Embezzlement Trial Reveals Cracks in Russian Leadership

Tuesday, December 28, 2010

Supporters of Yukos oil company chief executive officer Mikhail Khodorkovsky hold his portraits and posters outside a Moscow court, on December 27, 2010. (Alexey SAZONOV/AFP/Getty)

Russia’s closely watched trial of former oil tycoon Mikhail Khodorkovsky revealed a lot more than just the business dealings of one of the country’s most powerful and prosperous men. For many Russians, the court's ruling exposed a crack in the political unity that keeps Prime Minister Vladimir Putin and President Dmitry Medvedev comfortably in power. Is Russia's rule of law suffering manipulation by executive power?  

Khodorkovsky, the former head of Russia’s Yukos oil company, was found guilty of money laundering and of stealing about 25 billion dollars of oil revenue in the years after the breakup of the Soviet Union. Vladimir Putin has gone on record as saying that the man “should sit in a jail” for the severity of his crimes.  Khodorkosky’s supporters argue that the he is only guilty of angering Putin, and that the trial is politically motivated.  We discuss the details and what this trial portends for the future of Russia’s political playing field with New York Times Moscow Bureau Chief Clifford Levy.


Clifford J. Levy

Produced by:

Hsi-Chang Lin

Comments [2]

Evgeny Borsuk USA

If the long arm of justice in Russia were blind, it would not selectively prosecute those that disagree with their government, but rather would prosecute all criminals equally. Berezovsky and Khodorkovsky are victims of Putin's selective prosecution and if Russia wants to appear to honor the rule of law, they would also consider prosecuting the likes of Roman Abramovich for all of his offshore British Virgin Island money laundering schemes. Putin is keenly aware of Abramovich's tax avoidance operations and in fact understands that these offshore management companies were nothing more than fronts for violating Russia's foreign currency reserve restrictions. These violations of law could easily cause him and his cohorts to be prosecuted, however, given that Abramovich is Putin's bag man, it will probably take a regime change before he is prosecuted in that country for those known crimes. Perhaps that's why companies controlled by Abramovich will continue to win staged bid auctions as well as receive huge government contracts and loans as that continues to be a fantastic way for Putin's regime to concentrate the wealth of a nation into the hands of just a select few.

Dec. 30 2010 02:07 PM
Nikos Retsos from Chicago, Illinois

Mikhail Khodorkovsky 2nd trail is about the "Revenge of the Nerds," aka the average Russian - but in slow motion. When the Soviet Union collapsed, he, Boris Berezovsky, and other thieves of the Russian political elite grabbed the industries, factories, and assets of the Soviet state for pennies, and became the new czars of the Russian Federation. They became instant billionaires, and using their clout and bribes didn't bother to pay even state taxes, while the ordinary Russians were left in poverty but still had to pay taxes through the nose because they couldn't bribe their way out of them. As a result, Russian soldiers were not paid for months, and they had to collect cabbage in private farms to buy their necessities, while Russian miners went on prolonged strike after failure of the state to pay their salaries for 9 months! The Russian Federation Treasury was just empty.

Why was the state treasury empty? Because the new Russian billionaires - called oligarchs, didn't pay any taxes! They flashed their wealth, but at tax time they gave the state IOU's for their tax bill - which is typically a "promissory note," but the state could not pay pensions, the army, the miners, etc., with promissory notes. On his tax evasion trial, Khodorkovski admitted that he gave the state "IOU's for his tax bill -because "that what the other oligarchs were doing too!" Boris Berezovsky escaped to Great Britain which refused to extradite him, but there is still an arrest warrant over his head.

The theft and looting of the Russian assets by oligarchs enraged ordination Russians - especially pensioners, miners and others who watched the flashing of wealth by the new oligarchs, while they went through long misery, some became homeless, while the Russian oligarchs had a golden age. Those disgusted Russians voted for the tough Vladimir Putin overwhelmingly, and made him the new czar of their revenge. Putin gave them the revenge they wanted, and in return he became their man that deserves to be in the Kremlin. Is Putin whacking at Khodorkovsky to perpetuate himself in power? Absolutely! Russians traditionally liked tough leaders, that is why there is a re-surged admiration for Joseph Stalin. And Vladimir Putin is riding that resurgence wave with toughness to spare.

What about the freedom of the Russian judiciary then? Well, the Russian judiciary has always been affected by either bribes or political clout. Russian had a taste of a corrupt judiciary under Boris Yeltsin, and with their votes decided that a judiciary under political clout is better for their welfare - and bad for the oligarchs! Nikos Retsos, retired professor

Dec. 28 2010 11:35 AM

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