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RIA Novosti
April 28, 2005
YUKOS SAGA: CULMINATION POSTPONED

MOSCOW. (RIA Novosti political commentator Yury Filippov) - Many people in Russia had waited for this day. Hundreds of papers, television companies and radio stations were waiting for the verdict in the trial of ex-Yukos head Mikhail Khodorkovsky.

Businessmen and politicians had prepared several commentaries they could choose from, depending on which turn the events would take.

But their preparations were in vain. It was announced at the last possible moment that the verdict for Khodorkovsky and his business associate Platon Lebedev had been postponed from April 27 to May 16, officially because the judge had fallen ill. Few people in Russia believed the explanation, given that the Yukos case is too big to be postponed because someone has a running nose.

Two years ago, Yukos, one of the largest oil companies in Russia, found itself in the center of an investigation, as law enforcers came to the conclusion that the central figures in what became known as the "Yukos case" had inflicted $1 billion in damages on the state.

Yukos had been viewed as the most open and transparent Russian company, a showcase of Russian business in the West. And its leading shareholder, Mikhail Khodorkovsky, was not only the richest man in Russia but also a sponsor of all of the main opposition parties, right and left.

The prosecutors charged him with creating a criminal group that used fraudulent schemes to take control of state enterprises at the beginning of the privatization drive, later concealed its earnings and failed to pay billions of dollars in taxes. According to the investigators, another major shareholder, Leonid Nevzlin (who is now in Israel), was responsible for organizing contract killings and attempts on people's lives.

Khodorkovsky did not admit his guilt, saying that Yukos acted strictly in accordance with the law and his company was not to blame if the law allowed it to use tax optimization schemes.

The Yukos case is seen as indicative in many ways in Russia. Khodorkovsky was the typical product of a period of chaos and vast possibilities, someone who found his bearings in that situation. Many other groups - nearly the entire business elite and other people - acted in the same way in the 1990s. But, unlike Khodorkovsky and Lebedev, they are not the accused in a trial that has drawn a symbolic line under the "uncivilized" period of privatization and business in Russia.

At the same time, time seems to favor Khodorkovsky. The statute of limitations on void deals, according to which a considerable part of state enterprises was privatized, recently expired. As a result, charges against the two men regarding the privatization of a company, Apatit, in the 1990s were dropped. Some time later, President Vladimir Putin suggested reducing the limitations to three years, which means that all the privatization-related charges in the Yukos case will be dropped.

Putin made several more statements in his April address to the Federal Assembly, which observers linked to the Yukos saga. The president said the state should find ways for back taxes to be repaid that would ensure its interests without "undermining the economy and driving business into a corner."

He also said, "The tax agencies do not have the right to 'terrorize' business by returning to the same problems again and again."

Since charges of tax evasion was the second major component of the Yukos case, some observers concluded that the showcase verdict against the major tax evaders, Khodorkovsky and Lebedev, may be not as harsh as the ten year sin prison that the state prosecutor initially sought.

Alexander Shokhin, chairman of the coordinating council of the business unions of Russia, thinks that the verdict should be acceptable to both the state and the liberals.

Is such a compromise possible? After Khodorkovsky lost the main assets of Yukos, which were sold to repay debts, he has become a symbolic figure for Russia. He no longer owns a major oil company but he still has an image that does not leave millions of people in Russia indifferent. Some see him as a hero, a creator of modern Russia, and an upright man of great culture and ethics. Others say that he is simply a lucky thief who was made a scapegoat for the sins of business in the 1990s before those who did not gain from the first stage of liberal reforms.

On May 16, the judge of the Meshchansky court of Moscow will have to make a difficult decision. Let us hope she feels better by that time.