JUSTICE UNDER PRESSURE EXECUTIVE SUMMARY: THE DEFENSE PHASE OF THE TRIAL Prepared by Defense Counsel of Mikhail B.

B. Khodorkovsky & Platon L. Lebedev

CONTENTS

BACKGROUND................................................................................................................................ 3 Highlights of Fundamental Errors and Weaknesses in the Charges Exposed by the Defense... 5 Former and Current Russian Government Officials Undermine Credibility of Charges...... 7 Highlights of Other Testimony Supporting Defense.............................. 8

Wesley Haun.......................................................................................................................... 8 Jacques Kosciusko-Morizet................................................................................................... 9

Official Misconduct and Due Process Violations During Defense Phase of Trial........................ 10

Blocked Defense Witnesses and Experts, and No-Shows................................................. 10 Prosecutorial Mistreatment and Intimidation of Witnesses and Experts............................ 11 Witness Threatened with Subpoena at Courthouse Door..................................................... 12 Attempts to Compel Witnesses to Testify Against Defendants.............................................. 12 Disqualification of Defense Experts...................................................................................... 13 Disqualification of Defense Witnesses................................................................................... 14 Defense Not Allowed to Cross-Examine Prosecution Experts............................................. 15 Abuse of Investigatory and Prosecutorial Powers through Coercion of PwC..................... 16 Courts Refusal to Assist Defense in Compelling Production of Documents from Third Parties, to Consider Defense Documentary Evidence or to Compel Prosecutors to Produce Exculpatory Evidence............................................................................................................. 17

Court Denies Defense Requests to Exclude Illegally-Obtained Evidence............................ 17 Ongoing Denial of Defenses Access to Official Trial Transcripts...................................... 18

Extended Pre-Trial Detention: Reforms Flouted by Obsessive Persecution of Defendants... 19 CONCLUSION................................................................................................................................... 20

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BACKGROUND

This document has been prepared by defense counsel of Mikhail B. Khodorkovsky, former chief executive of the Yukos Oil Company, and of his business partner Platon L. Lebedev, who have been on trial since March 2009 in Moscows Khamovnichesky Court. The purpose of this document is to provide a summary of the defense phase of the trial, which ran from April 5 to September 22, 2010. This document is part of a series of legal summaries issued by defense counsel as the case has unfolded. 1 Certain elements of the analysis herein may be impacted by developments in court as the trial continues to unfold. A more detailed and definitive summary report, to be issued following the trial, will supersede this document. For further information, the legal defense team may be contacted via the Khodorkovsky & Lebedev Communications Center.2

The prosecutors have thrown every possible charge at Mr Khodorkovsky with little in the way of evidence. Instead, they caricature the entire Yukos operation as illegal. The indictment is vague, woolly and incoherent. But this has made Mr Khodorkovskys defence stronger. His detailed, page-bypage analysis of the indictmentdemonstrates the legal nihilism of the prosecution. Kirill Rogov, a political observer, has argued that this is now a courtroom where the prosecutors, not Mr Khodorkovsky, are on trial. The Economist, April 22, 2010

In 2007, former Yukos Oil Company CEO Mikhail Khodorkovsky and his business partner and friend Platon Lebedev became eligible for release on parole under Russian law, having served half of their 8year sentences since being arrested in 2003 and convicted in a politically-driven first trial that ended in 2005while Yukos was destroyed through bogus tax reassessments, forced bankruptcy proceedings and rigged auctions.3 Given their eligibility for release on parole in 2007, or at the latest upon completion of their 8-year sentences in 2011, new charges were sloppily manufactured and proceedings were instigated against Khodorkovsky and Lebedev to extend the incarceration of the two men well into the future. Khodorkovsky and Lebedev are accused of embezzling 350 million metric tons of oil worth over $25.4 billion and laundering over $21.4 billion, and embezzling $102 million in shares held by Eastern Oil Company (VNK, a Yukos subsidiary) and laundering the allegedly embezzled shares. The allegations have no credible grounding either in the facts described or in the legal terms invoked by prosecutors.4 The new charges, announced in February 2007 and brought to court in a second trial that started in March 2009, are intended to keep Khodorkovsky and Lebedev isolated from Russian political and economic spheres, to stain their reputations and to conceal or whitewash corrupt and criminal actions committed by high-ranking Russian officials, many of whom have personally benefitted enormously from the destruction of Yukos.

A summary of the due process violations that occurred in the investigation of the current case is available at http://www.khodorkovskycenter.com/content/defense-stay-motion-summary. A summary of the first month of the current trial is available at http://www.khodorkovskycenter.com/current-trials-legal-status. A summary of the prosecutions presentation of its case, from April 21, 2009 to March 29, 2010, is available at http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/Justice%20Under%20Pressure%2C%2 0Executive%20Summary%2C%20The%20Prosecutions%20Case.pdf. 2 Contact information is available under Media Center at www.khodorkovskycenter.com. 3 More information on the first trial is available at http://www.khodorkovskycenter.com/previous-trialsproceedings/khodorkovsky-lebedev-s-first-trial. The destruction of Yukos is explained in detail at http://www.theyukoslibrary.com/. 4 More information about the new charges is available at http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/MBKFactSheetKafkaesque%2014%20 09%202009.pdf.
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The prosecutions presentation of its case, which ran from April 21, 2009 to March 29, 2010, resembled a poorly-organized fishing expedition rather than logically structured proceedings actually proving the occurrence of any elements of crime. Despite reading from a 188-volume case file of random Yukos materials, and parading various witnesses into the court for immaterial questioning, prosecutors were unable to prove how it was possible that Yukos covered its operating costs and invested heavily in capital expenditures and acquisitions and paid dividends when the entire oil production of Yukos over a period of six years was allegedly stolen, as charged. Despite having over 11 months to read documents and question witnesses in court, the prosecutors plainly failed to prove their charges. Appearances of an adversarial trial have for the most part been cosmetic, as revealed by the judges biased handling of the multitude of due process violations that have marked the proceedings.5 By the time the defense phase of the trial began on April 5, 2010, it had become clear that the case-closed mentality of the prosecutors was reigning in the courtroom. The defenses protestations over the contradictions and outright absurdities of the case have been brushed aside by prosecutors and the judge, who have refused to address these issues directly. Independent observers visiting the trial have described the proceedings as evocative of the works of Kafka and Gogol. In the face of official misconduct and due process violations, as the trial unfolded the defense presented highly substantiated motions for the recusal of prosecutors and of the judgeto no avail. Out of a total of 100 motions filed by the defense in this phase of the trial that were unrelated to witness summonses, 87 motions were denied.6 Nevertheless, despite each successive setback, the defendants made every effort to engage with prosecutors and the court to prove their innocence,7 and they presented a vigorous, methodical, and meticulously substantiated defense from April 5 to September 22, 2010. Despite the efforts of the defense, which were notably bolstered by the candor of former and current government officials who supported the defendants through in-court testimony, the proceedings continued to be undermined by unfair and unlawful decisions and maneuvers that have irreparably frustrated Khodorkovskys and Lebedevs rights to a fair trial.

A summary of the due process violations and official misconduct that marked the prosecution phase of the trial is available in the summary referenced in footnote 1. 6 Out of these 100 motions, only seven motions were fully granted by the judge with positive outcomes for the defendants. Of the six remaining motions granted by the judge, procedural maneuvers by the court meant that four of the six motions were ultimately frustrated, and the remaining two motions were only partially granted and had a neutral impact on the proceedings. Prosecutors, who made far fewer motions because the proceedings unfolded overwhelmingly in their favor, had the majority of their motions granted: 11 out of 19 motions during the defense phase of the trial. The defense also presented the court with 57 combined motions to summon witnesses or experts to the proceedings. Of a total of 156 names therein, the court agreed to issue summonses for 93 witnesses and experts. However, of 93 summoned to appear, only 13 people attended the proceedings pursuant to a summons. No further steps were undertaken by the court to compel the appearance of individuals sought by the defense. 7 The presumption of innocence is enshrined in Article 49 of the Russian Constitution, yet this was ignored by prosecutors, who, even though they did not discharge their burden of proof and even though the court had not yet issued its ruling, repeatedly declared Khodorkovsky and Lebedev to be guilty of the alleged criminal acts. The court became complicit in the violation of the presumption of innocence by not censuring the prosecutors in this regardforcing the defense to demonstrate to the public the absurdity of the charges, and indicating that the persecution of Khodorkovsky and Lebedev is a politically-driven crime itself in violation of fundamental Russian and international norms.
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Highlights of Fundamental Errors and Weaknesses in the Charges Exposed by the Defense

During this phase of the trial the defendants and their counsel exposed fundamental errors and weaknesses surrounding the allegations leveled in the indictment. The defense invoked applicable law, broadly-known facts, common sense and oil industry norms, and brought relevant evidence and witness and expert testimony to the courts attention. Although prosecutors and the court went to great efforts to exclude exculpatory facts and to ignore the substance of the defenses arguments, by the end of this phase of the trial, the judge was left with no credible basis for a guilty verdict. Among the fundamental errors and weaknesses surrounding the charges that have been exposed by the defense8 and unresolved by the prosecutors or the judge at trial: The physical impossibility of the embezzlement of 350 million metric tons of oil by the defendantsmeaning all oil production of Yukos subsidiaries for 6 years was allegedly embezzled; not a single incident of oil disappearance or of the defendants taking possession of the oil was presented to the court by prosecutors. Prosecutors and the court neglected the outcome of the first Khodorkovsky-Lebedev trial and the tax proceedings against Yukos, in which the same oil that is now alleged to have been embezzled was in fact punitively and unlawfully taxed in order to drive Yukos into bankruptcy. If the oil was sold to generate taxable revenues, as established in those prior proceedings (and as now being concurrently argued by the Russian Federation before the European Court of Human Rights), then how can prosecutors simultaneously allege that the oil was in fact not sold by Yukos but embezzled by Khodorkovsky and Lebedev? The prosecutors and the court also ignored the fact that Yukos covered massive operating expenses and invested heavily in capital improvements and acquisitions and paid dividendsall financial operations recorded on the books of Yukos and several other companies and bankswhen all oil as the primary source of the funds necessary for these operations was allegedly stolen. The prosecutors ignored the lawful and transparent management and control structures of Yukos that could never have permitted the companys entire production of oil to be embezzled. The court complied with prosecution requests to block key Yukos witnesses and their depositions from being entered into the evidentiary record. The prosecutors neglected that Yukoss vertically-integrated structure was planned and approved not by an imagined rogue or criminal group, but rather by the Russian government itself, with support from the Kremlin, through a deliberate policy aimed at rescuing and developing Russias moribund oil industry in the 1990s. Official government records prove this. Prosecutors have confused property rights in crude oil, and the crude oil itself, neglecting that a transfer of ownership rights can occur without the oil physically changing hands. Prosecutors also stubbornly neglected basic chemistry: confusing the value of wellhead liquidfull of impuritieswith the value of crude oil.

More information on these fundamental errors and weaknesses is available in a short briefing paper entitled The Kafkaesque Prosecutions of Mikhail Khodorkovsky and Platon Lebedev, available at http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/MBKFactSheetKafkaesque%2014%20 09%202009.pdf.
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Prosecutors further incorrectly asserted that the price of crude oil in Russian production regions is comparable to prices of crude oil in Rotterdam or Augusta. The prosecutors ignored lawful contracts made between Yukos production companies with their parent company by arguing, in the alternative, that the domestic purchase price of oil was less than the export price at which the parent company sold the oil to the end purchasers of oil and oil products. Prosecutors also ignored industry-standard transfer pricing practices that are used for lawful tax optimization within vertically-integrated oil companies. Furthermore, in a string of previous court rulings involving Russian tax authorities and competition regulators, some of which were successfully entered into the evidentiary record of this trial, the structuring of Yukos transactions with production subsidiaries was scrutinized and judicially approved.9 When the embezzlement charges were brought in 2007, prosecutors pressured PricewaterhouseCoopers (PwC) to withdraw their approval of a decade of Yukos audits, since observers worldwide could see the obvious incompatibility between the auditors reports and the prosecutors charges against Khodorkovsky and Lebedev. The impossibility of the embezzlement charges could have been proven had the prosecutors or the court examined certain records of Transneft, the state-owned monopoly that tightly controls the movement of oil through Russias pipeline network. These records indicate that the allegedly embezzled Yukos oil was in fact legitimately sold and transported through the state pipeline network. The prosecutors or the court likewise could have examined financial operations recorded on the books of Yukos production companies, several other companies, and bankswhich prove that the entire oil production of Yukos over a period of six years was sold, not embezzled. The charges of laundering were shown by the defence to be completely empty. Prosecutors used the term laundering presumptively, amateurishly and erroneously for example, asserting the legal nonsense of laundering of crude oil. Prosecutors failed to establish fundamental elements of money laundering in criminal law: that a crime occurred and that the defendants acted to conceal the proceeds of that crime. If prosecutors were intent on a trial by headline, they may have succeeded in stigmatizing the defendants by having terms such as embezzlement and laundering associated with their names; but in the end the prosecution failed to show proof either of laundering or of any predicate offense. The court agreed to consider the prosecutions allegations of improprieties surrounding Eastern Oil Company (VNK) share swap agreements executed in 1998even though the statutory time limit for bringing charges expired in 2008. The defense underlined the legality of the now-disputed share transactions, demonstrating that they were fully in the interests of the company and indeed of the Russian Federation as a major VNK shareholder. The share swap agreements followed appropriate company procedures, were endorsed by the Russian Minister of State Property, and cleared investigatory scrutiny conducted between 1999 and 2001.

See for example http://www.khodorkovskycenter.com/news-resources/stories/courtroom-report-july-29-2010.

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Former and Current Russian Government Officials Undermine Credibility of Charges

In addition to comprehensive presentations in court by both Khodorkovsky and Lebedev, which destroyed the indictment piece by piece10, a succession of testimonies from widely-respected former and current government officials dealt heavy blows to the credibility of the prosecutions case: On May 24, 2010, Russias former Prime Minister Mikhail Kasyanov testified that the Kremlin had ordered Khodorkovskys arrest because Khodorkovsky had angered thenPresident Putin by funding opposition parties without presidential approval. Kasyanovs testimony was based on information he was privy to as prime minister, including face-to-face discussions with then-President Putin. Kasyanov further testified that at the time of the allegedly illegal activities involving Yukos, all Russian oil majors shared three attributes: vertical integration, the use of transfer pricing and preferential tax treatment in certain specially-legislated zones. He noted that Yukos was consistently one of the largest taxpayers in the Russian Federation, and that the company had its oil production and sales closely monitored by the government. When asked about whether the oil embezzlement charges were credible, he declared: Absolutely not!11 On June 1, 2010, former Soviet and Russian Central Bank chief Viktor Gerashchenko derided the charges, calling them utter nonsense. He noted that if the defendants were guilty as charged, Yukos could never have grown to preeminence in the Russian oil industry, and foreign oil majors such as Exxon, which examined Yukos to the last detail would not have made multi-billion-dollar offers for significant stakes in the company. Gerashchenko became Yukos chairman in 2004, the year after Khodorkovsky and Lebedev were arrested, and held the position as the company was dismantled through forced bankruptcy proceedings that benefitted state-controlled oil company Rosneft. He noted that none of the companies that acquired Yukos assets including Rosneftever complained about alleged large-scale embezzlement, and that no one in government ever suggested that massive amounts of crude oil had disappeared or been embezzled.12 On June 21, 2010, German Gref, Chief Executive of Sberbank and Russias economic development and trade minister from 2000 to 2007, testified that as minister he would have been aware if massive crude oil embezzlement at Yukos had been taking place as charged, in the vicinity of 20% of Russias annual production. Regarding the prosecutions erroneous assertion that Russias domestic pricing of crude oil is comparable to international market prices, Gref stated: To purchase at the same prices as in Rotterdamimpossible.13 On June 22, 2010, Viktor Khristenko, Russias Industry and Trade Minister since 2008, testified that he was unaware of any proof of the large-scale embezzlement prosecutors allege in their charges against Khodorkovsky and Lebedev. Prior to serving as Industry and Trade Minister, Khristenko had served as Industry and Energy Minister from 2004.

A summary of Khodorkovskys testimony is available at http://www.khodorkovskycenter.com/newsresources/stories/witness-testimony-summary-mikhail-khodorkovsky. A summary of Lebedevs testimony is available at http://www.khodorkovskycenter.com/news-resources/stories/witness-testimony-summary-platonlebedev. 11 A summary of Kasyanovs testimony is available at http://www.khodorkovskycenter.com/newsresources/stories/witness-testimony-summary-mikhail-kasyanov. 12 Gerashchenko boldly confronted the prosecution, exclaiming: Why are you doing this foolishness? A summary of Gerashchenkos testimony is available at http://www.khodorkovskycenter.com/newsresources/stories/witness-testimony-summary-viktor-gerashchenko. 13 More information about Grefs testimony is available at http://www.khodorkovskycenter.com/newsresources/stories/courtroom-report-june-21-2010.
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From 1997 to 2004 he served as Deputy Finance Minister, Deputy Prime Minister and briefly as acting Prime Minister. From 2000 to 2008 he served as Chairman of Transneft, the state pipeline monopoly. Khristenko was asked whether Yukos, its production subsidiaries or, now, Rosneftthe new owner of Yukos assetsever reported that some 60 million metric tons per year of crude oil had gone missing. Khristenko answered: No, I am not aware that something like this ever happened. Khristenko was also asked about transfer pricing.14 He noted that as a matter of government policy the subject has been ever-present since the late 1990s, due to the consequences of transfer pricing on the federal and regional budgets, and on minority shareholders, but that from his point of view transfer pricing practices were neither mysterious nor illegal.15 This lineup of distinguished former and current Russian government officials not only challenged the legitimacy of the trial, but also demonstrated the mounting opposition within Russias elites over the continued abuse of law enforcement and judicial powers in the campaign against Khodorkovsky and Lebedev. Highlights of Other Testimony Supporting Defense

Wesley Haun

The sole defense expert permitted to participate in the proceedings was Wesley Haun, a U.S. specialist in energy industry management who came to the stand on May 31, 2010, notwithstanding a pejorative declaration by prosecutor Gyulchekhra Ibragimova, who stated: We dont care what a foreign citizen will tell us.16 Haun testified that Yukos was comparable with other Russian and international vertically-integrated oil companies, and that Khodorkovskys actions were consistent with company leadership intent on building a model company that would achieve sustained growth and long term profitability. Having carefully examined the structure and operating procedures of Yukos, Haun stated that Khodorkovskys reorganization and management of the company benefited all shareholders, the production subsidiaries, as well as the Russian Federation, and was consistent with industry standards, custom and practice. He stated that the charges brought against the defendants are disproved by the commercial achievements of Yukos: the companys performance statistics and growth would have been impossible had crude oil been embezzled as charged. He further noted that the prosecutors erred in comparing the price of wellhead liquid to the end user price of crude oil. Unsurprisingly, the prosecution successfully motioned to have Hauns expert report excluded from the evidentiary record.17

14

It should be noted that the indictment includes no charges of unlawful transfer pricing, and that Yukoss tax optimization strategies were in compliance with evolving transfer pricing rules. 15 More information about Khristenkos testimony is available at http://www.khodorkovskycenter.com/newsresources/stories/courtroom-report-june-22-2010. 16 http://www.khodorkovskycenter.com/news-resources/stories/s-wesley-haun%E2%80%9Ckhodorkovsky%E2%80%99s-leadership-and-yukos%E2%80%99-performance-do-not-reflec 17 Hauns report was nonetheless made public by the defense, even if it will not be considered by the court, and it is available at http://www.khodorkovskycenter.com/news-resources/stories/specialist-testimony-summarywesley-haun.
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Jacques Kosciusko-Morizet

Jacques Kosciusko-Morizet served on the Yukos board of directors from 2000 to 2004. KosciuskoMorizet is a member of Frances senior business elite, having served as vice president of the bank Crdit Lyonnais. He also served as Frances deputy minister of international trade. As an independent director Kosciusko-Morizet had direct knowledge of both Khodorkovsky and Yukos. Kosciusko-Morizet was formally deposed as a witness by defense counsel in Paris in February 2009. Over the objections of prosecutors who sought to exclude the deposition simply and automatically because the interview took place in a foreign country, defense counsel were permitted to read Kosciusko-Morizets transcribed statements in court.18 Kosciusko-Morizet also appeared in court on June 8 and 9, 2010 for questioning and cross-examination.19 According to Kosciusko-Morizet: Examined from any perspective, the accusations against Khodorkovsky and Lebedev are complete nonsense. Yukos oil moved from the production companies through the downstream marketing companies in a manner consistent with the best industry practices and was sold by the production companies at a fair and reasonable priceYukos increased its revenues and profits by becoming a more efficient and better operated company that better managed its assets. Khodorkovsky understood the value of professionalizing Yukos and employing the best international practices. Khodorkovskys commitment was remarkable, especially given theRussian business environment which historically had strongly resisted transparency. In addition, Khodorkovsky emphasized legal compliance both as a good business strategy and because it was a means to achieve independence. Contrary to the indictment, Khodorkovsky did not solely make all important decisions for Yukos; rather, he listened to opposing views and ceded authority to others. Kosciusko-Morizet said: My entire experience was absolutely the opposite of someone running the company on his own and being a dictator. When Kosciusko-Morizet was at Crdit Lyonnais in 1998, oil prices and the ruble collapsed, making it impossible for Yukos to repay a loan to the bank. While many Russian companies defaulted on loans, Khodorkovsky actively worked with Crdit Lyonnais to restructure Yukoss debt, in order to avoid default and preserve the international reputation of his company. On the basis of his direct involvement in the Yukos-PwC relationship, KosciuskoMorizet ridiculed the assertion in the indictment that Khodorkovsky and Lebedev deceived PwC, and called this excuse by the auditors for withdrawing their endorsement of a decade of Yukos audits completely disingenuous. Kosciusko-Morizet said that PwCs turning against Yukos was very damaging for PwCs reputation, for the audit profession in Moscow and for international confidence in the Russian business environment. He further noted that he had spoken with a number of PwC partners who were embarrassed by the behavior of PwC Russia.

This was the first and last witness deposition that the judge allowed the defense to read in its entirety into the trial record. 19 See http://www.khodorkovskycenter.com/news-resources/stories/courtroom-report-june-8-2010 and http://www.khodorkovskycenter.com/news-resources/stories/courtroom-report-june-9-2010. The full text of Kosciusko-Morizets deposition is available at: http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/Deposition%20of%20KosciuskoMorizet.pdf.
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The prosecutions response to Kosciusko-Morizets testimony plumbed new depths of incompetence and impropriety openly on display in the trial. Prosecutor Valery Lakhtin accused Kosciusko-Morizet of being a conman and raised his voice to declare: What does this witness have to do with anything?! I dont think hes a witness, anyway! The prosecutor also asked, Who knows whether Kosciusko even respects our country? Referring to the acquisition of Crdit Lyonnais by Crdit Agricoleirrelevant to the proceedings and occurring well after Kosciusko-Morizet had retired from the banking industryProsecutor Lakhtin demanded that the court be told of Kosciusko-Morizets role in the merger, asserting that the witness bore responsibility for the banks insolvency. Prosecutor Lakhtin asserted that it was no wonder the bank went underlook at the executives it had. Kosciusko-Morizet responded that he did not go to Moscow to hear the prosecutor insult him time and again, and asserted: I have only one master, unlike some of the persons here. My conscience is my master. I have no interest in lowering myself to a lower level, to lose my dignity. In light of the damage inflicted upon the credibility of the charges by expert Haun and witness Kosciusko-Morizet, the prosecution and court subsequently invoked the thinnest of pretexts to avoid repeats of the spectacles of these first individuals who came at the request of the defense to Khamovnichesky Courtfrom verbally attacking the interpreter and his credibility to blocking defense witnesses and experts and refusing to examine their reports and depositions. Official Misconduct and Due Process Violations During Defense Phase of Trial

Blocked Defense Witnesses and Experts, and No-Shows

With the prosecution having called 51 witnesses20 to the court in the previous phase of the trial, it was now the defenses turn to petition for witnesses they sought to bring to the stand. Given the prevailing climate of fear after well-known cases of the authorities torturing, incarcerating or prosecuting people to extract false testimony in Yukos-related cases or to punish those who support Khodorkovsky and Lebedev,21 many potential witnesses stayed away from the trial22 The law does not empower the defense to compel witnesses to testify or third parties to produce documents, and therefore efforts to compel witnesses or production of documents depend upon the courts discretion. From the outset of the proceedings, the defense was at a significant disadvantage compared to the prosecution with respect to bringing witnesses to court, because the prosecution failed to attach the defense witness list to the indictment as required under Russian law.23 The judge failed to remedy this omission during the preliminary hearings. As a result, at the beginning of the defense phase of the trial, the defense, unlike the prosecution whose list of witnesses was attached to the indictment, needed to petition the court with respect to every single witness they sought to call to the proceedings, to request that the court subpoena each individual. The attendant procedural and practical hurdles borne
20

The prosecutions witnesses proffered either no testimony germane to the accusations, or testimony that actually contradicted the accusations. For more information on the prosecutions witnesses, see page 12 of Justice Under Pressure Executive Summary The Prosecutions Case available at http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/Justice%20Under%20Pressure%2C%2 0Executive%20Summary%2C%20The%20Prosecutions%20Case.pdf. 21 See for example the prominent cases of Svetlana Bakhmina, Vasily Alexanyan and Antonio Valdes-Garcia, described at http://www.khodorkovskycenter.com/history-background/other-key-individuals. 22 Recognizing the culture of fear engendered by Russias law enforcement authorities, the defendants published an open letter in the Russian media appealing to all former Yukos managers and employees to come forward and appear voluntarily in the court to testify. See http://www.khodorkovskycenter.com/newsresources/stories/khodorkovsky-lebedev-invite-colleagues-testify-trial. 23 See Executive Summary Call for Termination of Proceedings Against Khodorkovsky & Lebedev of February 27, 2009, available at http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/stay%20motion%20summary.pdf.
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by the defense in bringing witnesses to the proceedings meant that the defense was unnecessarily and unlawfully disadvantaged. Numerous potential key witnesses live outside of Russia, including former Yukos managers and employees who fled their home country out of fear of unjust prosecution and who have since been granted political asylum abroad. Several of these potential witnesses offered to provide testimony from outside of Russia, answering questions from the prosecution or the defense, for example through video conferencing with the courtroom. The court rejected these offers. In contrast, investigators questioned people abroad through international judicial channels without those witnesses being required to return to Russia. In addition, the court denied the defenses efforts to obtain testimony from Prime Minister Vladimir Putin, Deputy Prime Minister Igor Sechin (who is concurrently Chairman of Rosneft) and Finance Minister Alexei Kudrin. These officials do not enjoy legal immunity from being called to testify in court. Moreover, Sechin has been identified by Khodorkovsky as the main force behind his incarceration and the breakup of Yukos. The judge ruled that the defenses motions to have the men appear as witnesses were prematureyet in the end the time never became ripe and the defense was not allowed an opportunity to question them in court. Meanwhile, Sergey Bogdanchikov, former Chief Executive of Rosneft, was summoned by the court but did not appear. Rosneft was the main beneficiary of the dismantling of Yukos, and along with Sechin, Bogdanchikov is widely considered to have been one of the key figures behind the officialdoms onslaught against Khodorkovsky. The judge denied a defense motion to re-issue a summons for Bogdanchikov to appear at the proceedings.24 In the circumstances, it is unsurprising that of 93 individuals summoned to appear pursuant to requests from the defense, only 13 of them attended the proceedings pursuant to a summonsand the majority of the no-shows did not even explain their absence to the court. The court made no efforts to compel the witnesses to appear in court.

Prosecutorial Mistreatment and Intimidation of Witnesses and Experts

The prosecution intimidated witnesses and experts in court in the course of their presentations and cross-examinations. Directly or indirectly, the witnesses and experts were routinely threatened with criminal prosecution, insulted and interrupted. Hints were made that they could share criminal liability if they were connected to Khodorkovsky and Lebedev. Shameful incidents of prosecutorial mistreatment of witnesses and experts occurred in open court, concerning witnesses Tatyana Lysova,25 Viktor Gerashchenko,26 Jacques Kosciusko-Morizet,27 Farid Khamidullin28 and Stephen Wilson,29 and experts Kevin Dages,30 Laura Hardin,31 John Romanelli,32 Natalya Lopashenko33 and Elena
At the end of the defense phase of the trial, Bogdanchikov had managed to escape questioning by the defense, with Judge Viktor Danilkin informing the defense that Bogdanchikov could not be questioned simply because he no longer worked at Rosneft. See http://www.khodorkovskycenter.com/news-resources/stories/courtroomreport-september-21-2010. 25 http://www.khodorkovskycenter.com/news-resources/stories/courtroom-report-may-26-2010 26 http://www.khodorkovskycenter.com/news-resources/stories/courtroom-report-june-1-2010 27 http://www.khodorkovskycenter.com/news-resources/stories/courtroom-report-june-8-2010 and http://www.khodorkovskycenter.com/news-resources/stories/courtroom-report-june-9-2010 28 http://www.khodorkovskycenter.com/news-resources/stories/courtroom-report-august-6-2010 29 http://www.khodorkovskycenter.com/news-resources/stories/courtroom-report-august-12-2010 30 http://www.khodorkovskycenter.com/news-resources/stories/courtroom-report-june-3-2010 and http://www.khodorkovskycenter.com/news-resources/stories/courtroom-report-june-4-2010 31 http://www.khodorkovskycenter.com/news-resources/stories/weekly-report-trial-proceedings-august-16august-20-2010 32 Ibid. 33 http://www.khodorkovskycenter.com/news-resources/stories/courtroom-report-july-1-2010
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Rossinskaya.34 Prosecutors frequently became emotional in their opposition to defense witnesses and experts, raising their voices or shouting, stepping far outside the bounds of courteous behavior. At the end of the defense phase of the trial, the defense made a statement citing the blatant violations of procedural rules and safeguards that had taken place, including incidents of blackmail, intimidation, threats, unlawful arrests and even physical actions against witnesses.35 The defense statement called upon the judge to consider these irregularities in rendering a verdict that is lawful, substantiated and just.

Witness Threatened with Subpoena at Courthouse Door

On August 12, 2010, Stephen Wilson, a former international tax director at PwC and former Head of International Tax at Yukos, testified that the vertically integrated structure of Yukos reflected international norms and laws, and that it was not possible for Khodorkovsky or Lebedev to have embezzled Yukos oil or siphoned off sales proceeds. Although Wilsons testimony directly challenged the validity of the charges, in response prosecutors avoided the substance of the testimony. Instead, Prosecutor Lakhtin insinuated that Wilson had underpaid his own personal Russian income taxes, and aided Khodorkovsky and Lebedev in embezzlement and laundering activities. Immediately after his appearance, as Wilson tried to leave the courtroom, two investigators attempted to serve him with papers summoning him for interrogation by Investigator Tatiana Rusanova in connection with a secret parallel case.36 Rather than address the serious questions raised in Wilsons testimony, prosecutors brazenly attempted to intimidate not only Wilson, but any other potential witnesses with the courage to speak out in defense of Khodorkovsky and Lebedev.

Attempts to Compel Witnesses to Testify Against Defendants

On August 31, 2010, former Yukos executive Vladimir Pereverzin confirmed on the witness stand that the prosecution had offered him a chance to avoid a prison sentence if he testified against Khodorkovsky and Lebedev. Pereverzin is currently serving a sentence on charges analogous to those that Khodorkovsky and Lebedev face, having been convicted in a curiously separate trial for allegedly acting illegally with the two men and others in embezzling Yukos oil. Pereverzin told the court that he was offered probation in return for testifying against the defendants. His testimony echoed the treatment of former Yukos vice president and legal department head Vasily Alexanyan, arrested in April 2006 and held in pre-trial detention until January 2009Alexanyan refused to provide false testimony against Khodorkovsky and Lebedev in exchange for desperately-required medical

http://www.khodorkovskycenter.com/news-resources/stories/courtroom-report-august-9-2010 The full text of the statement is available at http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/20%20September%202010%20Liptser %20Statement.pdf. In response to the statement, Prosecutor Lakhtin replied with a tirade against defense lawyers, including notably foreign lawyers, who with defense witnesses and experts he alleged to be connected by mutual interests in opposing the prosecution. 36 One of the prosecutions favored means of avoiding the obligations of due processfor example to circumvent rules on gathering evidencehas been the use of parallel investigations. Even if these parallel investigations never result in cases going to trial, they provide opportunities for law enforcement authorities to employ any means necessary to gather evidence, including the threat of torture or detention to extract false statements. Numerous witnesses called by the prosecution in the Khodorkovsky-Lebedev trial revealed on the stand that they had been interrogated in parallel investigations opened by investigators. Some of these parallel investigations are conducted for secret cases; others led to convictions in trials that should instead have been joined with the current Khodorkovsky-Lebedev proceedings. For more information on the prosecutions use of parallel investigations, see page 9 of Justice Under Pressure Executive Summary The Prosecutions Case available at http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/Justice%20Under%20Pressure%2C%2 0Executive%20Summary%2C%20The%20Prosecutions%20Case.pdf.
35

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treatment.37 In yet another example, Frank Rieger, a German national and former senior Yukos official who was no longer working for the company in 2006, was detained for interrogation by investigators and pressured to agree to prepared statements implicating Khodorkovsky in the theft of billions of dollars. He refused.38

Disqualification of Defense Experts

An important aspect of the defense strategy entailed bringing to court a series of qualified experts to explain the factual basis of why the charges against Khodorkovsky and Lebedev are meritless and absurd. The defense sought both Russian and foreign experts who could speak authoritatively to the court in piercing through the ambiguities and generalities of the indictment. These experts were to reveal not only that the prosecutors made enormous errors in drawing up the charges, but also to what extent the prosecution of the case was handled by officials lacking even the basic expertise required in formulating allegations related to the activities of a major player in the energy industry. The prosecutors and the judge clearly did not want to confrontor be confronted withthe expert testimony that the defense had lined up. Despite the seemingly unassailable experience, knowledge and reputation of each of the experts that the defense sought to bring to the stand, prosecutors repeatedly demanded their disqualification citing irrelevant or invented pretexts. Prosecutors even assailed the credentials of interpreters retained for non-Russian-speaking foreign experts, even though the interpreters selected are among the most experienced of their profession. The judge overwhelmingly validated the prosecutions assertions, leading to a string of disqualifications of both Russian and foreign specialists. The court made it abundantly clear that regardless of the educational background, professional experience and skills possessed by an expert, he or she could ultimately be barred from testifying in the Khodorkovsky-Lebedev trial if they were being brought to court by the defense. Out of eight experts that the defense sought to bring to the court, only the first to appear in court for testimony was permitted to stand for questioningand the court refused to include his written report in the evidentiary record. The exclusion of foreign experts called by the defense was particularly inappropriate. For example, prosecutors demanded the disqualification of Kevin Dages, a U.S. economics and finance expert and Senior Vice President of Compass Lexecon, who was to present an analysis finding 13 independent discrepancies or inconsistencies within the indictment. Prosecutors asked the judge to disqualify him because they argued that Dages is not a specialist in Russian corporate law and did not have detailed knowledge of Russian accounting standards.39 Yet the expertise Dages sought to bring to the trial did

37

At the Russian Supreme Court on January 22, 2008, Alexanyan testified that when he was being denied medical treatment in detention, Salavat Karimov, former chief investigator in the Khodorkovsky-Lebedev cases, told him: [t]he leadership of the Prosecutor Generals Office understands that you must have medical treatment, maybe even not in Russia, you have a grave situationWe must have your testimony, because we cant support those charges that were making against Khodorkovsky and Lebedev. If you give evidence that suits the investigation, then well release you. Alexanyan, who had already been diagnosed with HIV infection and who developed lymphatic cancer while being refused medical treatment in detention, further testified: But I cant perjure myself, I can not frame innocent people, I refused to do this. And I think that no matter how horrible my condition may be right now, the Lord will protect me, that is why I did not do this, I can not buy my life like that 38 During the interrogation, which as in Wilsons case was conducted by Rusanova, Rieger was denied access to a lawyer or German consular official, and threatened with becoming a criminal suspect rather than a witness if he did not agree with the investigators version of events concerning Khodorkovsky. The German Ministry of Foreign Affairs formally protested Riegers 8-hour detention. See Riegers deposition, which the court refused to enter into the evidentiary record, available at http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/Frank%20Rieger%20Record%20of%2 0Interview%20by%20Counsel.pdf. 39 Lashing out at Dages, Prosecutor Lakhtin asserted that having experience testifying as an expert in the United States and Europe did not make him competent to provide his opinions to a Russian court. Reminding Dages that Khodorkovsky and Lebedev, in accordance with Russian laws, are accused of committing serious crimes,
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not require any particular knowledge of Russian legal or accounting rules. Indeed, the prosecutions pretext for excluding Dages ignored the many foreign elements intrinsic to the indictment: Yukos had subsidiaries and thousands of employees in foreign jurisdictions, subject to non-Russian law and U.S. GAAP financial reporting; significant Yukos assets were on the balance sheets of non-Russian companies; more than half of the companys financial turnover derived from foreign operations; and the foreign activities of Yukos figured prominently in the indictment and in numerous documents in the case materials. Eminently qualified to evaluate and explain Yukoss U.S. GAAP statements, Dages had been invited by the defense to assist the court in understanding these foreign activities of Yukos, and their implications for the indictmentyet was never permitted to do so.40 Later in the proceedings, proposed defense expert Laura Hardin informed the court that she worked for a Russian corporation, was knowledgeable in Russian Accounting Standards (RSBU), worked with and consulted Russian and CIS companies for most of her career, had close familiarity with Russian corporate law and Russian business practices, and consulted the Russian government on implementation of certain accounting rules and practices. Nevertheless, and without having Hardin even attempt to answer questions she was asked for her expert analysis, the prosecution argued that Hardin was incompetent as an expert. Despite her impeccable credentials and thorough knowledge of the case materials she examined in order to render her opinion, the judge granted the prosecutions request, and disqualified Hardin.41

Disqualification of Defense Witnesses

As with the treatment of defense experts, the proceedings were also marked by double standards and inconsistencies in the disqualification of defense witnesses. The court did not allow the defenses deposition of certain witnesses whom prosecutors sought to exclude because they were either accused or suspected in other criminal investigations. Yet, in a blatant double standard, when requested by the prosecution the court allowed witnesses, criminally accused or suspected, to testify in court or to have their interrogation transcripts entered into the evidentiary record. For example, the court not only rejected the defenses request to summon Bruce Misamore, Chief Financial Officer of Yukos from 2001 to 2005, to the proceedings, but also refused to enter his 53page deposition into the evidentiary record.42 The court agreed with the prosecutions argument that Misamores testimony had to be excluded from the proceedings because he is a suspect in another investigation. Yet earlier in the proceedings, the prosecution requested and the court allowed it to enter into evidence interrogation transcripts of Alexei Golubovich and Alla Karaseva, respectively a suspect and an accused in other cases. Furthermore, the court allowed the prosecution to question Ilya Yurov, an accused in another criminal case, as a witness in this trial. Yet, contrary to fundamental common sense and principles of due process, the court agreed to be willfully blind to testimony from

Prosecutor Lakhtin asked Dages: Arent you afraid for your reputation in the United States?! See http://www.khodorkovskycenter.com/news-resources/stories/courtroom-report-june-3-2010. 40 Indeed, the court actively ignored any analysis of Yukoss U.S. GAAP statements, which would have been probative in disproving the allegations against Khodorkovsky and Lebedev. 41 The judge stated: She did not examine the materials of the current criminal case, which prevents this court from establishing the objectivity of her testimony as a specialist. This circumstance allows the court to doubt Ms. Hardins professional competence as a specialist. The court considers that Ms. Hardin does not have the required special knowledge to [help] decide questions in this criminal matter, which precludes her from participating as a specialist. See http://www.khodorkovskycenter.com/news-resources/stories/weekly-reporttrial-proceedings-august-16-august-20-2010. In a similar vein, the court disqualified investment banking expert John Romanelli. See http://www.khodorkovskycenter.com/news-resources/stories/courtroom-report-august-172010-0. 42 On the courts refusal to summon former Yukos CFO Misamore, see http://www.khodorkovskycenter.com/news-resources/stories/courtroom-report-may-20-2010.
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the Chief Financial Officer of the company central to the allegations against Khodorkovsky and Lebedev.43 The court further refused to enter into evidence depositions of other foreign witnesses, including Michel Soublin (Misamores predecessor as Yukos Chief Financial Officer from 1999 to 2001, and subsequently Chairman of the Finance Committee of the Yukos Board of Directors until 2004)44, Frank Rieger (Vice President of Yukos RM, which oversaw refining and sales, from 2000 to 2002, and subsequently Financial Controller for the Yukos group of companies through 2005)45, Bernard Loze (Member of the Yukos Board of Directors from 2000 to 2006, Chairman of the Boards Corporate Governance Committee and Member of the Boards Nominating Committee from 2000 to 2001, and Member of the Boards Corporate Governance and Nominating Committee from 2002 to 2006)46, Sarah Carey (Member of the Yukos Board of Directors from 2000 to 2004)47 and Michael Hunter (former President of Dart Management Corporation and former head of Yukoss minority shareholders coalition)48. Whereas the prosecution was allowed to introduce into the evidentiary record interrogation transcripts of witnesses made during the investigation, the defenses depositions of key witnesses taken abroad, directly relevant to the allegations, were rejected by the court. This was yet another instance of procedural inequalities disadvantaging the defense.

Defense Not Allowed to Cross-Examine Prosecution Experts

The court did not permit the defense to cross examine prosecution experts despite the significant number of flaws in their reports pointed out by the defense. On four occasions the defense motioned the court to summon prosecution experts for cross-examination. On every occasion the motion was denied, leaving the assertions of prosecution experts in the trial record untested by the defense. When the defense motioned for the exclusion of prosecution expert reports due to substantive flaws and procedural violations, and because the defense had been denied the right to cross-examine the authors of the reports, these motions were denied. Two further motions, requesting the production of materials used by prosecution experts in their analyses, were also denied. The first prosecution expert report for which the defense sought production of documents is found in Case Volume 54.49 Prosecution expert Eloyan was asked to conduct an expert analysis to determine, based on access to accounting ledgers, computer servers and electronic media, what activity was conducted by several Yukos crude oil traders in 2002: from whom they bought oil and petroleum products, as well as purchase volumes and prices, and whether the information matches other sources of data available to the investigators. Eloyan prepared a 90-page report using the aforementioned
Misamores deposition is available at http://www.khodorkovskycenter.com/content/bruce-misamore-recordinterview-counsel. 44 Soublins deposition is available at http://khodorkovskycenter.com/sites/khodorkovskycenter.com/files/soublin-statement.pdf. 45 Riegers deposition is available at http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/Frank%20Rieger%20Record%20of%2 0Interview%20by%20Counsel.pdf. 46 Lozes deposition is available at http://khodorkovskycenter.com/sites/khodorkovskycenter.com/files/lozeinterview.pdf. 47 Careys deposition is available at http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/Sarah%20Carey%20Deposition.pdf. The defense motion regarding the Carey deposition is available at http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/29%20July%202010%20Motion%20S arah%20Carey.pdf. 48 Michael Hunters deposition is available at http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/Michael%20Hunter%20Deposition.pdf. The defense motion regarding the Hunter deposition is available at http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/30%20June%202010%20Motion%20 Michael%20Hunter.pdf. 49 Pages 185-229. See http://www.khodorkovskycenter.com/news-resources/stories/courtroom-reportseptember-7-2010.
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sources, including printed materials from electronic media that were seized. The defense sought to test the results of the analysis through access to the materials used by the expert, but needed to request production of documents because they were absent from the case file. Moreover, the defense noted Eloyans questionable credentials and evidence of errors he made in not following basic accounting rules. The second prosecution expert report for which the defense sought production of documents is found in Case Volume 45.50 In an expert analysis ordered by investigator Karimov, prosecution experts Eloyan and Kuprianov were to conduct an accounting and economics-based analysis of a Yukos subsidiary traders funds transfers. In the order, Karimov provides the experts with materials from case 18/41-03a different case. In their analysis the expertsboth not accountants and only one with a degree in economicsused seized electronic versions of accounting databases from two banks. The analysis took just three days and was performed at the offices of the General Prosecutor. Once again, the defense had no opportunity to examine the evidence used (in violation of applicable procedures, the experts used the term evidence in their report), or to test it against other more reliable sources. As with all of the other prosecution expert reports in the case materials, these two reports were drafted for other criminal cases, rather than for the current proceedings. As a result, the defense was presented with finalized reports that they had no effective means of contesting either during the preliminary investigation or in the course of the trial. Every single defense motion to exclude such reports was denied.

Abuse of Investigatory and Prosecutorial Powers through Coercion of PwC

Until 2007, the endorsement of a decade of Yukos audits by PwC was considered by many observers to be strong proof of Khodorkovskys and Lebedevs innocence and the absurdity of the embezzlement charges. Until June 2007, PwC publicly stood by its 1995 to 2004 Yukos audits. When the Russian authorities attacked PwC over the audits in court in December 2006, PwC stated: We will vigorously defend our position and reputation both in court and in dialogue with government authorities which are empowered to regulate [the] auditing profession. In January 2007, PwC insisted that its Yukos reports were properly prepared to present, in all material respects, the companys financial position and financial results in accordance with the relevant Russian accounting standards and that PwC concluded these audits according to the highest professional and ethical standards strictly in compliance with Russian [law] and best [auditing] practices. PwC was then subjected to police raids, partners were threatened with imprisonment for their work on Yukos, and legal proceedings unrelated to Yukos were brought against the firm. When PwC suddenly reversed itself and withdrew its decade of Yukos audits in June 2007, the firms aforementioned problems evaporatedeven those problems ostensibly unrelated to Yukos. A broadly-cited threat hanging over PwC as it adamantly defended its Yukos reportingthat the firms Russian license could be revokedhas not been raised again by officials since PwC backed down, and Yukos-related investigations into the firm appear to have ceased. PwC asserted that the audits were pulled due to new information on Yukos that they received from prosecutors. However, documents and witness statements prove that the information provided by prosecutors was not new to PwC, and that in any case the issues raised did not affect the overall validity of the audits. The Khodorkovsky-Lebedev defense team has asserted since 2007 that PwCs unusual and unconventional reversal was made in response to coercion and threats from Russian authorities. The defense team has documented its assertions and initiated legal actions in order to prove that PwC legally should have stood by its audits, and that the excuses PwC gave for its decision are factually incorrect and meant to cover up the truth. Khodorkovskys and Lebedevs main goals are
50

Pages 200-275. See http://www.khodorkovskycenter.com/news-resources/stories/courtroom-reportseptember-7-2010.

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to prove, first, that they were in fact not dishonest in their dealings with PwC; second, that prosecutors are guilty of grave misconduct in their handling of the case; and third, that the charges against them are bogus and improperly motivated. The Wall Street Journal and Financial Times undertook separate independent investigations into PwCs actions, and obtained documents disproving PwCs assertion about new information justifying the withdrawal of the audits. Both newspapers published major reports on the matter on September 7, 2010.51

Courts Refusal to Assist Defense in Compelling Production of Documents from Third Parties, to Consider Defense Documentary Evidence or to Compel Prosecutors to Produce Exculpatory Evidence

Reinforcing the pattern established since the outset of the trial, the court repeatedly refused: (1) (2) (3) to request or to compel third parties identified by the defense to produce evidence of an exculpatory nature; to consider documentary evidence that the defense sought to enter into the trial record; and to request or to compel the production of documents held and concealed by the prosecution.

Of particular note, the defense was denied access to evidence gathered in a parallel case which was extensively used by investigators and prosecutors as a means of circumventing procedural rules and safeguards in the present case. The judge denied defense requests to compel the prosecution to provide the defense access to files from that parallel caseeven though that case was a major source of materials accepted into the trial record in the present case.52 With respect to third parties, a case on point is Transneft, the state-owned monopoly that tightly controls the movement of oil through Russias pipeline network. To date, the court has refused to subpoena Transneft records sought by the defense. The defense asserts these records would indicate that the allegedly embezzled Yukos oil was in fact legitimately sold and transported through the state pipeline network. Likewise, publicly available Russian government documents from the 1990s, demonstrating government policy geared towards the development and functioning of Yukos as a verticallyintegrated energy company, have to date not been sought out by the court from official sources for inclusion in the case materials. Despite many efforts, the defendants were unable to enter such germane exculpatory evidence into the official case record and therefore could not use such documents in the interrogation of witnesses. Another example of the courts denial to introduce documents offered by the defense involves Yukoss U.S. GAAP financial statements, which were missing from the case materials introduced into the trial record for several of the years relevant to the allegations.

Court Denies Defense Requests to Exclude Illegally-Obtained Evidence

The court allowed prosecutors to submit evidence illegally obtained through unlawful searches and seizures. Despite the fact that this evidence did nothing to prove the charges, as a matter of principle and procedure the defense petitioned for exclusion of the illegally-obtained evidence. Initially the
51

See http://online.wsj.com/article/SB10001424052748704095704575473630120957538.html and http://www.ft.com/cms/s/0/8a380a34-b9e1-11df-8804-00144feabdc0.html. Additional information about the PwC-Yukos relationship is available at http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/PwC_MBK_PLL_QA.pdf. 52 On the use by investigators and prosecutors of parallel cases, see footnote 36 and accompanying text. See also the reference to case 18/41-03 under Defense Not Allowed to Cross-Examine Prosecution Experts, above at page 15.
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defenses requests for exclusion of this evidence were deemed prematurethen when the defense repeated a request for exclusion at the end of the defense phase of the trial, the request was denied.

Ongoing Denial of Defenses Access to Official Trial Transcripts

Citing the Russian Criminal Procedure Code, which stipulates that official trial transcripts are to be prepared within three days of court sessions, the defense has repeatedly motioned the court to provide copies of the trials official transcripts. In April 2010, the defense argued that delays of several days or even several weeks could be understandable, but that there was no credible justification for the court not having provided a single official trial transcript to the defense since October 2009. In May 2010, some additional official trial transcripts were provided to the defense, but only covering the proceedings up to November 2, 2009. From May 2010 until the end of the defense phase of the trial, on September 22, 2010, the defense was provided no further official trial transcripts for the proceedings past November 2, 2009. Only on September 24, 2010 was the defense team provided with additional official trial transcriptsyet only for the period from November 3, 2009 to January 20, 2010. When the trial recessed on September 29, 2010 for the preparation of final arguments, the defense team was still deprived of official trial transcripts for the last eight months of the trial. Among the concerns that the defense seeks to address through access to the official trial transcripts is the courts habit of excluding the full text of motions and in-court statements, which have instead been summarized along the following lines: Khodorkovsky made a statement to the court, objecting to actions of the presiding judge. The exclusion of the defenses legal reasoning from the official transcripts is a brazen distortion of the trial record, and it is all the more unfair considering that prosecutors have been permitted to insert documents into the official transcripts as they desire. More broadly, official trial transcripts are a key tool that defense lawyers refer to in formulating their arguments and ensuring a robust defense strategy as a case unfolds, and in particular when formulating closing arguments. Facing the intransigence of the court and the prosecutors on the issue, the defense sought an official clarification of the courts position in writing, which will form the basis of an appeal on the issue to the Russian Constitutional Court.

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Extended Pre-Trial Detention: Reforms Flouted by Obsessive Persecution of Defendants

Recent legal reforms brought forth by President Dmitry Medvedev have eliminated pre-trial detention for certain economic crimes in an effort to humanize the Russian criminal justice system. Changes to the Russian Criminal Procedure Code and Russian Criminal Code were signed into force on April 7, 2010, following the deaths in pre-trial detention of 37-year-old lawyer Sergei Magnitsky in November 2009 and 53-year-old entrepreneur Vera Trifonova in April 2010; both detainees were denied medical treatment after refusing to cooperate with corrupt officials. These reforms were ignored on May 14, 2010 when the Khamovnichesky Court granted the prosecutions request to extend the pre-trial detention of Khodorkovsky and Lebedev for another three months. Khodorkovsky and Lebedev had been held under harsh pretrial detention conditionsnormally intended for short periods of time onlyfor a total of five and a half years since their arrest in 2003. In response to the ruling, Khodorkovsky launched a hunger strike to raise awareness that the Russian justice system was failing to implement the reforms.53 Asserting that President Medvedevs reform goals were being blatantly undermined, and that a dangerous precedent was being set, Khodorkovsky vowed to continue his hunger strike until President Medvedev had been seized of the matter. The hunger strike ended after two days, on May 19, 2010, following public declarations that the Chair of the Russian Supreme Court and President Medvedev were to evaluate the situation. The initial judicial response did not bode well: on May 21, 2010, the Judicial Collegium for Criminal Cases of the Moscow City Court issued a ruling confirming the validity of the extension of the detention measures. To do so, the Collegium had to deny that Khodorkovsky and Lebedev were on trial for alleged acts committed in the course of their businessan obvious fallacy and disingenuous means of preventing the defendants from being freed of the constraints of pretrial detention. This not only placed the Khodorkovsky-Lebedev case outside of the scope of the recent legal reforms, but also opened the door to similar misinterpretations of the law being applied in other cases across the country. Concerned members of the Russian Duma have begun to examine why the courts have refused to apply the new law, but in the meantime, on August 16, 2010 the Khamovnichesky Court yet again extended the pretrial detention of Khodorkovsky and Lebedev for three months, to November 17, 2010. The defendants appeal to the Moscow City Court was rejected on September 2, 2010. The extended unlawful detention of the defendants in such harsh conditions will be appealed at the European Court of Human Rights, adding to the other complaints already filed by Khodorkovsky and by Lebedev at the Strasbourg-based tribunal.54

53

Khodorkovskys open letter to the Chairman of the Supreme Court of the Russian Federation announcing the hunger strike is available at http://www.khodorkovskycenter.com/sites/khodorkovskycenter.com/files/17_May_2010_Khodorkovsky_Open_ Letter_Hunger_Strike.pdf. 54 For more information on the double bars being imposed upon Khodorkovsky and Lebedev, see the Q&A with defense counsel Vadim Klyuvgant available at http://www.khodorkovskycenter.com/newsresources/stories/vadim-klyuvgant-detention-facility-equals-prison.
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CONCLUSION

When prosecutors with a track record of thuggish behavior openly brandish the threat that anyone who opposes them may fall victim to arbitrary detention and prosecution, the prosecutors may scare away witnesses and experts, but they do nothing to bolster the credibility of their allegations. Moreover, these same prosecutors seem so emboldened by their epaulets, or by powerful figures behind the instigation of this case, that they have neglected to prove their own charges, failed to explain their central theses and avoided confronting the defenses counterarguments. For these prosecutors, professionalism, rigor and courtesy towards the defendants have been trumped by misconduct, sloppiness and mockery. This suggests that the outcome of the trial will not and cannot depend upon the indictment or upon the case as presented by prosecutors. Any independent court would have dismissed the case and terminated the trial on the basis of the plain facts and legal reasoning advanced by the defense since the proceedings began. By his acts and omissions in the handling of the case, Judge Viktor Danilkin has been drawn into complicity with and responsibility for the official misconduct and due process violations that the prosecutors brought to the trial. At the fulcrum of the adversarial balance, the judge has effectively abrogated any real equality of arms, unfairly tilting the proceedings to favor the prosecution. Given the prosecutions failure to prove their case, any guilty verdict will lack grounding in facts and properly applied law, and will be motivated by reasons alien to justice. When Tatyana Lysova, the editor-in-chief of the Russian business daily Vedomosti, came to the witness stand in May 2010, Catherine Belton of the Financial Times observed that prosecutors appeared not to understand some of the simplest points she made about basic rudiments of the functioning of publicly-traded companies, the calculation of their value and the consolidation of their finances in international accounts. Belton described the apparently stunned reaction of the prosecutors to Lysovas testimony before they reverted to impugning Lysovas credentials as their only retort to her testimony. Belton concluded: The trial judge will be making up his mind. But it seems clear that if President Dmitry Medvedev is to achieve his plans for modernizing Russian justice, he has a long way to go.55

October 14, 2010

55

http://blogs.ft.com/beyond-brics/2010/05/26/russia-prosecutors-versus-the-press-in-khodorkovsky-trial/
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