Jailed Tycoon Resigns From Oil Giant

Times Staff Writer

Jailed Russian billionaire Mikhail Khodorkovsky stepped down Monday from the helm of Yukos Oil Co., saying he wanted to protect his firm from a possible political showdown with the Kremlin.

“As a manager, I have to do all I can to pull our workforce safely out from under the blows that are being directed at me and my partners,” Khodorkovsky said in a statement from a Moscow prison, where he has been held for more than a week on tax evasion, fraud and forgery charges. Khodorkovsky added that he intends to keep working through his philanthropic organization “to build an open and truly democratic society in Russia.”

It was not clear what effect Khodorkovsky’s resignation would have on prosecutors’ case against him or their decision to freeze more than 40% of the company’s stock. Sources close to the 40-year-old entrepreneur left open the possibility of his returning to Yukos in the future and characterized the resignation as a tactical move.

“He’s not finished with Yukos,” one source said. “This is about tactics. He’s creating formal room between himself and Yukos in a way that will make optimal use of all the resources at his disposal, including political means that could not have been used” while he ran Yukos.


Khodorkovsky’s allies allege that the case against him is being pushed by ex-KGB officers in the Kremlin who are close to President Vladimir V. Putin. The Kremlin faction’s motive, allegedly, is retaliation for Khodorkovsky’s funding of liberal opposition parties ahead of Dec. 7 parliamentary elections. The government maintains that it is simply trying to enforce Russian law in connection with Khodorkovsky’s corporate activities.

Political analysts say Khodorkovsky -- whose fortune, estimated at $8 billion earlier this year, makes him Russia’s richest man -- may be contemplating a presidential bid in 2004 or 2008. He has often been mentioned as a possible candidate.

Even if he did not run himself, Khodorkovsky would be free to launch political attacks and offer substantial financial support to Putin’s rivals without risking consequences for Yukos now that he has resigned as chairman of its Executive Committee.

“You will over time see increasing speculation as to Khodorkovsky being a contender, in various forms, in 2004 and 2008,” said a source close to the billionaire’s camp. His resignation, the source added, seems to send the message that “he has defined the conflict as a political one, and he wants to respond in kind.”


There has been little sympathy among the Russian public for the plight of well-known “oligarchs” such as Khodorkovsky who in the 1990s took title to public assets worth billions of dollars though privatization deals, often by questionable means, while millions of Russians have been left in poverty.

But a poll of Moscow residents last week found that while 25% greeted Khodorkovsky’s arrest with satisfaction or even “joy,” 37% reacted with perplexity, anxiety or indignation. In a separate poll, Putin’s approval rating remained high, at 73%.

“The authorities are turning Khodorkovsky into the most dangerous political opponent to President Putin with their own hands,” said Yulia Latynina, political analyst with the Echo of Moscow radio station.

“Now that he is in prison, Khodorkovsky has got much better chances of winning [any upcoming election] than what he had prior to his imprisonment,” she said. “Up until he was put in prison, he had not been a political figure in Russia at all. He was just an oligarch that the Russian people hated. Today, he already is a political heavyweight.”


Over the weekend, the government was engaged in damage control in regard to the Khodorkovsky case, with Putin’s new chief of staff, Dmitry Medvedev, questioning the legality of the prosecutor-general’s move to freeze Yukos shares to prevent their transfer.

Finance Minister Alexei Kudrin, in an interview published Monday in Kommersant, said the action was an attempt to restore law and order and would ultimately benefit the economy.

Russian share prices, ravaged last week, climbed Monday. Yukos shares rose 12%, to $12.65. Analysts said Khodorkovsky’s resignation would make the day-to-day management of the company easier but in the end could leave Yukos vulnerable.

“It was the right move, for there is no way a person can remain the head of a company and manage its business out of a prison cell,” said Mikhail G. Delyagin, chairman of the Institute for Globalization Problems, a Moscow think tank. Now that control over Yukos is out of Khodorkovsky’s hands, he said, “Yukos opponents can simply begin to meticulously and systematically attack Yukos assets with all means available and wait for the company to collapse.”


Yukos executives scheduled a meeting today to announce a new leader. Reuters reported it would probably be current board Chairman Simon Kukes, former chief executive of Tyumen Oil Co., Russia’s third-largest oil firm. Kukes worked as a technical director for Phillips Petroleum and Amoco in the United States and Russia in the 1980s and played an active role in Tyumen’s merger with British Petroleum this year.

In his statement, Khodorkovsky said he would continue as chairman of the board of his philanthropic organization, Open Russia. “Wherever I may work,” he said, “I will do my all for my country, Russia, in the great future of which I firmly believe.”

Alexei V. Kuznetsov of The Times’ Moscow Bureau contributed to this report.




Ups and downs of an entrepreneur

* Bargain buy: Mikhail Khodorkovsky obtained the Yukos Oil Co. in 1995 at the rock-bottom price of $350 million and is thought to control 44% of the company’s shares. His fortune was estimated at $8 billion earlier this year, and he was reported to be in talks about selling a stake in Yukos to Exxon Mobil or ChevronTexaco.

* Multiple charges: Khodorkovsky, 40, was arrested at gunpoint on his plane in Siberia. He faces charges of tax evasion, forgery and fraud against the state amounting to about $1 billion.


* Political aspirations? Khodorkovsky left the Communist Youth League and set up a banking business at the end of the Soviet era. Political analysts say the entrepreneur, who is married with four children, may be weighing a presidential bid in 2004 or 2008. He has often been mentioned as a possible candidate.

Sources: BBC, Los Angeles Times

Los Angeles Times