russia, lobbies the British government to go easy on Russia which is how BP thinks it can increase its political leverage in the Kremlin. Then BP invests more in Russia and instead of lobbying Russia to improve governance it lobbies its own government at home to be soft on Russia," he said.

"BP is the pillar of complicity, investing $1US-billion in the stolen assets of [Russia's] Rosneft and now look at what it has gotten then in Russia," he said.

Another case involves a British money manager, Bill Browder, who has been denied entry into Russia after he objected strenuously to Moscow's stock market shenanigans a couple of years ago, thus ruining values for his investors.

"His lawyer in Russia has been attacked by the state for representing him. I'm now representing Russian nationals who have had their assets taken in raids by members of the bureaucracy and have nowhere to turn because lawyers inside Russia are afraid to take their case. The secret police have now made it impossible."

Vremya Novostey, by Aleksey Grishin, 25 August 2008

A Siberian court rejected on Friday a request for parole from Yukos founder Mikhail Khodorkovsky, who is serving an eight-year prison term for fraud and tax evasion. Judge Igor Falileyev said: "The court ruled to deny the petition, and the decision can be appealed within 10 days in the Chita regional court."

Khodorkovsky, 45, the founder of what was once the country's largest oil company, was arrested in October 2003 and convicted in May 2005. Earlier this year new charges were filed against him, of laundering billions of dollars and stealing huge volumes of oil.

Explaining the refusal to grant parole, Falieyev said Khodorkovsky has refused to take part in a professional training program at the Krasnokamensk prison, and that he still faces punishment for breaking prison regulations.

Defense lawyer Vadim Klyuvgant called the grounds for refusal "quasi- legal." "The first reason is that Khodorkovsky failed to learn the profession of a sewing machine operator. And this despite his education, intellect, and managerial experience... The second reason is a reprimand issued on October 15, 2007, by the penal colony's administration for failing to comply with an order to put his hands behind his back." These decisions "have no relation to the law," Klyuvgant said.

The Yukos oil company formally ceased to exist in November 2007, after the company's assets were sold off through a series of liquidation auctions to meet vast creditor claims. State oil company Rosneft bought up the lion's share of the production assets, becoming Russia's largest oil producer.

Khodorkovsky, an outspoken critic of former president Vladimir Putin, has consistently denied all charges against him, saying he was punished for supporting the opposition, and that the liquidation of Yukos was engineered by corrupt government officials aiming to seize lucrative oil assets.

His parole request, filed on July 16, came after the election of President Dmitry Medvedev in March. The new pro-business leader had suggested that Khodorkovsky could eventually be pardoned, and has pledged major reforms to Russia's judiciary, aimed at creating an independent court system free of bribery and corruption.

As Khodorkovsky was escorted out of the court in handcuffs, he told reporters: "The judicial system won't be reformed any time soon." Khodorkovsky's chances of parole have been severely damaged by the latest charges, brought by prosecutors in June against him and his business partner Platon Lebedev, also serving an eight-year jail term for fraud and tax evasion, of laundering $28.3 billion and stealing oil between 1998 and 2004.

Chief defense lawyer Yury Shmidt told reporters that by law, a parole application can be resubmitted six months after a court's rejection, but that the new charges will be in force for one year, and the next appeal can only be filed after that. In a statement to the court published on Khodorkovsky's website, the former billionaire said: "I cannot repent crimes that did not exist. I cannot do this not only because of my belief in the unjustness of the verdict, but also because of my fear for the fate of many other people who have become hostages of the situation related to my conviction."

"As to the damages, it should be clarified that prior to my arrest Yukos was worth about 40 billion US dollars. Today, I no longer own anything. If somebody believes that some additional damages have been inflicted, after completion of the story with Yukos, they have been repaid with a vengeance."

Khodorkovsky told Russian business daily Vedomosti in an interview published on Friday that he has no intention of returning to the Russian oil industry and will not contest the rulings against Yukos.

The Daily Telegraph, by Adrian Blomfield, 23 August 2008

The Kremlin passed up the chance to calm investors unnerved by the war in Georgia yesterday when a Russian court refused to release Mikhail Khodorkovsky, the oligarch who fell foul of Vladimir Putin.

The decision to keep the tycoon behind bars suggested that in this matter, as in foreign policy, the Kremlin's hard-liners are very much in the ascendancy.

After the crisis in Georgia damaged the economy and sent share prices tumbling, speculation had mounted that the Kremlin would release Khodorkovsky in an attempt to show foreign investors that Russia was still a place where they could do business.

The Russian news agency Interfax even falsely reported that he had been granted parole, only to retract the report 30 minutes later. Analysts suggested that liberals in the government had advocated his release only to have the decision overturned.

Khodorkovsky was eligible for early release after serving more than half of his eight-year sentence for fraud and tax evasion, charges which critics say were politically motivated. But a court in the Siberian city of Chita, near the penal colony where the tycoon has been held, rejected parole on the grounds that Khodorkovsky had refused to participate in a sewing programme.

"Prisoner Khodorkovsky therefore does not deserve conditional early release,'' said judge Igor Faliliyev.

The Georgian conflict has dampened investor confidence already damaged by an apparently Kremlin-backed assault on BP's interests in Russia. In the first two working days of the war, more than pounds 3 billion left the country in foreign capital flight. Shares fell 10 per cent before rebounding on news of the ceasefire. They slid again as Russia reneged on several pledges to withdraw its troops from Georgia.

Russia's main share index is now close to 21-month lows after falling 32 per cent since an all-time high on May 21.

On Thursday, the Russian central bank disclosed that foreign currency reserves had suffered their second biggest weekly drop in a decade, falling by more than pounds 8 billion.

Some Western investment strategists in Moscow warned that the war in Georgia, and the growing estrangement between the Kremlin and the West, was jeopardising Mr Putin's hopes of turning Russia's economy into one of the world's biggest by 2020.

The Kremlin, however, seems unfazed. With even many Russian liberals supporting the war, the conviction in Moscow is that the country will only grow stronger and richer from a conflict that has shown their unassailable supremacy in the region.

"Russia has shown that it will not allow its tail to be twisted,'' said Yevgeny Yasin, a former economy minister who is known as a liberal reformer. "As far as business goes, we all know it is profitable to do business here and foreign businessmen will therefore agree to whatever terms they are given.''

Until his fall from grace in 2003, Khodorkovsky was Russia's richest man.

When Mr Putin became president in 2000, he told the tycoons, who made their fortunes from the acquisition of state energy and mineral assets at knock-down prices, that they could keep their money if they stayed out of politics and showed loyalty.

Khodorkovsky defied Mr Putin by funding the opposition and beginning talks to build an oil pipeline with a Western energy company, against Kremlin wishes.

The state's reaction was swift. He was jailed and his energy company, Yukos, was driven to bankruptcy.

Yet hopes for him were raised when Mr Putin, now the prime minister, shoehorned Dmitry Medvedev into the presidency in May.

Analysts said that releasing Khodorkovsky would indicate the new president was serious in his commitment to end "legal nihilism'' and show that he was able to make decisions without reference to Mr Putin.

But as he was handcuffed and dragged out of the court yesterday, Khodorkovsky told reporters that hopes for judicial reform under the new president had been premature and even naive. "This is something I have known for a long time,'' he said.

The Washington Post, by Philip P. Pan, 23 August 2008

A Russian court denied a parole appeal by jailed oil tycoon Mikhail Khodorkovsky on Friday, in a case that his lawyers have presented as a test of new Russian President Dmitry Medvedev's commitment to judicial reforms and the rule of law.

Khodorkovsky, 45, once chief executive of the Yukos oil company and the wealthiest man in Russia, was convicted of fraud and tax evasion in 2005 and is serving an eight-year prison term.

His arrest was seen by many as a move to punish a prominent Kremlin critic who was using his riches to help fund opposition political parties and independent journalism. It also resulted in the effective renationalization of one of the world's largest oil companies, allowing the Russian government to further consolidate control over the country's energy sector.

A judge in the remote Siberian city of Chita, where Khodorkovsky is serving his sentence, denied the oligarch's parole request by citing his refusal to take part in prison training in sewing and other alleged violations of prison rules, such as a failure to hold his hands behind his back during a jail walk, according to wire service reports.

Khodorkovsky appeared calm as the decision was read. "The judicial system won't be reformed anytime soon," he said as he was hustled out of the court by guards, the Associated Press reported.

Khodorkovsky's attorneys said prison authorities were ordered to fabricate charges and "invent" evidence that could be used to keep him in prison. One of his former cellmates has reported being blackmailed by prison guards into making a false allegation against Khodorkovsky.

Defense lawyers said the decision to deny the former billionaire parole demonstrated that the Russian judiciary remains plagued by corruption and political interference, despite Medvedev's promise upon taking office in May to "fight for a true respect of the law and overcome legal nihilism."

"This case represents an ongoing test," Robert Amsterdam, Khodorkovsky's lead international attorney, said by telephone. "President Medvedev has had the courage to denounce legal nihilism, but today we have another example of it. This issue will be revisited, and there will be other opportunities to fight it."

Khodorkovsky amassed a huge fortune buying state assets cheaply after the fall of the Soviet Union. He became a symbol of the excesses of the transition to capitalism.

Even if Khodorkovsky had been granted parole, he would not have been released, because prosecutors in June brought new charges of embezzlement and money laundering against him and his business partner, Platon Lebedev.