Russia seeks 14-year sentence for Khodorkovsky

Russian prosecutors said Friday they would seek a 14-year prison sentence for onetime oil tycoon Mikhail Khodorkovsky, who is on trial for embezzlement and money laundering while already in his seventh year of incarceration on a tax evasion conviction, all charges he has vehemently denied.

Khodorkovsky, once the head of Yukos Oil and the richest man in Russia, is widely seen as the nation’s leading political prisoner and a personal foe of Prime Minister Vladimir Putin. The current trial is seen by some observers as a referendum on whether Russia has changed since Putin was succeeded as president by Dmitry Medvedev, a lawyer who has complained about judicial corruption and manipulation, which he described as “legal nihilism.”

In the current trial, the prosecution has accused Khodorkovsky and his partner, Platon Lebedev, of embezzling more than $27.5-billion of oil from three production companies they controlled.

According to the prosecution, the pair set up front companies in rural Russian tax havens that bought the oil from the production companies at significantly reduced prices and then channeled the oil to refineries in Russia and foreign offshore companies that sold it at twice the purchase price or more.

“All the profits would accumulate in foreign offshore companies that became profit centers as the production companies in Russia accumulated losses,” prosecutor Valery Lakhtin read in court. “Thus the rights of their shareholders and the rights of the state were violated as the taxes and dividends wouldn’t come forth.”

The defense has said the allegations are absurd and the legal action a form of selective punishment on political grounds.

In the silence after the prosecution ended its presentation, Khodorkovsky, dressed in a black tweed jacket and a black shirt, his face pale, appeared to take it stoically.

“It is normal,” he said, a smile on his lips, his eyes pensive and sad, as he was led out of the courtroom, chained to the wrist of his guard.

“We didn’t expect anything good from the prosecution, but what they ask for is way beyond any reason,” his lawyer, Natalya Terekhova, said in an interview with The Times.

The defense argued that the prices were within accepted norms, and Yukos, as a vertically integrated company, created such transfer mechanisms legally.

“The position of the prosecutors is also self-contradictory,” Karina Moskalenko, another Khodorkovsky lawyer, told The Times. “Khodorkovsky is now serving a sentence for tax evasion, and if they are asserting that he stole all the oil his company produced, what did he go to prison for the first time if there was nothing to be taxed?”

Khodorkovsky and Lebedev have served most of their eight-year sentences on charges of fraud and tax evasion. Khodorkovsky was arrested in 2003, convicted in 2005 and sent off to a labor colony in far eastern Siberia. He was shipped back to the Matrosskaya Tishina prison in Moscow for this trial.

In the meantime, Yukos, which had an estimated value of $40 billion in 2003, went bankrupt and was sold to a front company that soon handed it to the state-controlled Rosneft company headed by a friend and close ally of Putin.

Then president, Putin launched the prosecution of Khodorkovsky after the stubborn oligarch, who supported opposition parties and funded human rights institutions, fell out of favor with the Kremlin, said Dmitry Oreshkin, an independent political analyst.

According to the Levada polling center, a recent survey showed that only 13% of Russians believe Khodorkovsky is guilty of the current charges, down from 29% in February.

The prosecutors implied that their 14-year-sentence target includes time Khodorkovsky has served awaiting his second trial, so that as a maximum, he would remain behind bars one more year for the initial conviction and 10 more years if found guilty of the new charges.

sergei.loiko@latimes.com