The rise and fall of Mikhail Khodorkovsky
A good read with all the qualities of a well-written political thriller. By Dixie Eriksson
ebruary 19, 2003. A resounding and ominous clash took place in the Kremlin, between two of Russia’s most powerful men – Vladimir Putin, the Russian president, and Mikhail Khodorkovsky, the richest man in Russia. The setting was innocent enough. Putin had invited leading Russian businessmen to discuss the subject of corruption with him and his senior officials. It was the first of a series of public meetings set up to give people the impression that both the host and his prominent guests were concerned about corruption and bad business ethics. Of course it was shown on national television and reported in the national press. Standard procedure to publicise political stunts without committing oneself to anything concrete. A charade parading platitudes seemingly off-the-cuff. Those taking part as well as those watching knew that. British journalist, writer, and broadcaster Martin Sixsmith sets this key scene, and spells out the detailed background and the significance of the clash in a Russian context in his brilliant new book Putin’s oil: The Yukos affair and the struggle for Russia. It is a good read with all the qualities of a well-written political thriller. That is a bonus, however, for the real treat Sixsmith’s book offers is the way he untangles the Yukos affair involving very complex and covert moves, Russian and international politics, hosts of crucial players, victims, subsidiaries, holding companies, and alleged murders. Sixsmith is well-versed in contemporary Russian history, politics, and culture from first-hand experience as a student, a journalist, and a regular visitor for three decades. He is the ideal guide with a lot of contacts, informal and formal. He really goes out of his way to


turn every stone to throw light upon this ongoing and enigmatic duel between two gifted men. Both of whom, in the final analysis, may be losers. Sixsmith also retells the story of the birth of the oligarchs in the turbulent days of Yeltsin’s Russia, when the frail young democracy and the economy headed towards bankruptcy more than once. Bewildering times of rampant corruption. The daring, the ruthless, and the business-minded were there to get their pick when the stagnant communist command economy was to be dismounted and transformed almost overnight into a liberal market economy. An operation impossible led by the stumbling president, Boris Yeltsin, egged on by economists and experts from abroad. It was a transition without precedence in scale and complexity, difficult in the best of days, and with the best of intentions. It is now obvious that the hasty privatisation was a deeply flawed process beyond control and leaving a bitter after-taste and sullying the oligarchs’ reputation. The majority of them being Jewish activated anti-Semitic prejudices, never in short supply in Russia. In those days, Khodorskovsy was a ruthless operator, always on the lookout for a quick profit. Through political wheeling and dealing with Yeltsin, he managed to lay his hand on a strategic asset like Yukos oil, and set to become the richest man in Russia. Putin’s oil is an intensely contemporary and vivid book. King Oil is a cash cow with political clout, and in the news all the time. Mikhail Khodorkovsky has, according to French newspaper Le Figaro, recently begun a new hunger strike in gaol and tries to play Medvedev, the current president, against Putin – to no avail so far.

Back to February 19, 2003. As Putin declared war on corruption, the businessmen around the table praised the president in rotund and empty phrases for his initiative. Small wonder really. All the oligarchs present had taken advantage of corrupt practices like greenmailing, and corrupt civil servants and politicians, when they started hoarding their large fortunes in the dying days of the Soviet empire. Nothing of substance was expected and nothing was delivered at the Kremlin meeting. But when it was Mikail Khodorkovsky’s turn to speak it was obvious that he would not play according to the rules. He was loaded with slides presenting actual statistics on corruption challenging the official version of the story, unwanted and far too revealing. His fervour for liberalism, for honesty and transparency in business was obvious. Even though he as usual was shy and ill at ease in formal public situations. The president’s scrutinising cold eyes and expressionless poker face did not help much either. Still a KGB-man to his very fingertips. Khodorkovsky had spent the preceding three years working like a madman to turn Yukos into an open western-style operation to attract western investors. He had also acquired the oil company Sibneft, owned by fellow oligarch Roman Abramovich. At the same time, he was plotting to open an oil-pipeline to China. He was number one in oil in Russia, but his ambition was to become number one in the world. According to Sixsmith, Khodorkovsky had undergone a conversion removing himself from his earlier ruthless robber baron days and ways. The first oligarch to engage in philanthropy in grand style, through his Open Russia Foundation. President Putin did not like anything of



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that. Khodorkovsky and Yukos sat on large Russian oil reserves stolen from mother Russia, according to Putin. Transparency and western control of Russian oil are not his cup of tea. Furthermore, he did not like what he heard from his informers, that Khodordovsky had tried to buy political muscle in the parliament, the Duma, through bribery and party financing. The odious oligarch had also hinted at going into politics. Despite the fact that Putin had made it very clear, when taking office in 2000, that the oligarchs would be left in peace as long as they did not meddle with politics and did not challenge or criticise the president. It is important to remember that Putin had promised to destroy the oligarchs as a class, echoing Stalin’s promise to destroy the rich peasants, the kulaks, as a class. Sinister words with high public resonance. However, Khodordovsky went on bravely and did not stop until he had accused the president of Russia of personal involvement in corruption, in connection with a business deal involving the state oil company Rosneft. Then and there, Khodorkovsky’s and Yukos’ fate was probably sealed. At least that is Sixsmith’s opinion, “It was a brave or a very foolish move, and it was to have farreaching consequences.” The reader immediately learns what happened because Sixsmith starts his tale with Khodorkovsky’s arrest in October 2003. Then moves back in time to describe, in minute detail, how the authorities clamped down on Yukos and its management almost immediately after the showdown in February. Probably the so called Siloviki clique – the cronies from KGB and its successor organisation the FSB, whom Putin had recruited into Kremlin – tried to scare Khodorkovsky to go into exile, leaving Yukos up for grabs for the state. These hard-liners come out in Sixsmith’s portraiture as patriotic and by all signs a greedy lot who want to humiliate and get rid of all the liberals from positions of power in Russia. They also feel that Russian oil should be re-nationalised. They believe that the black gold would give Russia political clout, and this has come true. But Khodorkovsky decided to stay on and fight for justice with disastrous results not only for him, his family and

Yukos, but also for some of his employees. He is still in gaol. The surrounding world could only watch Russian justice at its worst playing a cat-and-mouse game with the defendant and Yukos. An act of hubris, or did he believe that his money and his western contacts in high places made him less vulnerable? Or, did he believe in Russian justice? Khodorskovsky has been accused of and sentenced harshly for tax evasion, fraud and other crimes. But it is painfully obvious that the trials are political, in that Khodorkovsky has been singled out among the oligarchs as a scapegoat. It is also very clear that the judicial system is a sham. Even Khodorkovsky’s lawyers have been brutally harassed. In fact, the modern Russian justice system have so much in common with the communist show trials of the thirties. Trials seem to be looked upon as hermeneutic circles where the guilt is already established beyond doubt. The court proceedings are for public consumption, a warning, and an opportunity for the autocrats in power to humiliate the accused, who are always supposed to plead guilty and beg for mercy. The tax liabilities of Yukos were clearly blown out of proportion and the alleged crimes belonged to the distant past, well past the statue of limitations. As in most show trials. Khodorkovsky and his colleague Lebedev and the management of the company were defined as an organised

criminal group. In the second trial, the accusations reached the Kafkaesque quality of trials in any totalitarian state. Khodorkovsky and his gang were accused of stealing all oil produced and all proceeds earned by Yukos. The Russia of the Silovikis is a strange sort of democracy which is slowly withering, as important institutions like a free press become more and more statecontrolled. The Yukos affair is, according to Sixsmith, a very Russian conflict. On one level, a fight between liberals with western ideals and the patriotic-conservativeautocratic forces who want to restore Russia’s greatness. Going further back in Russian history one can find the same antagonism dressed in slightly different costumes between those who want Russia to link up with Europe and those who claim that mother Russia’s true and sacred destiny is to be found elsewhere in spiritual and moral terms. Westernisers vs. Slavophiles, as Sixsmith puts it. Khodorkovsky has undergone yet another conversion in his prison cell. Sixsmith describes him as an archetypal Russian figure of the intelligentsia, the wronged prophet echoing themes from Tolstoy and other Russian classics in his writing. Deprived of his worldly possessions and status he has found religion in the Russian Orthodox Christianity. His arch-enemy Putin is ironically also a member of the same church. Khodorkovsky is a psychological enigma. Sixsmith delves into his selfdestructive behaviour. It is very difficult to fully understand how this coolheaded man with a sharp and analytical intellect could take on and challenge Putin in such a naive way. The cost has been excruciatingly high for him and his family, not to mention those working for him, some of whom are virtually destroyed. What happens next with him is impossible to predict. Putin is still in power with a tarnished reputation as a democrat but more powerful than ever thanks to Yukos Oil. �

Putin’s oil The Yukos affair and the struggle for Russia By Martin Sixsmith Continuum, 2010

Dixie Eriksson

is Editorial Adviser,

Independent World Report.

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