Embattled Russian billionaire Mikhail Khodorkovsky, the main owner of oil giant YUKOS, arrived at a court in Moscow yesterday for the opening of his trial on fraud and tax evasion charges.
Khodorkovsky, Russia's richest man, will be tried along with another major shareholder in YUKOS, Platon Lebedev. The trial is seen by many as a government-inspired push to jail Khodorkovsky and strip him of his wealth.
His downfall is said by analysts to be the work of people in the Kremlin who fear he was using his wealth to sway public policy and mount a challenge to their authority.
PHOTO: REUTERS
Khodorkovsky, 40, wearing a brown leather jacket, arrived in a large blue van at a side entrance to the Meschchansky district court in Moscow and was led in by police. Inside the building, he waved to his parents, reporters and lawyers before being led into the courtroom.
The trial, before a panel of three judges, is an important test case for President Vladimir Putin, who has said he wants justice to run its course in the YUKOS affair. He has also warned that tax evasion will not be tolerated and that other captains of industry may face prosecution.
YUKOS shares fell by up to 12 percent on Moscow's Micex stock exchange yesterday after at one point on Tuesday plunging 14 percent to US$6 on the benchmark RTS exchange, its lowest level for more than two years.
Human rights activists accuse Putin of manipulating the judicial process to suit the state's interests. The hearing was part of a two-pronged judicial assault on YUKOS and its owners, which comes to a head this week and could put the company in bankruptcy.
A Moscow court will hear an appeal tomorrow by Russia's tax ministry aimed at forcing YUKOS to pay a US$3.4 billion bill for back taxes immediately.
If the court finds in favour of the tax authorities, as expected, YUKOS says it may go bust because another court has frozen the company's assets, making it impossible for YUKOS to raise enough cash in time to pay the bill.
A member of Khodorkovsky's legal team said he was in little doubt that both men would be convicted and receive jail sentences of up to 10 years.
"They are going to be found guilty," Robert Amsterdam, a Toronto-based lawyer, said.
"It is a show trial to help the government expropriate YUKOS," he said.
Some analysts say that if YUKOS is driven out of business, Khodorkovsky and his associates, who control the oil group through a company called Menatep, will be dispossessed of their prize asset.
Investors appear to be giving up hope of a negotiated settlement with the authorities that could let YUKOS off the hook. "I personally do not see any other scenario apart from bankruptcy," said Stephen Dashevsky, an analyst at Aton brokerage in Moscow.
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