Kremlin declares oligarchs fair game

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The Independent Online

The most important court case in Russia since the fall of Communism will resume on Wednesday when Mikhail Khodorkovsky, the country's richest man, reoccupies the defendant's cage and hears prosecutors begin reading out an indictment that runs to 800 pages.

The most important court case in Russia since the fall of Communism will resume on Wednesday when Mikhail Khodorkovsky, the country's richest man, reoccupies the defendant's cage and hears prosecutors begin reading out an indictment that runs to 800 pages.

The case is the first of the Putin-era "show trials", according to Mr Khodorkovsky's advocates, designed to punish him for his anti-Kremlin politicking. Not so, says the government: rather, it is part of its efforts to clean up Russian business, reclaim some of the national assets plundered by the oligarchs, and force them to pay their tax dues.

The Kremlin has already hinted that the Khodorkovsky trial is something of a test case and that prosecution of other oligarchs may follow. If so, this is bad news for Russia's super-rich because, according to one Moscow-based analyst who declined to be named: "All of the oligarchs are creatures of the Yeltsin era. They have got where they are because they knew who to talk to and who to bribe. In the mid-1990s it was almost impossible not to be a criminal to be successful. If Khodorkovsky is guilty then so are all the others. He's just richer and stole bigger assets."

The trial will go some way to revealing exactly how the bespectacled billionaire, who started off his career running a student café, was able to amass a fortune which is today estimated at $15bn (£8bn). The picture of Mr Khodorkovsky, 40, that is likely to emerge is one that will disgust the majority of ordinary Russians who saw their living standards collapse at the very time when he was exploiting the self-same chaos to become the country's wealthiest citizen and head its largest private oil firm, Yukos.

Many of the charges are also being levelled at Platon Lebedev, a key business associate, who is being tried alongside Mr Khodorkovsky. Prosecutors allege that both men were part of "an organised criminal enterprise" that systematically defrauded and stole from the state during the 1990s' loans-for-shares privatisation boom.

They are particularly concerned with the purchase of a 20 per cent stake in Russia's biggest fertiliser producer, Apatit, in 1994 by Mr Khodorkovsky and his associates. They claim that the auction was rigged and that all of the bidding firms were dummies representing his interests.

As a result, prosecutors allege, the stake was snapped up for just $225,000. The successful bidder was contractually obliged to invest $283m in the company "within a year" but that money never materialised. That, say prosecutors, amounts to embezzlement. Both men deny all charges.

Then there is the question of taxes. The authorities say that Mr Khodorkovsky is guilty of corporate and personal tax evasion to the tune of $1bn, masterminded through a complex network of shell companies, offshore firms and consultancy agreements. Again he denies he did anything illegal.

Mr Khodorkovsky's business tactics have always been controversial. Many Russians believe his purchase of a controlling stake in Yukos in 1995 was daylight robbery. He and his associates were somehow able to buy a majority stake for the knockdown price of $350m; two years later it was valued at $9bn.

When the bank he founded, Menatep, went bust in 1998, a court-appointed manager was unable to get a complete picture of its finances, in part because a lorry-load of the bank's records "accidentally" fell into the Moscow river.

As an indication of the murky world that he used to inhabit, a former head of security at Yukos, Alexei Pichugin, is also due to stand trial this year - for murder.

He is accused of killing a family in 2002 to cover up a scam and of attempting to murder Olga Kostina, a former senior adviser to Mr Khodorkovsky, and a former Menatep employee. Mr Pichugin protests his innocence, and there is no suggestion that Mr Khodorkovsky was involved.

But, says the Moscow analyst: "It was a cut-and-thrust world. There were bomb blasts, drive-by-shootings and dead bodies used to turn up all over the place."

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