RADIO FREE EUROPE/RADIO LIBERTY, PRAGUE, CZECH REPUBLIC
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RFE/RL Russian Political Weekly
Vol. 5, No. 15, 14 April 2005

A Weekly Review of News and Analysis of Russian Domestic Politics

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HEADLINES:
* KHODORKOVSKII CASE IS A SIGN OF THE TIMES
* TNK-BP HIT WITH LARGE TAX CLAIM — AGAIN
* BASHKIR OPPOSITION COMES TO MOSCOW
* AIDS AWARENESS CAMPAIGN OFF TO A SLOW START
* RIGHTS GROUP URGES MOSCOW TO REOPEN KATYN MASSACRE
INVESTIGATION
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POLITICS

KHODORKOVSKII CASE IS A SIGN OF THE TIMES

By Victor Yasmann

The 10-month trial of former Yukos CEO Mikhail Khodorkovskii,
Menatep Chairman Platon Lebedev, and former Volna General Director
Andrei Krainov came to a close on 11 April, with Khodorkovskii giving
his final statement to the court. A verdict will be announced on 27
April, Russian media reported.
In his closing remarks, Khodorkovskii said that he
“didn’t make a good oligarch,” and that he had not fled Russia
despite being repeatedly advised to do so. He said that Yukos was the
target of “greedy bureaucrats” and that he was imprisoned to prevent
them from ransacking the oil giant. Khodorkovskii maintained his
innocence on all charges. “I sincerely tried to work for the good of
my country, and not for my own pocket,” Khodorkovskii said. “All that
I have left is an awareness that I was right, my business reputation,
and the power of my will.”
In the prosecution’s concluding statement on 29 March,
prosecutor Dmitrii Shokhin asked the court to convict Khodorkovskii
and Lebedev and to sentence them to 10 years’ imprisonment on
fraud, embezzlement, and tax-evasion charges, newsru.com reported.
Shokhin told the court the defendants “deserve” severe punishment
because they have refused to admit their guilt. He charged that
Lebedev “repeatedly demonstrated his disrespect to the court” and
that Khodorkovskii deserved particular severity because he had
“organized a criminal group.” Shokhin also asked the court to
confiscate the assets of Khodorkovskii and Lebedev that have already
been frozen, including a 60 percent stake in Yukos and a 30 percent
stake in Sibneft that belong to Menatep, “to compensate for harm they
caused the state.” He also asked the court to make the men ineligible
to hold senior public or managerial posts.
Shokhin asked the court to give Krainov a 5 1/2-year
suspended sentence because of his “repentance and partial admission
of guilt.”
Defense lawyers asked the court to acquit their clients on
all charges. Lebedev’s lawyer, Yevgenii Baru, said that “enough
evidence has been presented for any competent, independent court to
acquit Lebedev,” newsru.com reported on 6 April. Khodorkovskii lawyer
Genrikh Padva said Khodorkovskii not only did not commit the crimes
ascribed to him but that “no crimes were committed at all.” In his
statement, Padva meticulously went over all the prosecution’s
arguments in an effort to demonstrate that there is no evidence of
“the slightest signs of criminal activity.”
Padva paid particular attention to the charge that
Khodorkovskii and Lebedev had formed a criminal group. He denied the
existence of any such group, saying that the prosecution had not
shown “what the composition of the group was or what were the roles
of its members, and so on.” “The joint maintenance of a business
cannot be proof of a ‘criminal group,'” Padva told the court
on 7 April.
“I hope that on the day the verdict is pronounced, the iron
gates will swing open and the watchmen will release Khodorkovskii
into freedom,” Padva said.
Another Khodorkovskii lawyer, Yurii Shmidt, told RFE/RL on 10
April that prosecutors and the public continue to view Khodorkovskii
and other rich Russians as “criminals by definition.” In the case of
Khodorkovskii, he added, they are ignoring the fact that he owes his
fortune not only to his hard work and managerial skills, but also to
the fact that he invested his money into the loss-making Yukos in
1996 when oil was selling for about $8.50 a barrel.
Shmidt added that it will not be easy for the court to
deliver the verdict that the Kremlin expects. He noted that Deputy
Prosecutor-General Vladimir Kolesnikov said in October 2003, well
before the trial began, that Khodorkovskii should be sentenced to 10
years in prison, the very term that prosecutors at the trial are
seeking. However, Shmidt said, it will be difficult for the court to
convict without violating the law.
Karina Moskalenko, another Khodorkovskii lawyer, said on 7
April, according to newsru.com: “This case will not be decided in the
court, or the Moscow Municipal Court, or the Supreme Court, or the
European courts. It will be decided in the court of history, and the
court of history will be harsh with all of us.”
Throughout the trial, the Kremlin and the state-controlled
media did a lot to boost the perception that Khodorkovskii and his
colleagues are criminals. The arrests of Lebedev and Khodorkovskii in
July and October 2003, respectively, came in the wake of a scandalous
report by the National Strategy Council that asserted that the
oligarchs were plotting a quiet coup in Russia.
In September 2004, just as prosecutors began presenting their
case in court, NTV screened a documentary called “A Terrorist Act,
Paid In Advance,” which charged that Khodorkovskii used profits from
the sale of Siberian oil to provide material aid to Chechen
“terrorists.” The film included references to some events that
happened as early as 1995, before Khodorkovskii took over Yukos.
On 30 March, NTV showed a documentary called “Brigade From
Yukos,” in which Menatep shareholder and former Yukos executive
Leonid Nevzlin was directly accused of organizing paid killings and
Khodorkovskii was implied to have been involved. The film linked
Khodorkovskii to former Yukos security chief Aleksei Pichugin, who
was convicted of murder and attempted murder on 25 March. The
documentary included footage of Khodorkovskii, Nevzlin, and Pichugin
shooting rifles during a hunting trip or similar outing. The
information in this documentary was repeated on state-owned RTR the
same evening.
Moscow human rights activists have long argued that the case
against Pichugin, a former Federal Security Service (FSB) officer,
was manufactured to pressure him into revealing compromising
information against Khodorkovskii. The first jury in the Pichugin
case was released after it asked the court to dismiss the charges
against him, and a second jury was later convened, which convicted
him.
The cases against Yukos and Khodorkovskii are a pivotal
moment in the history of post-Soviet Russia. When Khodorkovskii was
arrested by the Alfa special-forces unit in Novosibirsk on 25 October
2003, Russia was a different country. Mikhail Kasyanov was the prime
minister and Aleksandr Voloshin was the head of the presidential
administration. Both were viewed as oligarch-friendly holdovers from
the regime of former President Boris Yeltsin. Many in Russia and the
West continued to believe cautiously that President Vladimir Putin
was leading Russia gradually but perceptibly toward a more democratic
future. Some believed that Putin was sincere in his desire to combat
corruption.
Putin’s policies in the ensuing period have cast such
claims in serious doubt. Many of those who believed Putin was
combating corrupt oligarchs have come to believe now that he was
merely fighting his political opponents and those who financed them.
Many of the old oligarchs have not only kept their properties, but
have seen their fortunes increase steadily during Putin’s
administration. At the same time, new oligarchs have emerged from the
bureaucracy and the secret services. As a result, Russia had the
second-largest number of billionaires (27) on the “Forbes” magazine
list of global billionaires that was released in March.

TNK-BP HIT WITH LARGE TAX CLAIM — AGAIN

By Jeremy Bransten

At first glance, the scenario seems all too familiar.
Following an audit, Russia’s Federal Tax Service presents a major
oil company with a bill for unpaid taxes dating back several years.
The initial sum is relatively modest, but it gradually grows
as the tax service uncovers more and more alleged arrears. That is
what happened to Yukos, landing its chairman Mikhail Khodorkovskii in
court and burying his company under $27 billion of tax debt.
Now, TNK-BP, a Russian-British joint venture that is
currently Russia’s No. 2 oil producer, is being hit with similar
claims. For now, the tax bill is much lower than it was for Yukos —
but the sums being demanded have been growing exponentially in recent
weeks, raising concerns among investors.
TNK-BP initially received a revised tax bill for 2001
amounting to 4 billion rubles ($144 million). This week, the company
announced the tax authorities are now demanding an extra 22 billion
rubles ($791 million), bringing the firm’s total tax liability to
nearly $1 billion. And that is just for the year 2001. Russia’s
Federal Tax Service says it cannot exclude the possibility that
arrears for the following years will also be found.
All this happened just days after Russian President Vladimir
Putin flew to Hannover, Germany, where he tried to boost foreign
investor confidence. Putin reiterated on 10 April that his government
will limit prosecutors’ ability to review privatizations and that
the Kremlin does not intend to interfere with business.
“Any allegations that Russia is preparing to revise the
privatization results are groundless. On the contrary, we are
currently considering reducing the statute of limitations on
privatization deals from 10 to three years to stabilize ownership
relations and not to allow any possibility of redistribution [of
property],” Putin said.
How should investors interpret this apparent mixed message?
Dmitrii Loukashov, an oil analyst at Aton Capital, a Moscow-based
brokerage house, believes there is no cause to worry at this time
that another Yukos-style affair is in the making. Not all recent tax
claims in Russia, he notes, have ended in victory for the tax
authorities.
“[People] probably forgot that there have been other outcomes
in modern Russia — different outcomes than in the Yukos case. As an
example, everyone should remember the Vimpelcom charges, which
amounted to $1 billion as well and were reduced to meaningless
figures,” Loukashov told RFE/RL.
Indeed, to back Loukashov’s point, there was news on 13
April that a subsidiary of Japan Tobacco in Russia has won a court
victory against the tax authorities for an arrears bill amounting to
$79 million.
But on the other hand, many foreign business leaders say the
timing of the claims against TNK-BP is too coincidental for comfort.
John Bamford, head of the International Business Management
and Computer Consultancy that matches British investors with
investment opportunities in Russia, noted that the announcement about
the TNK-BP tax claims came in the middle of the Russian Business
Forum in London. The forum is the leading annual gathering of
politicians and entrepreneurs from both countries.
Bamford said many participants at the forum could not help
but think politics — as in the Yukos affair — may be playing a
role. “It’s quite extraordinary that this particular thing should
come up exactly to make the headlines in the newspapers for
discussion at the forum,” he said. “Somebody’s trying to make a
point, I think, and I don’t necessarily think it’s the tax
collectors. I think that the timing is probably a little more than
just a nice innocent tax collector saying, ‘We’ve found this
gap.'”
Bamford also said the fact that the tax authorities are
looking into arrears from the year 2001 also contradicts Putin’s
statement on 10 April that a three-year statute of limitations would
be imposed on such investigations:
“There was supposedly this line drawn under past taxes, which
has been brought back from 10 years to three years, and one
wasn’t expecting this one — which is to 2001, which is rather
more than three years,” Bamford said.
It all adds up to some worried investors. Back in 2003, when
the TNK-BP merger took place, the deal was one of the largest by a
Western company in postcommunist Russia and seen as proof of the
forward momentum of economic reforms. If the company is now under
attack, investors fear the business climate in Russia could turn
sour.
Loukashov said the worst-case scenario, which remains
impossible to verify, is that members of President Putin’s own
administration are trying to undermine him — using the tax service.
The implications, he said, are too grim to contemplate — especially
if one sees Putin as a guarantor of economic stability.
“What I’m afraid of is that these charges were not
authorized by the president and the president’s office, which
could mean that the president is losing his grip,” Loukashov said.
For his part, the British head of TNK-BP, Robert Dudley, said
on 12 April that he does not believe his company will find itself in
a “Yukos situation.” But he added that state authorities in Russia
were gradually reasserting their influence over the economy —
something he said should be a cause for concern.

REGIONS

BASHKIR OPPOSITION COMES TO MOSCOW

By Claire Bigg

The place where Bashkortostan’s opposition chose to stage
its demonstration in Moscow on 7 April had a certain significance.
Protesters met on Lubyanka Square in front of Russia’s Federal
Security Service (FSB) building and near a monument to the victims of
Stalin-era political repression.
They were calling on the federal authorities to dismiss
Murtaza Rakhimov from his post as president of Bashkortostan. The
authoritarian Rakhimov has ruled the Muslim-majority republic in the
South Ural mountains since 1993.
One of the protesters held a placard reading “Rakhimov’s
regime is arbitrary, corrupt, and violent.” A handful wore striped
uniforms supposed to represent those worn by prisoners in Nazi
concentration camps.
Airat Dilmukhametov, leader of the Bashkir National Front,
one of the republic’s more radical opposition movements, told
RFE/RL that Rakhimov has presided over a dictatorship where human
rights are regularly violated.
“Over the past 15 years there have been many cases of death,
murder, poisoning, car crashes, torture, illegal punishment,”
Dilmukhametov said. “A dictatorship has been established [in
Bashkortostan]. This is why people are disappointed and many of them
are scared.”
The Bashkir opposition also accuses Rakhimov of corruption.
It charges that the oil companies controlled by Rakhimov’s son,
Ural, have mismanaged millions of dollars through tax evasion.
The demands of the Bashkir opposition, however, are likely to
fall on deaf ears. Dilmukhametov said he has little hope that
Rakhimov, who was reelected president in 2003 with the support of
Russian President Vladimir Putin, will be sacked. The Kremlin is
widely regarded as turning a blind eye to Rakhimov’s alleged
abuses in return for his loyalty.
Unrest in Bashkortostan has been growing since police
detained and injured several hundred people in a violent sweep of the
town of Blagoveshchensk in December 2004.
Rights groups say more than 1,000 people were arrested and
taken to police stations, where they were reportedly beaten and
humiliated.
Dilmukhametov said he hopes the recent protest will draw
Moscow’s attention to the republic’s problems in the face of
growing unrest. “We are doing this [protesting] in order for our
conscience to be clear in case the situation in Bashkortostan takes a
different turn,” Dilmukhametov said. “We are now warning the public
and the federal leadership. This is one of our last warnings.”
Dilmukhametov told RFE/RL the opposition movement in his
republic was inspired by the recent mass protests that recently
toppled the government in Ukraine and Kyrgyzstan.
Boris Kagarlitskii, a political analyst who heads
Moscow’s Institute for Globalization Studies, said he believes
the Russian authorities will ignore the protest. But he argued that
Bashkortostan’s government is not viable and that the crisis
could eventually destabilize the Kremlin.
“If you don’t sacrifice Rakhimov, if you do not react to
the demands of the opposition, which I think is going to be the case,
then the movement will radicalize,” Kagarlitskii said. “From being a
movement against a local leader it will become a movement against
Moscow as well.”
According to the Bashkir opposition, Rakhimov’s
government has spared no effort to try to sabotage the protest.
Opposition leaders were delayed for five hour on 8 April
after additional security checks at the airport in Ufa, the capital
of Bashkortostan. The oppositionists said the checks were ordered by
the Bashkir government.
They said airport officials also tried to confiscate boxes
containing the lists of over 150,000 signatures in support of
Rakhimov’s dismissal. The boxes were later delivered to
Putin’s administration by the protesters in Moscow.
The Bashkir government was swift to fend off the allegations
and branded the protest an attempt at undermining it.

MEDIA

AIDS AWARENESS CAMPAIGN OFF TO A SLOW START

By Robert Coalson

Deputy Prime Minister Aleksandr Zhukov created something of a
media sensation on 30 March when he appeared at a Moscow conference
and acknowledged that the spread of HIV/AIDS in Russia has become a
threat to the country’s security and development. The theme of
the conference was public-private initiatives to combat the epidemic
and one of the main projects discussed was a $200 million,
three-year, public-service campaign by Russian media to raise
HIV/AIDS awareness.
Gazprom-Media Chairman Aleksandr Dybal told the conference on
30 March that his company and other media outlets, including REN-TV,
Muz-TV, MTV, and the radio stations of Russian Media Group are
donating $200 million in cash, airtime, and print space to the
effort.
Gazprom-Media controls NTV, NTV-Plus, TNT, Ekho Moskvy, and
other media properties and is wholly owned by the state-controlled
natural-gas giant Gazprom. Gazprom played key roles in the de facto
nationalization of the empires of former oligarchs Vladimir Gusinskii
and Mikhail Khodorkovskii.
Russian Media Group is controlled and headed by
Kremlin-connected businessman Sergei Arkhipov. He told “The Moscow
Times” on 18 March, “I do have friends in the Kremlin,” although he
denied that he discusses his business with them. In 2004, the company
staged a free concert for people who could prove that they had voted
in the presidential election, a move that was viewed as part of the
Kremlin’s effort to boost turnout in an election in which
President Vladimir Putin faced minimal competition. The company’s
plans to turn its flagship station, Russkoye Radio II, to a largely
news and information format has been viewed by analysts as part of a
Kremlin effort to consolidate its control over the information sphere
in the run-up to the 2007 and 2008 Duma and presidential elections,
respectively.
Despite Dybal’s “announcement” of the public-service
effort on the heels of Zhukov’s speech, the campaign was actually
launched at a 29 November press conference at state-owned
RIA-Novosti, to considerable media fanfare in connection with the 1
December World AIDS Day event. At that time, RIA-Novosti was also
named as a participant, “Vechernyaya Moskva” reported on 9 December.
Interfax reported on 29 November that the newspapers “Komsomolskaya
pravda,” “Izvestiya,” and “Vedomosti” would also participate, but
Dybal did not mention them in March.
At that press conference, participants also announced that
the “Stop AIDS” campaign would mostly include a new, locally produced
series featuring people living with HIV. Dybal did not mention this
project at the 30 March conference.
In November, it was announced that “technical and financial”
support would be provided by a number of Western foundations,
including the Kaiser Family Foundation and the Bill and Melinda Gates
Foundation. In addition, Dybal said at that time that he expected the
state media to join the effort. “You might say that we consider this
our patriotic, humanitarian duty,” Dybal said, according to
“Vechernyaya Moskva.” “We have already signed up nearly 30 large
companies and, of course, we certainly expect ORT and RTR to join our
ranks — [and we] hope that they will join our project. We are also
talking to regional companies, whose support is very important to
us.” Dybal added that he expected the “active participation” of
American actor Richard Gere in the campaign.
The online newspaper vsluh.ru reported on 2 December that the
“Stop AIDS” campaign will include not only public-service
announcements, but also the development of information resources and
briefings for journalists.
Zhukov’s appearance at the AIDS conference and recent
calls by President Putin and other administration officials for
businesses to do more to help the country give some reason to believe
that “Stop AIDS” might gain some traction now.

INTERNATIONAL RELATIONS

RIGHTS GROUP URGES MOSCOW TO REOPEN KATYN MASSACRE INVESTIGATION

By Claire Bigg

In 1943, German soldiers discovered a mass grave in the Katyn
forest near Smolensk, in western Russia. The grave held the bodies of
thousands of Polish soldiers, priests, doctors, and intellectuals
killed three years earlier by the NKVD, the Stalin-era secret police.
Human rights groups and historians believe up to 21,000
people were murdered in what became known as the Katyn Forest
Massacre. A Russian government investigation into the case has been
ongoing since the early 1990s. However, the government closed the
investigation on 11 March.
Boris Belenkin is a historian who works for Russia’s
prominent human rights group Memorial. He says his organization on 7
April sent a letter to the Russian authorities asking for the Katyn
investigation to be reopened.
“The reason behind this letter was the general military
prosecutor’s announcement about the closure of the Katyn case and
his claim that the death of 1,800 people had been confirmed with
absolute certainty, when we know that at least 14,000 have died,”
Belenkin told RFE/RL.
Belenkin said that the government has failed to provide any
other official information as to why the investigation has been
closed.
Russia has been reluctant to acknowledge that the killings
constituted a war crime. It wasn’t until 1990 that Soviet leader
Mikhail Gorbachev admitted his country’s involvement in the
massacre.
As a reconciliatory gesture, in 1992 the Russian government
handed over to then-Polish President Lech Walesa previously secret
documents testifying that Soviet dictator Josef Stalin had ordered
the killings.
Russia’s recent decision to close the investigation,
however, could face criticism ahead of the grand ceremonies planned
for 9 May to mark the 60th anniversary of the end of the World War
II.
Estonia and Lithuania have also dealt a blow to Russia by
turning down its invitation to attend the May celebrations in Moscow,
after saying their countries were oppressed by the Soviet regime.
Latvian President Vaira Vike-Freiberga has accepted an invitation to
attend the celebrations.
The Katyn issue could further erode relations between Russia
and Poland. Polish lawmakers last month renewed calls for Russia to
classify the massacre as genocide and bring the remaining
perpetrators to justice.
Belenkin views Russia’s decision to close the
investigation as a sign of the growing patriotic and nationalist
trend under the government of President Vladimir Putin.
But Sergei Markov, director of the Institute for Political
Studies in Moscow, said Moscow is mainly trying to protect its image.
“Moscow is trying to minimize the damage done to its image by
talk about the Katyn case. Katyn is one of the tragedies of the
Second World War — a tragedy that was not admitted for a long time
by the Soviet Union, which did not want to hurt relations with its
ally, socialist Poland,” Markov said.
Markov also speculated that Russia could be trying to avoid a
potential series of damaging and costly lawsuits from descendents of
victims if it fully admits to all the killings that took place.
“One can isolate several concrete episodes in the Second
World War, and if Russia admits its responsibility in every one of
these cases it might be sued for all of them,” Markov said. “There
would be a lot of economic consequences. I think Russia doesn’t
want to create the possibility of such lawsuits taking place.”
Russian-Polish relations have been particularly strained over
the past months, with Poland announcing in March that it planned to
name a square in Warsaw after the slain Chechen separatist leader
Djokhar Dudaev.
Moscow responded by threatening to rename the street in which
the Polish Embassy has its seat in Moscow after Mikhail Muravev, a
Russian Army general nicknamed the “hangman” for his ruthless
suppression of the Polish uprising of 1863.

POLITICAL CALENDAR

15 April: Duma expected to vote on second reading
of amendments to the law on forming the State Duma that would
introduce the proportional-representation system and eliminate the
single-mandate districts.

15 April: Russian spacecraft scheduled to launch new crew to
the International Space Station from the Baikonur cosmodrome in
Kazakhstan.

16 April: Opposition in Bashkortostan planning a major
demonstration calling for the resignation of republican President
Murtaza Rakhimov.

17 April: Krasnoyarsk Krai and Taimyr Autonomous Okrug to
hold referendums on the question of merging.

18 April: Moscow Arbitration Court to begin hearing case
against Yukos regarding suspected tax arrears for 2003.

27 April: Verdict expected to be announced in the case of
former Yukos CEO Mikhail Khodorkovskii and Menatep Chairman Platon
Lebedev.

27-28 April: President Putin to visit Israel and the
Palestinian Autonomy.

9 May: Commemoration of the 60th anniversary of the end of
World War II.

10 May: Russia-EU summit to be held in Moscow.

30-31 May: Foreign Minister Sergei Lavrov to visit Japan.

19 June: Referendum in Samara on dismissing Mayor Georgii
Limanskii.

23 June: Yukos shareholders meeting.

24 June: Gazprom shareholders meeting. Date by which merger
of Gazprom and Rosneft to be completed, according to RBK.

4 July: 750th anniversary of the founding of Kaliningrad.

6-8 July: G-8 summit in Scotland.

August: CIS summit to be held in Kazan.

September: First-ever Sino-Russian military exercises to be
held on the Shandong Peninsula.

1 November: New Public Chamber expected to hold first
session.

2006: Russia to host a G-8 summit in St. Petersburg.

1 January 2006: Date by which all political parties must
conform to law on political parties, which requires at least 50,000
members and branches in one-half of all federation subjects, or
either reregister as public organizations or be dissolved.

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Copyright (c) 2005. RFE/RL, Inc. All rights reserved.

The “RFE/RL Russian Political Weekly” is prepared by Robert Coalson
on the basis of a variety of sources. It is distributed every
Wednesday.

Direct comments to Robert Coalson at coalsonr@rferl.org.
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