US embassy cables: Khodorkovsky ‘will not be free while Putin is in power’
Wednesday, 18 April 2007, 07:48
C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 001770
DOJ OF OPDAT/ALEXANDRE, LEHMANN AND NEWCOMBE, OCRS/OHR AND
SHASKY, OIA/BURKE AND DITTOE
STATE FOR EUR/RUS
EO 12958 DECL: 04/17/2017
TAGS ECON, KCRM, KJUS, PGOV, PREL, RS“>RS
SUBJECT: RUSSIA: MEETING WITH XXXXXXXXXXXX
REF: A. MOSCOW 774 B. MOSCOW 697
Classified By: Ambassador William J. Burns for reasons 1.5 (b, d)
1. (C) Summary: Emboffs met with XXXXXXXXXXXX. He described the new embezzlement and money laundering charges — that Khodorkovskiy engaged in transfer pricing that harmed unwitting minority shareholders in Yukos’ three production subsidiaries — as a re-packaging of the charges in the first case. He claimed the defense has substantial evidence these shareholders were fully informed of these activities. Further, XXXXXXXXXXXX maintained that the charges are without legal or factual support and questioned the prosecution’s claim that the loss to the subsidiaries was USD 30 billion, a figure he said was about equal to the value of the oil produced by the three units during the period in question. XXXXXXXXXXXX said he was surprised that a Moscow court had agreed to change the venue of the trial from Chita to Moscow. He described two cases pending before the European Court of Human Rights (ECHR). The first case claims that Khodorkovskiy was arrested and held in pre-trial detention in violation of the European Convention on Human Rights (the Convention), while the second alleges violations of Khodorkovskiy’s right to a fair trial. XXXXXXXXXXXX maintained that the case against XXXXXXXXXXXX is politically motivated and being run out of the Kremlin, and does not foresee any change of status for Khodorkovskiy while the Putin Administration remains in office. End Summary.
The New Charges
2. (C) On February 16, the General Procuracy charged Khodorkovskiy and Platon Lebedev with embezzlement and money laundering (Ref B). According to the indictment, Khodorkovskiy and Lebedev acquired controlling interests in three oil companies (Samaraneftegaz, Yuganskneftegaz, and Tomskneftegaz) and then caused these companies to sell oil at below-market prices to other companies that they controlled without disclosing to other shareholders their role in these transactions. They then allegedly re-sold the oil at market prices, which were approximately 3-4 times greater than the original purchase price. The alleged victims were the other shareholders of Samaraneftegaz, Yuganskneftegaz, and Tomskneftegaz, who were entitled to the benefit of an arms-length sale at market prices, but instead received only the artificially deflated prices allegedly set by Khodorkovskiy and Lebedev (Ref B).