JUSTICE UNDER PRESSURE ― THE KHODORKOVSKY-LEBEDEV APPEAL MAY 2011 EXECUTIVE SUMMARY ― Prepared by Defense Counsel of Mikhail

B. Khodorkovsky & Platon L. Lebedev

At the end of Russia’s second criminal trial against Mikhail B. Khodorkovsky and Platon L. Lebedev, on December 27, 2010 the two men were declared guilty of embezzling and laundering the proceeds of all oil produced by Yukos subsidiaries over a six-year period.1 The Khamovnichesky Court found the defendants guilty of having embezzled significantly more oil than prosecutors had alleged or even attempted to prove. Lead defense lawyer Vadim V. Klyuvgant called the trial “a charade of justice”. On December 30, 2010, with less than a year remaining before completion of their existing 8-year prison terms, Khodorkovsky and Lebedev were sentenced to an overall total of 14 years in captivity, meaning that counting time already served they are now expected to remain in jail at least until 2017. The defense initiated appeal procedures on December 31, 2010.2 The appeal is scheduled to be heard by the Moscow City Court on May 17, 2011. ―

The appeal sets forth irrefutable grounds for reversal of the lower court’s verdict and for termination of the case. The core argument to set aside the contested verdict is that it does not identify any acts by the appellants that constitute criminal conduct. On this basis alone, the only outcome of the appeal if it is to be decided solely on an independent application of the law to the facts would be acquittals for Khodorkovsky and Lebedev in the second case against them, clearing the way for their scheduled release in 2011. Although the trial court’s failure to identify acts constituting embezzlement or laundering is a sufficient basis to reverse the verdict and to terminate the case, the appellants supplemented their appeal with clear examples of prejudicial due process violations. The trial court committed numerous fundamental and irreparable violations of Russian criminal and procedural law, culminating in a defective, unjust and unlawful verdict. The appellants further note that the verdict contradicts rulings in prior Yukos cases in Russian courts as well as the Russian Federation’s defense at the European Court of Human Rights. The defense is not expecting a fair ruling from the Moscow City Court. Indeed, after the issuance of the December verdict, two now-former Khamovnichesky Court employees stirred enormous public controversy in asserting that the higher-level Moscow City Court had been
The Khodorkovsky-Lebedev defense team has released an executive summary providing an analysis of the Khamovnichesky Court’s 689-page verdict, available at: http://khodorkovskycenter.com/sites/khodorkovskycenter.com/files/MBK_PLL_verdict_summary.pdf. 2 English translations of the appeal filings are available at http://khodorkovskycenter.com/. The Russian originals are available at http://www.khodorkovsky.ru/.
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directing the trial judge’s handling of the case all along. One whistleblower stated that in fact judges of the Moscow City Court—the same court now set to hear the appeal—wrote the verdict. A second whistleblower stated that the trial judge frequently met with members of the Moscow City Court, and the judge acknowledged not being the ultimate decision-maker. The main goal of the appeal is to expose the lawlessness of this case and to reveal the disregard for the rule of law in Russia in this case and thousands of others. The appeal also will exhaust options for legal redress within Russia, opening the road for Khodorkovsky and Lebedev to appeal to the European Court of Human Rights (ECHR). Below is a summary of the principal bases for the Khodorkovsky-Lebedev appeal.

The Verdict is an Attempt to Deceive that Does Not Identify Acts Giving Rise to Criminal Liability

The verdict seeks to substitute sheer volume for legitimate substance and create confusion with misapplied or fabricated legal terminology intended to conceal massive judicial deceit: nowhere in the 689-page verdict are acts identified that constitute elements of a crime. The court failed to show any wrongful taking possession of property; no transactions for the sale of oil were found invalid; and the case file itself refuted any allegation that such transactions were not willfully and lawfully executed and consistent with the business interests of a vertically-integrated oil company. What the verdict intentionally mischaracterizes as criminal deeds are in fact descriptions of regular, lawful business activities of a vertically-integrated oil company. To create an illusion of criminality, the verdict relies upon patent falsehoods and ignorant, nonsensical, absurd and mutually exclusive assertions and conclusions that contradict the law, economics and common sense. The verdict fails to demonstrate that there was a lack of exchange for value, or that damage was caused to any victim, in the Yukos oil sales transactions; on the contrary, the verdict contains data revealing that the allegedly injured parties—Yukos production subsidiaries—in fact received payments and profits from the sales, with no evidence of any oil going missing. To substantiate its erroneous calculations of harm inflicted, the verdict ascribes Rotterdam oil pricing to domestic transactions; this ignores transport costs, customs duties and other expenditures creating a large difference between domestic and international oil prices; the verdict simply ignores these realities and asserts the fallacy that the much higher Rotterdam pricing was applicable domestically. In the trial’s closing arguments the prosecution, citing arithmetic errors and lack of evidence, had suddenly reduced the volume of oil allegedly embezzled by approximately one third, to 219 million metric tons valued at approximately $13.4 billion; the judge nevertheless convicted the defendants of embezzling the volume of oil originally alleged in the indictment: 350 million metric tons worth over $25.4 billion—irrespective of the arithmetic errors and lack of evidence that even the prosecution conceded.

Fundamental and Irreparable Due Process Violations Render the Verdict Defective, Unjust and Unlawful3

The appeal court is asked by the defense to consider due process issues only if the court disagrees with the central, determinative argument of the appeal: that the verdict fails to identify acts by Khodorkovsky and Lebedev that constitute elements of a crime. The verdict was issued on the basis of an investigation, indictment and case file that failed to comply with Russian and international norms; in the pretrial investigatory phase, the defense catalogued a series of severe abuses of the Russian criminal justice system, and asserted that these abuses were so numerous as to be irremediable; facing charges that were both factually and legally untenable, in March 2009 the defendants petitioned to terminate the proceedings, but the court summarily rejected the petition, making no effort then or thereafter to cure the violations and allowing the case to proceed despite an investigation, indictment and case file marred by illegalities. The court deprived the defendants of explanations of the allegations against them, including explanations of the circumstances to be proven and of the scope of the proceedings; specific and concrete questions from the defendants were never addressed; the court thereby frustrated their ability to defend themselves effectively. The presumption of innocence was ignored by prosecutors, who, without censure by the court and even though they failed to discharge their burden of proof or await the ruling, repeatedly declared Khodorkovsky and Lebedev to be guilty of the alleged criminal acts. Furthermore, on December 16, 2010, Prime Minister Vladimir V. Putin publicly intervened in the case: in televised remarks, with the judge deliberating on the verdict, the Prime Minister discussed the charges and stated that Khodorkovsky’s guilt had been proven in court and that he must stay in jail. The court failed to ensure an adversarial trial; the proceedings were repeatedly and dramatically marred by unlawfully favorable conditions and advantages for the prosecution; the court essentially relieved the prosecutors of the duty to substantiate the relevance of their evidence and to prove their allegations. Unable to refute their germaneness, the court simply brushed away or ignored the principal arguments and evidence adduced by the defense. The court repeatedly refused to request or to compel third parties identified by the defense to produce readily-available evidence of an exculpatory nature, and failed to ensure that witnesses sought by the defense appear in court.

For a more detailed summary of the extensive due process violations and incidents of official misconduct, see: “Justice under Pressure – Pre-Verdict Executive Summary”, pages 12-22, available at: http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/MBK_PLL_pre_verdict_trial_e xec_summary.pdf.

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The defense was deprived of the opportunity to examine many witnesses and all experts but one, and to examine as evidence or add to the case file interviews obtained through lawfully-followed procedures. In the verdict the court assessed witness testimony selectively and in bad faith, simply “disagreeing” with testimony that clearly refuted the charges. The court allowed obviously inadmissible evidence adduced by the prosecution. Although the trial hearings ended in November 2010, the court did not make the complete official trial transcripts available to the defense until March 2011, well after the December 2010 verdict and sentencing; this delay, and the absence of references to the official transcripts in the verdict, cast into doubt whether the official transcripts were completed before the verdict was issued, or whether they were in fact even needed by the judge given a preordained outcome; the delay was accompanied by a refusal to allow the defense a reasonable amount of time to prepare objections to the official transcripts. In the official trial transcripts, important motions by the defense were omitted, numerous admonitions and criticisms the judge directed to the prosecution during the trial were wiped from the record, statements spoken by the prosecution were misattributed to the defense and non-objections by the prosecution were converted into objections; when the defense filed 1,060 pages of objections cataloguing the extensive inaccuracies and omissions in this official record of the trial, the judge breezed through and dismissed the objections in less than one day, standing by the distorted but official transcripts by transmitting the case file to the Moscow City Court for appeal, without ever responding to the defense to address the objections. From the outset, the case was outside of the territorial jurisdiction of Moscow’s Khamovnichesky Court, meaning that the verdict was issued by an unlawfully-composed court. Defense pleadings regarding the politically-motivated nature of the proceedings and the unlawful interference by public officials in the administration of justice were not assessed by the court or reflected in the verdict. Khodorkovsky and Lebedev were held under the harsh “pretrial” detention regime throughout the trial, in violation of the law as eventually confirmed by the Russian Supreme Court in April 2011—too late to be of any direct benefit to them.

The Verdict Contradicts Dozens of Prior Yukos Rulings in Russian Domestic Courts and Russian Federation’s Defense at the European Court of Human Rights

The defense cites final rulings by other Russian courts, including higher-level courts, establishing that the oil sales transactions involving Yukos production subsidiaries were validly and lawfully executed; that the subsidiaries were not unlawfully dispossessed of the oil and in fact supplied it as contracted; that pricing within Yukos complied with the law and did not violate anyone’s rights;

that Yukos trading companies used low-tax jurisdictions only for lawful tax optimization; and that Yukos was the owner of the oil and beneficiary of its sales. • Even the appellate court from the first Khodorkovsky-Lebedev case ruled that acts then as now imputed to them were incompatible with embezzlement charges. The verdict creates a juridical Catch-22: either Yukos owned the oil, a legally settled fact under Russian law as determined by all previous courts; or the oil was embezzled, in which case Yukos could not have also sold the same oil and could not have also owed taxes on the same oil sales; in finding Khodorkovsky and Lebedev guilty of embezzlement, the verdict creates a massive and irreconcilable contradiction in Russian jurisprudence. Defending itself in separate cases before the ECHR, the Russian Federation is asserting that Yukos was the owner of the oil produced by Yukos production subsidiaries; simultaneously however, in the second Khodorkovsky-Lebedev criminal case, the verdict concludes that the same oil was not owned by Yukos but rather stolen from the company’s production subsidiaries by the defendants; these absurdly incompatible positions—one version for the ECHR and a different version for the domestic court system—are being argued concurrently on behalf of the Russian Federation in major parallel proceedings.

CONCLUSION

As defense counsel Alexey E. Miroshnichenko stated in the final submissions to the Khamovnichesky Court on October 28, 2010, the “[s]ubstance of a court judgment, even if it became final, cannot be of some sacred nature. A court judgment cannot cancel or change laws of formal logic or commonly known facts…[which] do not require special proof, and ignoring them is a fortiori unlawful and meaningless.” The verdict subsequently issued in the second criminal case against Khodorkovsky and Lebedev—most likely to be enshrined as “sacred” by the appellate court—does in fact rely upon cancelling and changing laws of formal logic and commonly known facts. The verdict is a knowing and willful fictional description of purported criminal conduct, devoid of corpus delicti, blind to the preponderance of exculpatory evidence and built upon a bulldozing of due process. Should it be upheld as expected upon appeal, the verdict will stand as a monumental embarrassment to the Russian judiciary and to those state officials who seek to portray it as a valid act of justice.

May 16, 2011

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