Transcript of the closing arguments as given by Genrikh Padva, lead lawyer for Mikhail Khodorkovsky, in the Meshchansky Court on April 5 Translator’s note: the sign * is used in the original text, apparently to indicate omissions of some sort. Pl. also note that whenever an obvious typo was made by the person who typed the transcript (as in compliance instead of non- compliance) or the meaning of what the speaker had in mind was clear despite unclear language the translator took care of that. However there are unfinished sentences and, more importantly, thoughts here that had to be left as they were. They are followed by (sic - transl.). Your Honors, When attorney Krasnov was the first to make remarks on behalf of the Defense, during the intermission my colleagues came up to me and said that, as far as the substance, they very much liked what he had to say but that he was speaking too fast. And Vladimir Nikolayevich replied that, while he had come to think over the last few years that public speaking would never again make him nervous, it turned out that this time he was very nervous indeed. That explains why he was rushing. You know, I felt good for him. I would like to say that I share his nervousness because the future of human beings is being decided here. And we are perfectly aware that you are administering justice and that your signature will seal the fate of not only the men in the dock but the lives of their loved ones, children, and of their elderly parents. And, given the specifics of the case, perhaps your signature will also determine the lives of very many people in this country. On the other hand, we also understand that the correctness, fairness and lawfulness of your decision at least in part will depend on how honestly, in good faith and in a professional manner we will do our duty as defenders. That is why I am never embarrassed to admit and to emphasize that yes, indeed, as I am about to begin my remarks in defense of an individual in the dock, I feel nervous. I understand why Rivkin might have taken pleasure in making a few sarcastic remarks with regard to the Prosecution. The thing is that, and that is very unfortunate, during this trial the parties have not always behaved in a gentlemanly manner. That is how I would put it. And, unfortunately, in their remarks the public prosecutors, in my view, made insulting statements with regard to the Defense. As they evaluated the witnesses and experts, the prosecutors hinted, in an untoward manner, that such and such expert is a good personal acquaintance of Rivkin’s, and that such and such expert has known Krasnov for a long time, and a certain female witness, before her testimony in court, paid a visit to attorney Padva's office and had a conversation with him, and, thus, cannot be trusted. But then it is difficult to resist the temptation to say that witness Pletnev, a young investigator from Belgorod is clearly more dependent on the General Prosecutor and his deputies than any of the above experts and witnesses depends on us. After all, it would only take one stroke of a pen to exert maximal punishment on Pletnev for an inconvenient testimony given in this court. A lot has been said about controllability at this trial. And as they accused our clients, i.e. Lebedev and Khodorkovsky, the prosecutors often proceeded from allegations that somebody had done something, whereas that particular individual or even a legal entity was controlled by or under the control of Khodorkovsky. And such controllability was sometimes of multistage nature. A certain company established another company. That other company, in turn, established a third one. The third one set up a fourth one. And this, fourth company is controlled by Khodorkovsky because, you see, the first one happened to know Khodorkovsky. One could travel very far down this particular line of thinking. Speaking of controllability, all those legal entities, even including Khodorkovsky himself, are controlled by the tax authorities and the Prosecutor’s office. So, should we say that the latter are responsible for what happened? Because maybe their untimely interference, their failure to understand the law, perhaps their lack of knowledge or some other circumstances enabled Khodorkovsky who was controllable by them and some companies that were, in turn, controlled by Khodorkovsky to perform those acts. I think that such allegations should be treated with greater care. And we should talk about true guilt and genuine interdependence among individuals, firms, especially when the discussion touches on their possible guilt. After emphasizing the temptation to engage in a polemic not with the Prosecution but with arguments made by a specific prosecutor, sometimes, perhaps, unfortunate arguments, I would like to say that I will resist that temptation and will try and focus exclusively on the case file. I will only analyze evidence that has not been voiced either by public prosecutor Shokhin, or investigator Karimov, or even by the deputies of the General Prosecutors, or by Kolesnikov who over a year ago said – before the criminal trial and without any proof – that the individuals in the dock would get ten years. Not that they would get those ten years but that the public prosecutor would demand ten years for them. I hope that my optimism that justice does exist in this country, my optimism that you, representatives of justice, are true judges, my hope for thorough, patient, serious, months-long examination of the materials of the case will be justified. And that is why I will now proceed to specifically analyze the evidence, again, hoping that I will be heard and in the hope that the arguments that you will find genuinely serious, and I think there are quite a few such arguments, will form the foundation of an appropriate and fair sentence. Most of the charges against him accuse Khodorkovsky of committing crimes as part of a group. Only two out of the many episodes he is incriminated with allege that he committed a crime single-handedly and not as part of a group. That crime is provided for * in Article 198, that is evasion of taxes by an individual, and, as I said, my colleague attorney Schmidt will discuss that here. The episode, provisionally referred to as *, is the episode linked to the fact that Khodorkovsky embezzled some funds in favor of Gusinsky. Formally, with regard to that episode the Prosecution also says that it was perpetrated in an organized group. However no group is specified. And, as a matter of fact, it is completely obvious that, as far as the substance of the charges, the reference is to Khodorkovsky. So, that is why I am starting with that particular episode in order to demonstrate that Khodorkovsky has not committed a crime either on his own, or as part of a group. And not only because he is not involved in the alleged acts. More on that later. But also because there was no crime whatsoever. These were completely legal transactions. It was a legal act. However it was not performed by Khodorkovsky, but by other individuals. The act had to do with the fact that an organization, a legal entity, lent money to another legal entity. I will use simple terms. I am not an economist. I do not want to tire you and all those present here with having to explain certain terminology. So, a legal entity lent money, funds to another legal entity and the debt was fully repaid. And we will prove it with 100% accuracy. So, what is the substance of the charge? From the formal legal perspective, the allegation is that, while directing an organized group, Khodorkovsky unlawfully and gratuitously collected and turned over for the benefit of Gusinsky funds owned by OAO Oil Company YUKOS and entities under his control. So there we have it. Let me decode that. The reference is that Khodorkovsky allegedly, acting as part of some group, collected funds from Oil Company YUKOS and some other entities that were also under his control and handed them over them to Gusinsky. That is, he embezzled those funds. That is why he was arraigned on charges under Article 160 of the RF CC in its 1996 version, which is also wrong, but more on that later. According to the charge, the total embezzled amount constitutes 1 billion 346 million and 200 thousand non-denominated rubles and it was wired via four different transactions. Three payments were made to Media-Most, respectively on July 5, 1995, September 30, 1999, and November 18, 1999. I will not overload verbal remarks with numbers, since they can be found in the Bill of Indictment, and they are also in documents that we will submit. I have mentioned the total number though. In addition, there is a reference to another 669 million 314 thousand and 620 rubles allegedly wired by other legal entities, Grace and Mitroi, to a Gusinsky- controlled entity. So, three wires to Media-Most, and another wire to another entity * that was also allegedly controlled by Gusinsky. This is the matter at hand. Of course we are not denying that all that money, all those funds were wired in exactly the amounts specified by the Prosecution, or that they were paid to entities also named by the Prosecution. However we do argue that there are no elements of crime in those acts. Before talking about the substance I will revisit what has already been discussed at length during the court proceedings. This episode appeared in the Khodorkovsky case file after an investigation had been in progress for quite some time regarding completely different matters, which had nothing to do with Khodorkovsky’s relationship with any of Gusinsky’s entities. So, all of a sudden, an official report shows up in the case file from Senior Special Major Case Investigator of the Prosecutor General’s Office of the Russian Federation Karimov to the Head of the Department for Special Major Cases. The report says that during an investigation into fraudulent acquisition of funds by the chief executive of the holding company Media-Most the Office of the General Prosecutor attached certain accounting records of the holding company Media-Most that were of interest to the investigators in the current case. Certain documents were obtained as part of some other case involving Gusinsky. And, according to Karimov’s report, the investigators are interested in those documents. The case file contains no request, instructions, report, or any document to indicate how Karimov found out about the existence of that document and why he produced the report in question. Similarly, it was not demonstrated during the judicial investigation. It remains unknown. What should have then followed in accordance with the law? I will first offer a brief legal digression. You know, when I talked to Mikhail Borisovich Khodorkovsky, he repeatedly asked me to place minimal focus on procedural matters but, instead, to discuss the substance of the matter so that the public would understand that he was not guilty on the merits of the case and not because something was wrong from the juridical perspective. But I cannot do that. I must offer procedural analysis because, in the presence of procedural violations, it is impossible to talk about the truth. Because it is impossible to say that the truth was identified where a criminal case was not instituted, strange as it may sound. Because the fact that no case was instituted, i.e. there was no official recognition that an investigation into the matter is under way indicates that there was absence of proper governmental control of the investigator’s activities. Because, when a case is instituted then the prosecutor is duly informed, and the prosecutor handles, or at least should handle (it may not always happen) the case and control it. And where a case was not instituted things bypass the prosecutor and, thus, bypass governmental control. The prosecutor acts as the eyes of the sovereign. On the other hand, it violates the individual’s rights. You see, when a case is instituted against an individual that automatically makes him a suspect, thus granting him certain rights – the right to defend oneself. So, sad as it is, but with regard to this particular episode – and we have thoroughly analyzed it and petitioned you to rule as inadmissible evidence obtained in violation of the law – under the law, if investigator Karimov found out something he should not have submitted his report to distinguished Mr. Lyseiko, a respected individual who occupies a very high position. Instead, Karimov should have done something completely different. To the extent that these materials were available, he should have isolated them, or, if they were not available, he should have requested the prosecutor to sanction the institution of criminal proceedings, as required by Articles 144-146 and 140 of the RF Code of Criminal Procedure. It was not up to him as an investigator to decide what to do next. It is a prosecutor’s decision. Karimov should have reported that there was certain information and there were grounds for a case to be instituted under a certain provision of the Criminal Code. It was the prosecutor’s decision to establish whether or not such information existed and, if it did, to institute proceedings. After that it was the prosecutor’s job to decide who would investigate, the same investigator or another one. And if the investigator is the same the case would have been turned over to him. And it is not until then that the investigator has the right to investigate that episode along with other things that he has been investigating as part of that case. Anything else is forbidden. I will not repeat myself. We have submitted a wealth of material to you regarding this matter. We have made references to relevant comments in the Code of Criminal Procedure, we have provided an opinion by one of the most credible experts on procedural matters, and we have provided excerpts from the law. This is an undisputable fact. You have left that fact for the future. But, alas, as of today, the public Prosecution supports the charges in that regard in full, although, in our view, the investigation to the extent that it pertains to this episode is completely illegitimate. No evidence obtained as a result of such illegitimate investigation has any legal meaning. And, by that token, any such evidence is inadmissible and cannot be used to substantiate a conviction. In addition to formal legal considerations that I have just referred to, I will also of course demonstrate that this charge is incorrect in its substance. Since I have already touched upon matters of procedure and so as to avoid having to revisit them later, I will mention a couple of other circumstances. Under this episode, the charge against Khodorkovsky was based on Article 160 as per the June 13, 1996 version of the RF CC. Unfortunately, it was precisely according to that version that the public prosecutor presented the charges in the courtroom. I must say that I find this a little perplexing. With all the qualifying arguments presented here by my colleague, I will not follow in the footsteps of the public prosecutor, although I do understand his feelings, and I will not resort to strong language. However I do find it perplexing. Why didn't they, as required by Article 10, bother to qualify [those acts] under the laws that should have been applied? We know that on December 8, 2003, some considerable amendments were made to the law. The amendments were designed to improve the situation of the individual who is being held accountable. Thus, the concept of ‘repeated act’ as a qualifying element was deleted from that article. In fact, this particular concept has been completely removed from the Criminal Code. Also, additional penalties were removed from Article 160, including confiscation of property. That particular kind of punishment was also partially removed from the Criminal Code. Thus, the effective law is more lenient. At the very least, this undisputable, unconditional requirement should have been complied with. How could this have been overlooked after an almost year- long court investigation? And this while we have discussed it verbally and in writing. Thus, even before we even start discussing whether or not guilt or involvement have been proven, based on Article 10 only the current version of Article 160 of the law may apply to such alleged acts, which do not constitute corpus delicti. It is impossible to talk about some kind of a group during this period of time and allege that Khodorkovsky committed embezzlement in favor of Gusinsky while part of that group, which allegedly pertains to this episode, because it is, simply, a naked allegation. There is no evidence to support that. True, I must say, Your Honors, that such incrimination poses the biggest challenge for the Defense. How can you defend against charges that consist in an allegation that is not supported by any evidence? The prosecutor says, “Yes, this is what happened.” Therefore, we can only reply as follows, “No, this is isn’t what happened.” And if the court is presented with a proofless allegation by the prosecutor and a similarly proofless allegation by the defense counsel then, from the perspective of the law and requirements, who must carry the burden of proof? The prosecutor. As far as finding somebody innocent, as far as the fact that the defendant must always be given the benefit of the doubt, then even in that case where we have one “for” and one “against” then, of course, the ruling must favor the defendant. Unfortunately, in the real world that does not always happen. The thing is that there is a whole range of circumstances that favor the defendant. That is how I would put it. Unfortunately, the Prosecution is backed by the authorities; the Prosecution relies on the credibility of the State; Prosecution benefits from the fact that those arguments are offered by a government-appointed prosecutor. And we perfectly realize that sometimes such considerations outweigh what we say. Therefore, although we are not required to do so, we will try to disprove allegations that have been stated and are not supported by any evidence. French lawyers say that they do not come to court in order to prove something but only to make sure that the prosecutor cannot prove anything. This is how it should be. Of course we will not follow in the footsteps of French lawyers. Given our reality, our justice and the requirements of our practice, we will go farther. And we will carry on our shoulders the burden of disproving allegations made by the prosecutor. First and foremost, we hereby state that Khodorkovsky is not the committer of this crime. When – I think it was Lebedev - referred to the distinguished procedural opponent as a 'subject’ (a double entendre in Russian; ‘subject’ means both ‘crime committer' and, in everyday parlance, ‘shady character’ – transl.) it invited a negative reaction. From the perspective of the law, the term committer or actor (‘subject’ in Russian – transl.) is by no means insulting. It is a term used in the criminal procedural legislation. It means whether or not someone is a person that can be held responsible for such actions. According to the disposition of Article 160, in both its old and new versions, only an individual entrusted with property can be held responsible for embezzling it. That is expressly stipulated in the law with regard to misappropriation or embezzlement of property placed in somebody’s trust. Aware of that and in realization of the fact that it cannot bring charges in any other way, the Prosecution claims that Khodorkovsky allegedly embezzled property entrusted on him. Now, if the Prosecution has claimed so it should have offered proof that such property indeed had been placed in Khodorkovsky's trust. It should have proven on what grounds such property was entrusted on Khodorkovsky. A very long time ago, back in 1972, a Plenary Session of the USSR Supreme Court explained in a ruling on judicial practices in cases of embezzlement of State-owned or societal property what the term “entrusted” or “placed in somebody’s trust” meant. The court ruled as follows, "Official responsibilities shall be considered…” That is, it concerns a situation where property is entrusted on somebody on account of that person’s official responsibilities, job description, formal legal responsibilities. “Or contractual relations.” That is, something is provided for in a contract. “Or when a special instruction is issued whereby an individual charged with embezzlement exercised powers with respect to embezzled property, such as managing, directing, delivering, or storing.” Here is a list of what – any of those items – the Prosecution should have proven. That is, it should have proven that the funds allegedly embezzled by Khodorkovsky had been voluntarily transferred to him by the owner of such property for a specific purpose. That is, that such property was entrusted on Khodorkovsky and was in his lawful possession. And that Khodorkovsky had certain powers granted to him with respect to such funds. An abstract allegation that certain funds were entrusted on the defendant, which is not based on specific facts, is in itself illegitimate. But we will go farther. We will demonstrate to you that the materials in this case establish that nobody ever placed those funds in Khodorkovsky’s trust. As claimed in the charges, OAO Oil Company YUKOS transferred funds allegedly embezzled by Khodorkovsky to the company Media-Most. When did it happen? Between July 5, 1999 and April 28, 2000. In the meantime, the Prosecution prudishly fails to mention where Khodorkovsky worked during that period of time and what position he held. If those funds were indeed entrusted to Khodorkovsky the Prosecution should have specified the grounds on which it was done. If it had to do with his official position his position should have been described, along with his relationship with Oil Company YUKOS at the time. However it has been established that between the above dates Khodorkovsky did not have an employment relationship with Oil Company YUKOS. From June 1998 through March 2000, Khodorkovsky was Chairman of the Board of OOO YUKOS-Moscow, an entirely different legal entity. At that time it did not even manage Oil Company YUKOS. Until May 2000 the managing entity was Rosprom, which was not headed by Khodorkovsky in 1999-2000. Thus, Khodorkovsky did not even have an indirect legal relationship with Oil Company YUKOS. Therefore, such funds could not have been entrusted to him through his job. I simply don’t know. I guess I could anticipate some arguments on the part of the prosecutor along the following lines. “Well, perhaps, formally there wasn’t anything, but, given his [Khodorkovsky’s] status, bearing in mind who he was, he could have managed…” That is an entirely different matter. It is then not subject to Article 160. Because, under Article 160, one must formally, legally establish and prove that funds in fact were entrusted to somebody. That is, in the case of an official position, it should have been proven that there was such a position that enabled him to dispose of, sign off on, wire the funds to so and so. It has been established however that Khodorkovsky did not have any kind of employment relationship with YUKOS-Moscow. It follows from a July 28, 2004 reply by YUKOS-Moscow that during that period of time, namely between July 1, 1999 and January 1, 2004, Khodorkovsky did not have an employment relationship with Oil Company YUKOS and did not have managing powers at that organization. That, of course, covers authority to enter transactions on behalf of YUKOS and to make wire transfers from the accounts of Oil Company YUKOS. The above-mentioned information about Khodorkovsky’s places of employment and positions held by him is confirmed by documents in the case file. Even before we provided this certificate there already was one on page 95 in vol. 1. And, finally, there is Khodorkovsky’s testimony. There is also information from his employment records, a notarized copy of which is attached to this case file. In addition to someone’s official position, as we have mentioned above, funds can be entrusted in a different manner. For instance, via a power of attorney. In the event of special authority. It follows from the above-indicated reply, which is attached to the case file, that no power of attorney was issued to Khodorkovsky for entering financial transactions on behalf of Oil Company YUKOS during the period of time pertaining to alleged embezzlement. No power of attorney is to be found in the case file. And, finally, Khodorkovsky did not have any employment or any other contracts with Oil Company YUKOS, which would have authorized him to dispose of any funds and would have enabled the Prosecution to claim that those funds were entrusted on him. It should be noted that an organization’s banking accounts can be managed only by individuals whose signature can be verified against that organization’s signature banking card. Of course, Khodorkovsky was not on that signature card. And, thus, he was not an individual who could have wired funds anywhere with his signature alone. You can see for yourselves that Khodorkovsky’s name is not on the banking card, which can be found on pp. 153-168 in vol. 175 of the case file. Thus, it has been established, beyond any doubt, that through his official capacity Khodorkovsky was not someone who had been granted powers to dispose of or manage funds. He did not have a contractual relationship with that company, nor did he have a special, trust-based instruction from that company. Neither the investigators, nor the Prosecution have mentioned the existence of anything like that in this courtroom. Therefore, no funds owned by Oil Company YUKOS were entrusted on Khodorkovsky. This alone would be absolutely sufficient to say, “We are sorry, Khodorkovsky is not guilty of anything.” Because, under Article 160, he could only be guilty if the wired money, irrespective of how and why it was wired and whether or not it has been repaid, that he does not have anything to do with that, because that money was never entrusted to him (sic – transl.) All of this is just as true – even more true in fact - of the circumstances involving the transfer of funds owned other two legal entities, Grace and Mitra. Of course Khodorkovsky had absolutely zero to do with those entities’ funds, no matter how you look at it. According to the Grace banking signature card, the only person authorized to sign payment documents on its behalf was its General Director Karaseva. See vol. 84, page 224. As far as Mitra, only its General Director Kartashov could sign payment documents on its behalf. vol. 82, page 60. Because, as has been mentioned above, Khodorkovsky did not have the authority to command the finances of the three entities – Oil Company YUKOS, Grace, or Mitra – and had no right to sign payment documents on their behalf. And the Prosecution did not even consider Karaseva and Kartashev as members of the organized group that allegedly perpetrated instances of embezzlement. Khodorkovsky could not be the committer of this crime contemplated in Article 160 of the CC even if such a crime were even perpetrated by anybody. We will further prove that the crime itself was never committed by anybody. Not just by Khodorkovsky but by anybody at all. More than that, I will demonstrate to you a very interesting fact in that regard, which indicates that… Well, anyway, it does not matter what it indicates. Suffice it to say that the fact in question will once again prove that there is no corpus delicti here. Your Honors, here is what the Prosecution claims as it describes in its Determination to Arraign Khodorkovsky, attached to the case file, vol. 214, page 264, and also presented on page 31 of the Bill of Indictment, the objective aspects of the crime. Frankly, I could not believe my eyes when I first read that. Please listen. The Prosecution claims that it was not funds owned by Oil Company YUKOS, Grace, or Mitra that were embezzled for the benefit of Gusinsky but, I quote, [funds] “received through theft of proceeds from the sales of apatite concentrate, theft of proceeds from the sale of oil and oil products, and through tax evasion.” Kaboom! That is what kind of money was wired to Gusinsky! So, according to the Prosecution, he embezzled his own money, which, of course, he had first stolen somewhere and somehow. Then follows something else, which is not a slip. No, it is a whole construct by the Prosecution. The Prosecution says in the same proceedings documents that those funds, which were stolen from three sources: sales of apatite concentrate, sales of oil and oil products (God knows what that means by the way), and tax evasion. How was that money embezzled? The Prosecution carries on. These are all quotes from major proceedings documents, not just some loose words. [Funds] obtained via theft and tax evasion were concentrated in accounts held by foreign companies. And, the Prosecution says in writing, it was those funds that Khodorkovsky disposed of by distributing them at his own discretion, including by transferring part of them to Gusinsky’s companies. So where exactly did he wire those funds from? I have just told you that, according to the Prosecution, he wired the funds from so and so, including from YUKOS-Moscow; that he used so and so payment orders. These payment orders are available. And here it says something different – that he wired the funds from accounts held by foreign companies. Accounts in which he accumulated those funds that had been stolen on other occasions. Is this supposed to be a serious charge? Or is it a mockery of a charge? It was a slip of the tongue, please bear with me. I said YUKOS-Moscow but I meant Oil Company YUKOS of course. The payment orders are there. Thus, on the one hand, the Prosecution refers to Khodorkovsky embezzling funds entrusted on him, while at the same time claiming that he transferred funds previously stolen and misappropriated by him and his group. Some clarity is in order. At least in these remarks. What is the Prosecution saying today? Or is simply serving a bunch of stuff a la carte if you will? Sort of, what’s your fancy kind of a deal? I am afraid we are not exactly at a restaurant. The Prosecution must clearly state what it charges [the defendant] with. It follows from the Bill of Indictment that he may have taken this somewhere or maybe he stole it and here is from where he wired those funds. How are you supposed to choose? And how are we supposed to defend? That means that now we must analyze everything that has to do with some foreign companies in which those funds are supposedly being accumulated. [And we are supposed to] defend against some theft of oil and oil products, while no such charges have been brought by anybody anywhere. And then there are these procedural documents that contain all this garbage, I can't find a different word to describe it. One of those procedural documents was signed by Senior Special Major Case Investigator of the Prosecutor General’s Office of the Russian Federation Karimov. Another Bill of Indictment was signed by him and approved by a deputy to the General Prosecutor. How much higher can you go? It should all be clear and truthful and correct. And instead we have this complete, utter absurdity. I have already said that there has been enough [demonstrated here] to enable me to state that those funds that he transferred were not funds that had been entrusted on him. For that reason alone there can be no charges under Article 160. With those charges, it is not even clear what was embezzled and where it came from. There cannot even be a discussion on that subject. The Determination to Arraign and the Bill of Indictment indicate, and the same is maintained by the public prosecutor, that Khodorkovsky unlawfully and gratuitously collected and turned for Gusinsky’s benefit cash resources that belonged to Oil Company YUKOS. So, in the final analysis, the matter at hand is in fact Oil Company YUKOS. And it says further down that it inflicted damage on the owners of those funds. The owners. This is what the Determination to Arraign says. We perfectly understand the legal meaning of the term “owners.” It is set forth in vol. 214. I have already made that reference. I will not repeat it every time. Pages 264-245. (sic – transl.) The Bill of Indictment – apparently the Prosecution is not concerned about certain terms and my colleagues have discussed it before - indicates that the damage was inflicted on the possessors, not owners of those funds. But possessor and owner are two different notions. Because property also means possession. It also means you can use and dispose of what you own. And here, for some reason, there is only a reference to damage inflicted only on possessors. Damage was inflicted on legal entities. But the Bill of Indictment says, "and to shareholders of legal entities.” That the embezzlement caused damage to the legal entity itself, so it is after all Oil Company YUKOS, and to shareholders of such legal entities. How exactly were they damaged? By virtue of understating the earned profits by those amounts. And, appropriately, as a result of reduced dividends due to the legal and natural persons, the outside shareholders. First of all, let us note that there is no mention of that in the Determination. Thus, the Bill of Indictment runs counter to the Determination and broadens the charges brought in the Determination. This is something that the Bill of Indictment cannot do. And this is sufficient for me to say to you, “Your Honors, I will no longer discuss this because these are completely illegal instructions.” The Prosecution’s Determination does not discuss any damage to individuals, shareholders, etc. And this is completely irrelevant. And yet I will say a few words because this subject was touched upon in a discussion of another episode. From my perspective, [it was said] very appropriately and very convincingly that the claim that damage was caused to shareholders of such legal entities through reduced dividends is completely absurd. Especially as far as Grace and Mitra are concerned. Both Grace and Mitra are limited liability partnerships. That means that they have no shareholders by definition and they cannot have any under the law. What kind of shareholders of those entities suffered damages? What were these people thinking as they wrote this? Let us go further now. All these astonishing allegations incriminate Khodorkovsky. That means it should have been proven that Khodorkovsky had some kind of direct involvement in those events. I have already mentioned that the property was never entrusted on him. Thus, of course, formally there was no way for him to dispose of it. And you are being told here that yes, indeed, such and such organization was established by such and such organization, and this one was founded by that one, and Khodorkovsky knew so and so really well, and, it turns out, Karaseva used to work for him and so on and so forth. And, as a result, no matter what happens and where it happens Khodorkovsky is going to be held responsible. This position is completely unacceptable. And, I hope, you will reject it. Clear evidence must be provided of the fact that, at the very least, Khodorkovsky was clearly and firmly aware of what was happening. So at least one witness should be brought in who can say, “I reported this to him.” Or at least that Khodorkovsky told him in a personal conversation that yes, he knew about it. Or that somebody said that, yes, indeed Khodorkovsky called him to his office and gave him such instructions. Or at least that he called on the phone and suggested or asked. Is there a single witness who could say that Khodorkovsky was at the very least informed of what was going on? There were no such witnesses, either during the preliminary investigation, or here in this courtroom. So on what grounds can claims be made that not only he knew but that he also organized all of that, that he did all of that? And not just with Oil Company YUKOS but also with other entities, allegedly controlled by him. Did witness Karaseva confirm that? Did somebody else corroborate that? That, yes, somebody called us and said, “Please give the funds to Gusinsky.” Perhaps there is someone from there, from Most, who could say, “Yes, we made a deal with Khodorkovsky. We told him that we badly need money. Lend us some. Give us a loan. Or embezzle some but do give us some money." Again, the answer is ‘no'. What are the grounds, I am asking? I would very much like to hear a clear answer. On what grounds do they claim that Khodorkovsky is somehow involved in those acts, that he was aware of them? Or that he knew when, how much, on what grounds, etc. wires were effected. A complete vacuum. And in this vacuum we must defend and say that it never happened. This is what we are saying and, as we say that, we are referring to specific circumstances. So, what are we saying? We are saying that, yes, Most asked for help; that Oil Company YUKOS indeed placed available cash on the basis of loan agreements. Those agreements were completely legal. They had full legal grounds and they were grounded in terms of substance. For Grace and Mitra we are saying that Khodorkovsky has nothing to do with them whatsoever. Why they made a decision whether or not to loan the money we haven’t the slightest idea. But if Article 160 is to apply or any crime is to be discussed then the Prosecution should have proven that the funds were transferred gratuitously. It ought to have been proven with 100% reliable evidence. That the money left and was never repaid. That Oil Company YUKOS indeed suffered damages in that amount. Let us take a look and see whether or not that was proven. What does the Prosecution do trying to prove that indeed a crime was committed? It practically does not prove that fact because it cannot be proven. It never happened. We will demonstrate it later. Instead, the Bill of Indictment at great length and in great detail describes pretty much the same things over and over again. As in what Gusinsky did with the money. If he did something unlawful let him be held responsible for it. We have nothing to do with that. We are not even being accused of knowing in advance that Gusinsky would somehow dispose of the money improperly. That he would spend the money on liquor, partying, would buy yachts, automobiles, or invest in a business. We are not incriminated with that. And we do not know what Gusinsky did with that money. We can only be held responsible to the extent of our own compliance with the law. I am using the word “we.” I am generalizing all the circumstances of this case. Of course this is not Khodorkovsky himself. His role, let me repeat that, his participation, even his awareness of everything that took place, have not been established. But I use the word “we” to imply all the entities that had some kind of relationship to these events. Strangely, the Bill of Indictment allocates a lot of space to the fact that a building was purchased at 5/1, Bolshoi Palashevsky Lane, Moscow. There is a description provided along with testimony by witness Antipin who attended the last court session. And a claim is made that part of the funds used to purchase the building belonged to Oil Company YUKOS, and so on. What does it have to do with the fact whether or not the money was provided gratuitously? This is what needs to be established. And how the money was spent is irrelevant. Let us look at whether the money was provided gratuitously or was subject to repayment. Although we are not required to prove innocence – under the law, guilt must be proven by the Prosecution – we venture to affirm that we have proven that the agreements whereby funds were transferred were reimbursable. And not just that there were such provisions but that the money was actually repaid. This is confirmed by the following evidence. On July 5, 1999, OAO Oil Company YUKOS and ZAO Media-Most entered into a loan agreement. Please refer to Schedule #1 to a reply by OOO YUKOS-Moscow, which we have submitted to the court and which was attached to the case file on February 11, 2005. Under the agreement, OAO Oil Company YUKOS placed idle cash in the amount of RUR equivalent of US$5 million for a certain term (whereby the loan was to be repaid), subject to repayment. As indicated by the item specifying the purpose of the payment per the payment order, available on page 29, vol. 7, and in Schedule #3 to the reply, which we have provided, the agreement is a legal foundation for a cashless payment in the amount of RUR121,450,000 with Oil Company YUKOS. Under the indicated agreement, ZAO Media-Most, the recipient of funds and, thus, the debtor undertook to deliver to YUKOS a promissory note for the loan amount denominated in USD within two business days of the loan proceeds being deposited in its settlement account. ZAO Media-Most honored the commitment, as evidenced by a report on acceptance/delivery of the promissory note as of July 6, 1999, Schedule #2 to the reply, which you have attached to the case file. Such relationships, just like all the other ones I will discuss later, were fully in compliance with the provisions of Article 815 of the Civil Code of the RF and the Russian legislation governing bills of exchange. So, what happens next? On April 28, 2000 Oil Company YUKOS presented the above bill for payment directly to ZAO Media-Most in accordance with an April 28 report of acceptance/delivery of unnumbered promissory notes for repayment, Schedule #10. The promissory note was used for collateral. The promissory note was presented for payment. On the same day the promissory note was paid by Media-Most via payment order #783 in the amount of RUR142,150,000. A little more actually. They even paid an interest. That the amount was entered in the settlement account of Oil Company YUKOS is confirmed with memorandum order #783 of April 28 and a statement of account of Oil Company YUKOS as of April 28, 2000, Schedules #11, 12 and 13 of the reply #YuN 78/1. What gratuitousness is there to talk about? How is it possible to accuse an individual while covering up all these circumstances? What has the Prosecution done? I think the prosecutors of course knew all of this. But these are my assumptions. At any rate, they did not study any of that but turned it over to the court. They said where the money was sent but they did not indicate whether or not the money was repaid and on what grounds the money had been transferred in the first place. So, it has been established reliably with regard to the first agreement that it was a loan agreement and it was completely official and in compliance with the law. Money was temporarily wired under that agreement and it was repaid in full plus interest. The original loan was in the amount of 121,450,000 and 142,150,000 was repaid. What is there to complain about? Clearly, the above data confirm everything. First, that the original loan agreement made on the basis of civil law standards did provide for repayment. Second, that funds made available under the agreement were repaid. The amount repaid by Media-Most exceeded the amount lent by Oil Company YUKOS by RUR24,700,000. So there is your embezzlement. On September 29, 1999, OAO Oil Company YUKOS and ZAO Media-Most entered into another loan agreement. See Schedule #4 to the reply that we provided to you and attached to the case file. The agreement provided for the placement of idle cash of OAO Oil Company YUKOS in the RUR equivalent of US$10 million, i.e. 250,800,000 rubles. The conditions were the same – it was a term, repayable loan. According to the item specifying the purpose of the payment per the payment order, page 72, vol. 7, and also Schedule #6 to the reply to us #YuN780, which you have attached to the case file, the agreement provides a legal foundation for a YUKOS cashless payment in the amount of 250,800,000 rubles. Under that agreement, Media-Most undertook, within two days of the loan proceeds being deposited in its settlement account, to deliver to YUKOS ZAO Media-Most-issued promissory notes for the loan amount, denominated in USD. That commitment was fulfilled. The promissory notes were delivered. On April 28, 2000 Oil Company YUKOS presented those promissory notes for payment directly to Media-Most according to the report on acceptance/delivery of promissory notes for debt repayment purposes. Schedule #10 to the reply, which you have attached [to the case file]. On the same day ZAO Media-Most redeemed the promissory notes via payment order #783 in the amount of 284,300,000. That is, again, it was a large amount. That the funds were deposited in the settlement account is confirmed by memorandum order #783 of April 28, 2000 and a statement of the Oil Company YUKOS account. Including this, so-called gratuitous agreement (sic – transl.). In fact, all the legal grounds were there. This agreement provided for repayment. And the money was repaid. I will not discuss the other ones in as much detail. They are all absolutely identical. I will simply [mention] the key parameters. Next time, on November 17, 1999 yet another loan agreement was made. It also provided for placement of the ruble equivalent of US$10 million, or RUR263,200,000. The terms were the same. The loan was collateralized with a promissory note in the name of Oil Company YUKOS. On April 28, 2004 YUKOS presented the said promissory note for payment to ZAO Media-Most. The promissory note was paid on the same date. Again, with interest. YUKOS earned 21,101,000 under that agreement. I have not mentioned the earnings under the previous agreement. Here – YUKOS made 33,500,000. Again, not only did the agreement provide for repayment but there was a profit made. Finally, the fourth agreement. It concerns a wire in the amount of * RUR710,750,000. In fact it has been established that Oil Company YUKOS transferred the above amount to OOO Delf. Instead of a loan agreement it was done via an assignment agreement. In exchange Oil Company YUKOS received four notes issued by ZAO Meta-Media. You will remember that a witness was examined regarding that matter. Everything was established beyond any doubt. The case file does not contain a Oil Company YUKOS payment order for the amount specified by the Prosecution. The Prosecution has alleged that the payment order is available on page 196 in vol. 7. However it is a mistake. I am not sure whether it is intentional or unintentional. The specified page in vol. 7 contains a copy of the memorandum order, not a copy of an April 28 payment order as stated on page 521 of the Bill of Indictment. It has been said, somewhat sarcastically, here that, mildly put, those are different things. The memorandum order indicates that the payer, Oil Company YUKOS, transferred the above-indicated amount, namely 710,750,000 to the recipient under the transaction. Also, it says that the payment was effected under an assignment agreement. In the former three situations there were loan agreements, but this one was an assignment agreement. The above circumstances are also corroborated by a copy of a payment order, which we have submitted and which has been attached to the case file. It is dated April 28. The number on it is 2900. The payment order also refers to an assignment agreement as the basis for payment. The agreement was made on April 28, 2000. It follows from the language of the agreement, which we have also submitted, and it has been attached to the case, that it provided for YUKOS to buy from Delf the claim to four Meta-Media notes worth a total of RUR equivalent of USD25 million. The document is also in the case file. vol. 7, pages 176-179. Those were the legal grounds for money transfers. Under paragraph 1-2 of the assignment agreement, YUKOS was to pay Delf RUR710,750,000 for the acquired claim to the indicated four promissory notes. Delf undertook to transfer all documentation in support of the claim to Meta-Media. Also, the four notes are specified. Everything seems to be clear. And everything is very simple. The notes transfer occurred via a report on delivery/acceptance of promissory notes. They are currently at your disposal. Subsequently, under an August 2 assignment agreement, Oil Company YUKOS assigned the claim to Alta- Trade. The claim with respect to OOO Saturn. But that is irrelevant. But, of course, I will mention all of that. Under paragraph 1-2 of the agreement, Alta- Trade was to pay YUKOS RUR560,600,000, which it did. That is to say that Oil Company YUKOS received its money. But in a somewhat more complicated way. It didn’t receive its money directly from those whom it had given the money to. And, also, YUKOS received its money by way of partial termination of obligations, as a result of an agreement made by Alta-Trade and YUKOS on netting mutual similar claims, and also via Alta-Trade effecting a non-cash transfer in the amount of RUR510,172,282.25 to the settlement account of OAO Oil Company YUKOS. Payment orders. We have specified all of that in writing. I do not want to trouble you with that since it is difficult to follow this in the verbal vs. written format. But all relevant documents confirming my statements are in the case file. We have submitted them to the court. And the court attached them to the case file. They are at your complete disposal. Thus, from the very outset the transfer of funds by OAO Oil Company YUKOS to OOO Delf was subject to repayment, according to the contract. Subsequently, everybody exercised their rights. And the amount wired by Oil Company YUKOS was fully repaid. Thus, in accordance with the documents, it is established that RUR1,346,000,200 (sic – transl.) transferred by Oil Company YUKOS to the accounts of ZAO Media-Most and Delf was fully repaid to OAO Oil Company YUKOS. In addition to the already mentioned fact that all the specified transactions provided for repayment, the same is also evidenced by the following circumstance. It follows from a reply by YUKOS-Moscow attached to the case file on February 11, 2005 that before conducting financial transactions to extend a loan to ZAO Media-Most Oil Company YUKOS examined the assets and solvency of the borrower, i.e. of Media-Most per se. What are you being told here? That why were those agreements of gratuitous nature? Because, allegedly, by that time Most was virtually bankrupt and it was clear that it would not repay the funds. This is not true. These are baseless assertions that are blatantly out of sync with reality. Before lending Oil Company YUKOS made sure that the borrower was solvent, i.e. verified whether Most and its entities that were recipients of the funds were solvent. And it was not until it was established that the borrower was solvent that the loan was provided. The inspection indicated that the RUR equivalent of 25 million (sic – transl.) borrowed by ZAO Media-Most was within 1-2% of its total assets. That, in turn, meant that the loan carried virtually zero risk. And Oil Company YUKOS could only lose that money through force-majeure events, which, unfortunately, occurred but in this particular case force-majeure did not result in Oil Company YUKOS actually losing its money. The assets of ZAO Media were not examined since its promissory notes were guaranteed by ZAO Media-Most. *** I have not made up any of this. This is according to the testimony by witness Antipina who was examined during the court investigation. Copies of the promissory notes can be found in the case file, on pages 176-179, vol. 7. And the ZAO Media-Most guarantee is indeed stamped on them. One can see it on the promissory notes. That means that in the event of Meta-Media’s failure to pay under the promissory notes Media-Most bears full responsibility with its assets. And it had gigantic assets. And the promissory notes were worth 2% of its assets. Therefore, of course, all of this was secured. According to a report by an independent licensed appraiser ZAO International Appraisal Center, as of October 1, 1999 the market value of the 100% of ZAO Media-Most's assets as a going concern amounted to… Well, anyway, there are some gigantic numbers here. 2,000 billion or something like that *. In other words, considerably more than the total face value of what it guaranteed *. Therefore, the purchase of Meta-Media’s promissory notes was also a safe financial transaction for OAO Oil Company YUKOS. *. The repayment of all funds and lack of losses experienced by Oil Company YUKOS through the above business transactions has been confirmed and [the relevant materials] have been attached to the case file. An excerpt from the minutes of a meeting of the Oil Company YUKOS Board of Directors, #120- 14, on July 9, 2004. Schedule #3 to the reply by OOO YUKOS-Moscow. In accordance with the latter, the conclusion and performance of agreements on the provision of a loan to ZAO Media-Most for a total amount equivalent to USD25 million and the execution by Oil Company YUKOS of transactions to re-invest funds received from ZAO Media-Most for the purchase of ZAO Media-Most’s promissory notes worth the equivalent of USD25 million were all performed by duly authorized officers of OAO Oil Company YUKOS, based on the lawfulness of such transactions and in accordance with the legislation applicable as of the date of their execution and performance. The Board of Directors confirmed that the above-mentioned transactions and actions were in line with the economic interests of Oil Company YUKOS. It also confirmed that YUKOS had not experienced any losses through the execution and performance of such transactions *. We didn’t really have to prove that Grace and Mitra also got their money back, if even for the simple reason that there is no proof whatsoever that they transferred funds to Most or that Khodorkovsky is in any way involved. Nothing has been established. But we have ventured and gone to the trouble of establishing those circumstances as well. And we have established that those entities, too, loaned funds, not embezzled them. And they also got their money back in full. I will offer a brief description of the actual events that were somewhat more complicated. Because, once again, none of this has any relevance to the charges against Khodorkovsky. But nonetheless. Under an August 12, 1999 agreement, pages 76-77, vol. 7, Grace acquired from ZAO Biron a promissory note issued by the KB Most-Bank for RUR268,682,260. However the face value of the note is higher at RUR 268 million 968 million (sic – transl.) 600 thousand (sic – transl.). Therefore, the existing civil law contract constituted the immediate grounds for Grace to transfer funds to Biron. As I said, the value of the promissory note was somewhat higher, it was purchased at a discount below the face value in order to make a profit on the difference. In performance of the indicated contract, Grace, in full compliance with the banking legislation, the bank account contract, page 211, vol. 84, executed a payment order, page 74, vol. 7, which was complied with by the bank. And Biron transferred to Grace a promissory note with a face value indicated in the acceptance/delivery report, page 78, vol. 7. Under a December 21, 1999 agreement, Grace acquired from ZAO Sard-1 a Most-Bank promissory note for RUR400,632,360 (pages 86-94, vol. 7) at a discount. The face value was higher than that. Again, the purpose of the transaction was to make a profit. In execution of that agreement, Grace, in full compliance with the banking legislation and the agreement on opening a bank account (see page 211, vol. 84), executed a payment order that was duly complied with by the bank. In its turn, Sard-1 transferred the Most-Bank promissory note that can be found on page 95 of the case in vol. 7. Based on a February 14, 2000 agreement, pages 110-111, vol. 7, OOO Mitra bought a promissory note from Osmet-1. All of this is documented in the case file. And the Prosecution could have easily seen all of this and realized how absurd any discussion of gratuitousness is. Based on the February 14, 2000 agreement, Mitra bought a Most-Bank promissory note from Osmet-1 for RUR287,700,000, pp. 108-112, vol. 7. The same volume. The face value and the promissory note cost more (sic – transl.). Therefore, the legal grounds were provided by the agreement. And also to make a profit of 5,854,000. (sic – transl.) Mitra bought the money and received that promissory note. All of this is available on pp. 42-44, vol. 82 of the case. In vol. 7, page 108. And in vol. 7, page 103. Finally, under a February 16, 2000 agreement, pp. 138-139, vol. 7, Mitra also purchased a promissory note from OAO GM-2. It paid money for it. Pages 137-140, vol. 7, and page 146, vol. 7. The face value of the promissory note is higher. They paid somewhat less. And they also derived a certain profit when they sold that note. If we were to sum up the matters involving Grace and Mitra we would conclude that they also provided money on a completely reimbursable basis. And all the money was repaid. However people who are not familiar with the financial and economic policies of organizations can wonder why all of was going on. It was going on because it was mutually beneficial. One party tried to dispose of a promissory note based on the assumption that it could not sell it at its face value. The other party believed that it could indeed sell the note at a higher price, at the face value, which is what it did. This is how all those transactions were effected. At any rate, there is nothing criminal about them. I am wrapping up this episode. I just have a couple more things to say. There is nothing criminal in this episode. And, of course, there are no grounds to discuss any involvement of Khodorkovsky in this criminality. (sic – transl.). It can be considered established beyond any doubt. Evidence of guilt under this episode was collected with serious violations of the law. And the proceedings in this regard were conducted without instituting a criminal case. Secondly, the fact that the property of organizations specified in the charges was entrusted on Khodorkovsky has been refuted by the materials in the case file. Khodorkovsky’s involvement in the transfer of any funds to Gusinsky- controlled entities has not been proven with any materials in the case file. The funds specified in the charges were not embezzled but, instead, they were transferred to Gusinsky-controlled entities under valid and reimbursable transactions. All those funds were returned to the original remitters. The charges were worded in such a way that it is impossible to understand what funds these are. In addition to claims that those funds belonged to Oil Company Most (sic – transl.) it has also been claimed that those funds were stolen by Khodorkovsky himself. It should be noted that I have not mentioned here – we will submit this in writing – another sizable area, as I did not consider it necessary because what I have already said is sufficient. But this area has to do with the fact that a number of documents referred to by the Prosecution cannot be considered proper evidence since they were allegedly retrieved from that very server from which nothing in fact was retrieved. And, during examination, completely new documents, new in both quantity and volume, appeared, which cannot provide a foundation for a verdict. So, the question of whether or not Khodorkovsky is guilty of anything under this episode, whether or not his actions, and nobody knows what kind of actions, constitute corpus delicti, there can only be one answer – not guilty. <…> … specific episodes in the case. I consider it necessary to dwell on a particular examination that is common for everybody *. As I have already briefly mentioned, with regard to virtually all the episodes Khodorkovsky is charged with committing a crime. Either in an organized group, or in a group acting by previous conspiracy, or as leader of that group, or he created it, and so on. Before I discuss the specifics of each episode I may, briefly and by the episode, mention proof or lack of proof of this specific allegation on the perpetration of a crime as part of a group, I would like to comment on how serious in general an allegation is regarding the existence of any criminal group. That is, a group of individuals who, in addition to generally useful activities (sic – transl.), engaged in the commission of crimes. We hereby conclusively state that no group, let alone different groups that at different times involved Khodorkovsky and, of course, Lebedev, but right now we are talking about Khodorkovsky, have never existed. It is a completely groundless allegation that conflicts with reality. We will try to substantiate this. [We will try] to disprove the Prosecution’s case. Substantively, the case against Khodorkovsky and Lebedev is based on the allegation, an undoubtedly groundless and untruthful allegation by the Prosecution that they, these individuals are essentially not successful businessmen but virtually lords of organized crime in this country; that Bank Menatep and other organizations specified by the Prosecution are not commercial entities, which engaged, in compliance with the law, in banking or other commercial activities in order to make a profit; that those are not publicly useful entities for this society but, instead, components of a criminal group. In the meantime, it has been established that in 1990 Bank Menatep, led by Khodorkovsky, was among the first and most successful Russian commercial banks. Under its Charter, which is attached to the case, the goals of the bank’s activities consisted in: • Effective utilization of the research/technological and export potential of enterprises and organizations; • Faster implementation of state-of-the-art technologies; • Creation of research-intensive products. All of this is laid out in the bank’s Charter, available on pages 22 and 45 (?), vol. 58. It must be said that, of course, it was a new issue for our society, for our State. Our banks had never before engaged in such activities. And it was difficult to imagine that they should engage in them. Although, of course, it was a worldwide, universally recognized and extremely useful kind of activities for the State and the society. The key goals of the bank included the use of financial and lending leverage to accelerate the advances of science and technology, reduce duration of development and implementation of new technology, boost exports, implement modern management methods and economic practices, provide lending for promising production efforts, for the development and implementation of research ideas. That is, a specific quest for specific enterprises interested in selling available R&D products, and involvement in the establishment of industrial and trading enterprises. In this regard I recall how we examined in the courtroom some of the bank’s activities with regard to the company Apatit, which were completely in line with its Charter and were perfectly normal from the perspective of rights and requirements. The public prosecutors offered a clearly negative response to that, "What, is this what the bank was doing? What, its representatives substituted for something named Flora at an investment tender, and so on? *. This is criminality.” These, in fact, are completely normal activities. Normal, publicly useful activities that were provided for in the bank’s Charter. In fact, the bank worked to implement objectives set forth in its Charter. And it successfully implemented goals laid out in its Charter-related documents. It is public knowledge that the bank was actively involved in a number of government programs. In particular, was authorized by the bank of the State- owned company Rosvooruzhenie (Russian Weapons), (sic grammar – transl.). In 1994-95, the bank, in the interests of its clients, actively and legally participated in investment tenders, buying interests in a number of major industrial enterprises. Not only OAO Apatit, but also the Voskresensk Mineral Fertilizer Plant, and Uralelectromed, as well as the Mid-Urals Kirovograd Brass-Works. *. The bank’s right to engage in the above activities was confirmed by Konstantin Lubenchenko examined by the court as an expert on February 9- 10. The Prosecution commented on Mr. Lubenchenko’s testimony and conclusions in the sense that could he really be trusted if he had not yet returned his cabinet minister ID, which he was required to return. I will not now try and solve substantively on behalf of * the matter of whether or not he should have returned his ID. Although, that is provided for in the ID. Why didn’t he return an ID signed by the guarantor of our Constitution (RF President – transl.)? Maybe he was allowed [to hold on to it] in recognition of his services. It is hard to say. However, even assuming that his failure to return his ID was unlawful, can that be used as a ground to question and just brush aside a serious study performed by an expert, a top-notch expert, one of the best in this country? No analysis was carried out *. No, he never returned that ID, he held on to his cabinet minister ID, which may have a lot of sentimental value for him * because of the connection to our President. That’s that. So, do not listen to his expert opinion. In the meantime, Professor Lubenchenko explained that, being a universal bank, Menatep was entitled to engage in any banking transactions authorized by the RF banking laws. That includes investment activities. A practical and legal distinction between traditional banking activities and banks’ activities at the stock market was not legislated until 1996. Until then no distinction had been made between banks’ transactions. So, all of them were seen as routine banking transactions. Therefore, until 1996, and we are talking about 1994-95 here, any licensed commercial bank could freely: 1. Conduct securities transactions on its behalf. 2. Conduct securities transactions on behalf of its clients. 3. Consult its clients on investment matters. For that reason we do not now and have not in the past disputed a number of activities attributed to us. We only dispute that they were in any way criminal. Yes, the bank actively engaged in certain activities. Not Khodorkovsky, but the bank. I would like to emphasize that first and foremost. Here is something I remember since I was a young person. I think it was Mayakovsky who said, “We say ‘Party’ but we mean ‘Lenin’. We say ‘Lenin’ but we mean ‘Party’.” So, let us not do that. Let us not say “bank” and mean Khodorkovsky. And let us not say “Khodorkovsky" and mean the bank. Khodorkovsky is an individual, a citizen who has been charged with certain specific crimes. The bank is an entity that acted independently at certain moments in time under his leadership and at other moments in time - not under his leadership. And it is not sufficient to say that the bank did something and, therefore, Khodorkovsky did that. It must be proven that Khodorkovsky also did that, in particular, as a citizen and as an individual. I would like to remind you of certain well-known facts. In the early 1990s the Russian industry was in crisis. It was public information and it was acknowledged by all the leaders of this country. State-owned enterprises had no investments. There were months-long payroll backlogs. Equipment was becoming outdated rapidly. All of you will remember how coal miners banged their hard hats [on the ground] in this nation’s capital to hammer in the message that they had not been paid for months. That was the situation in this country. So, the government sought to get private capital to help restore the collapsing enterprises. Unfortunately, or maybe fortunately, at that time businessmen were afraid of getting involved with post-Soviet industrial enterprises encumbered as they were with huge debts to the government and massive payroll arrears. Apatit was exactly that kind of enterprise. In 1995, due to a structural crisis that, in particular, affected the entire oil industry and also due to the extremely grave situation of the State-owned oil company YUKOS, which at the time was already in existence, a large interest in that company was offered for sale at a loans-for-shares auction. Despite the immense risk of investing in a virtually bankrupt company, Bank Menatep submitted a bid at the auction. It received 78% of the Oil Company YUKOS stock for management against a USD350 million collateral. That is why Khodorkovsky removed himself from the activities of the bank and focused on Oil Company YUKOS. He went to the oil fields. You heard about that, you will remember. [he did it] in order to see the oil-producing facilities for himself, to work there, to get to know things inside out. And, largely through Khodorkovsky’s personal efforts, in 2003, OAO Oil Company YUKOS was no longer a company on the brink of bankruptcy and soaked in red ink but, instead, an international energy market leader with a capitalization of USD40 billion. *. The Prosecution has tried to present Khodorkovsky’s publicly useful activities – it is obvious from what I have said – as criminal acts. Not just some criminal acts but criminal acts that were committed as part of a criminal group. Because of that all the charges against Khodorkovsky, except for those under Articles 198, 427, incriminate Khodorkovsky as part of an organized group, or individuals that were part of a group (sic – transl.) *. Therefore, above all, I consider it necessary to analyze the matter of whether indeed an organized group was set up by Khodorkovsky or at least with his involvement for the purpose of committing one or several crimes. You have heard that all the defendants have denied the existence of such criminal groups, and also denied leading them or participating in them. In his testimony Khodorkovsky claimed that he had not established any groups for the purpose of engaging in criminal activities and that he did not know anything about the existence of any such groups. Lebedev gave similar testimony and confirmed that Khodorkovsky had not organized such groups and that he, Lebedev, had not participated in, had not heard about such groups or their activities. In his testimony Krainov also denied involvement in any organized group that sought to commit a crime. In the meantime, to appease the Prosecution, Krainov was ready to corroborate almost anything in exchange for leniency and for being left at large – I have no clue how he thought it could be accomplished - despite being charged with such horrendous crimes. But he did say that he had not had any connection, including criminal, either to Lebedev, or to Khodorkovsky. And he had never heard about the activities of an organized criminal group. It is absolutely obvious that as they accuse an individual of committing a crime as part of an organized crime investigators must prove who, when (at least in which year), under what circumstances, and where organized the group and who the group comprised. What was the purpose of the group – to commit one or several crimes? What kind of crimes? Et cetera. I assure you that not only none of that has been proven but nothing has even been indicated. It has not even been said in writing where, in what way, when, and how that group was put together, who, specifically, created it, who were members of the group. None of that is available. There are fragmented mentions of one group, then another, yet another, and yet another – a fourth one. At different times. Et cetera. It is not an accident that the case file contains no proof that at some particular moment Khodorkovsky made a decision to establish an organized criminal group and formulated the objectives of its activities. Nor is there any proof of how he [allegedly] brought together the accomplices. It is not an accident that none of that exists. This is so because in reality there was no such group. The mere fact of individuals working in a company, let alone in different companies, and even the fact that several individuals from the same organization manage a business together, cannot be used to prove the existence of an organized group. I would like to emphasize the incorrectness of a statement by defendant Lebedev when he referred to a group of persons at the prosecutor's office. Yes, there was an organized group of investigators in the prosecutor's office. And we know who was in charge and so on. But that does not mean that it was a criminal group. That alone is insufficient for labeling a group as criminal. Yes, of course, it can be argued that a certain group of individuals worked at the bank. Of course there was! But it must be proven that the group was criminal, that it was organized for different purposes other than to let the bank operate in a normal and successful manner. It should have been proven that the group was established to commit some kind of crimes. In the meantime, the Prosecution has proffered no proof that Khodorkovsky ever conducted any meetings attended by anybody. * Determination to Arraign Khodorkovsky. Numerous * mentioned as “members of a group of individuals.” And the Bill of Indictment, as I said, contains references to a large number of names and companies. However, simple enumeration of individuals and legal entities, of course, fails to confirm that their legitimate association for lawful business purposes constitutes organized activities (the word ‘criminal’ seems to be missing between ‘organized’ and ‘activities’ - transl.). In this regard, I would only like to mention a rather well-known fact that has been reported by the mainstream media. The thing is that in order to prove the existence of an organized group one must prove the existence of a direct link between alleged criminal acts and the acts of the relevant natural or legal persons. And in this regard our competent agencies submitted a request to the Supreme Court of Lichtenstein asking for mutual assistance, which was denied. Why? The court said that there was no evidence of a link between the lawfully existing Bank Menatep and the alleged illegal activities. Denial by the Supreme Court of Lichtenstein for Civil Cases #12RS 2003-255. It was published. The Prosecution alleges that there was an ongoing relationship between Khodorkovsky, Lebedev and, in particular, Krainov. It also alleges that they also used some unique methods to prepare and commit crimes. That is a baseless allegation. No references are being made. Although there is evidence that disproves it. That evidence is constituted by Khodorkovsky's testimony. As sad as it is for the Prosecution, it is in fact evidence. There is also Lebedev’s testimony. There is also Krainov’s testimony. All three have said that this is not true; that this came out of nowhere; that they were not part of any group. Moreover, both Khodorkovsky and Krainov have said in the courtroom that they have never met. I remember Krainov answering my question in the negative, when I asked him, “Tell us if you were ever at Khodorkovsky’s *.” I can remember how you, your honor, objected when Krainov was asked if he had ever been at Khodorkovsky’s. And he confirmed one more time that he had never been at Khodorkovsky’s. I asked if, maybe, he had met him somewhere else, at a party, at a meeting of some group somewhere. Never before in his life. On the other hand, did Khodorkovsky maybe come to visit you? Maybe you didn’t visit him but he visited you? That even made him laugh. Of course that never happened. So what is this allegation based on then? Alas, on nothing. It didn’t even come out of thin air. Because there isn’t even thin air here. It simply is the product of someone’s imagination. The above testimony by Khodorkovsky, Lebedev, and Krainov has not been refuted by any of the witnesses, or by any document. Nobody has ever seen them together, nobody knows about their meetings, nobody has seen or knows of any correspondence between them. Your Honors, everything that happens in the world must have some kind of physical consequences. Maybe not right away but somehow, eventually. If there was a group, an organized group, that means they met frequently. That means they had to somehow meet, correspond, talk among themselves. Otherwise how could a group have existed? We do not have a single fact, none whatsoever, to the effect that they ever met. Outside, at a restaurant, at an office, in someone's study, during a walk in the park, so they could talk about something and could agree on something. I am not even discussing here that there had to be some kind of a meeting, a gathering to set up the group. Nothing. Not a single fact. No evidence that this ever took place. Look at what the Prosecution writes further down, “Khodorkovsky and Lebedev established a complex hierarchy of co-subordinated commercial entities, which served to fulfill their criminal goals.” And what does the Prosecution refer to? Just look at the Bill of Indictment. They refer to constituent instruments of various companies, minutes of founders’ meetings, sessions of the Boards, general meetings of participants in various companies, incorporation papers of legal entities, companies’ internal documents, reporting documentation and arguments. (sic – transl.). In the opinion of the Prosecution, all those documents – and I think they themselves do not quite believe it but, at any rate, they write about this. The Prosecution asserts that all of this indicates that there was a group here. In the meantime, it is completely obvious… One could simply brush this aside. But I will say a few words. All these documents are routine paperwork that is used in standard business practices by all organizations. No organization can exist without constituent instruments. How can those documents point to the existence of criminal groups? None of them contains even the slightest amount of information about any criminal or unlawful activities on the part of Khodorkovsky or anyone else for that matter, or about Khodorkovsky’s leading role in an organized group. The Prosecution asserts that the presence of Khodorkovsky and Lebedev at the first founding meeting of the JV RTT and their signature on the meeting’s minutes “attest to the fact that even at the formative stage of that enterprise Khodorkovsky and Lebedev were directly involved in its activities, trying to assume leading positions.” Their presence at the meeting. That is actually what the Prosecution says. Their presence at the meeting. At the founders’ meeting. This is what allegedly attests that they tried to assume leading positions. And that this already constitutes goals of criminal activities. And there is no explanation offered, as the allegation is being made, why the Prosecution believes that the fact of somebody’s presence at a founding meeting indicates an attempt to assume leading positions. Very well. Let us suppose that such attempts did take place. Are these attempts criminal in the context of the market economy? Is there a businessman out there who would not like to assume a leading position? What do businessmen want? To work as janitors at those organizations and enterprises, OOOs and OAOs? No, of course, [they want] leading positions. But that has not been proven. Moreover, in addition to Khodorkovsky and Lebedev, the meeting was attended by a large number of other individuals. That included Vorobiev, and *, and Golubovich, and many others. Why is there no reference to them? Perhaps all of them together wanted to assume leading positions? Why are Lebedev and Khodorkovsky being singled out of the many people in attendance at that meeting? What does their participation prove other than the fact that they probably knew each other? Is anyone contesting that? Is anyone concealing the fact that they knew each other? And, more than that, they have said that not only they knew each other but they were friends. Good for them. Despite this, two are being selected from among the participants, and a statement is being made that their attendance at the meeting attests to the fact that there was some group with some unseemly intentions. Further down there is what I would refer to as a joke of evidence. The Prosecution goes on to say on page 39 of the Bill of Indictment, “Lebedev’s presence at the meetings indicates that he acted in concert with Khodorkovsky.” It is not being explained how the fact of the presence (at a meeting of the JV RTT’s Board of Directors) of one of the Board members corroborates that his activities were coordinated with Khodorkovsky. What about the other Board members? Aren’t they also members of the group just because they attended the Board meeting? And didn’t they act in concert? What kind of nonsense is this? Again, further down the Prosecution argues, "The signing by Khodorkovsky and Lebedev of minutes of the JV RTT meetings confirms the validity of the charge against them that they were de facto leaders of that organization.” This is exactly what page 40 of the Bill of Indictment says. First, the existence of a signature on a corporate document does not indicate that the person who signed it holds a senior position. Second, OK, so they were in charge. Who is disputing that? But does that prove the establishment of a criminal group or their leadership positions in one? However all these facts are included specifically in the chapter that contains evidence of the existence of a criminal group. Further down, the Prosecution refers to… Your Honors, I understand that it is rather difficult to sit through all these details. But this is evidence used to substantiate the charges. In the Prosecution’s opinion, this evidence irrefutably proves the existence of a criminal group. It takes up dozens, hundreds of pages of the Bill of Indictment. I may not need to analyze all of it but I must analyze most of it. The Prosecution then goes on to provide the JV RTT’s manning list with a reference that Khodorkovsky and Lebedev used individuals specified in the said manning list as CEOs and Chief Accountants of various front legal entities. Front legal entities? From where, to whom and why? No explanation is given. In the meantime, in itself a manning list does not prove that individuals in it were used to achieve criminal goals. You know how it should have been done? First, it should have been proven that certain individuals in JV RTT were used to accomplish criminal goals, that in Khodorkovsky’s interests they performed certain acts and after that it should be said that their names are actually to be found in the manning list. Here, a manning list is used as proof that they led a life of crime. In itself a manning list does not indicate that an individual in it is a criminal or a member of a criminal group. In his remarks the public prosecutor repeated the language in the Bill of Indictment contained on page 40 and specified that the JV RTT’s customer- handling procedure proved that JV RTT’s employees used by Mikhail Borisovich Khodorkovsky in fact managed funds owned by front companies. Almost everything is correct except for the fact that it is completely groundless. Indeed, the customer-handling procedure provides for “management of funds owned by customers who on a continuous basis used cash services (sic – transl.) of JV RTT.” This is recorded in the document on page 227 in vol. 150. Here, a small change, as it is often done by the Prosecution, completely changes the meaning. It also distorts the meaning of an absolutely legal document. One more time. Just to make things crystal clear. The fact of the matter is that the customer-handling procedure provided for management of funds owned by customers who on a permanent basis used custodial services. The Prosecution puts it differently. It says that the customer-handling procedure proves that the relevant employees of JV RTT managed funds for front companies. These are not the same things. The Prosecution then proceeds to make the following conclusion, “Evidence is available in the case that Khodorkovsky and Lebedev always managed the activities of Bank Menatep, commercial entities of MFO Menatep and JV RTT.” This is an arbitrary statement. Out of the blue. However, the evidence in the case file by no means establishes that Khodorkovsky and Lebedev always managed. On the contrary, as established by evidence in the case and by a number of circumstances, which I will not reiterate here, Khodorkovsky and Lebedev did not always manage Bank Menatep. In particular, Khodorkovsky at some point in time left the bank. I have spoken about it before. He left for the oil fields. And at that time he was not at the helm of the bank. Khodorkovsky was never on the staff of MFO Menatep or JV RTT. Nor was he ever the CEO of those entities. At the same time the Prosecution fails to specify why it is criminal to manage a commercial entity. Even if we were to agree that yes, he did manage it. Instead of information about criminal activities the Prosecution again cites information about routine commercial activities. Prior to that the Prosecution admits the lawful nature of those entities’ activities. For instance, on page 43 [it says] that those entities were not established for criminal purposes but to purchase interests in enterprises and to manage commercial organizations. By referring to founders * of legal entities the Prosecution makes the ungrounded conclusion that Khodorkovsky was involved in establishing commercial entities via which he allegedly intended to join the statutory funds of the enterprises through MFO Menatep. (sic – transl.) And this allegation was disproved during the court proceedings. Thus, the written evidence submitted by the Prosecution to the court referred to the commercial companies Smile, Alt, Kamea, Argut (?), and A-Trust. Pointing to a decoded signature of one of the founders, the Prosecution claimed that Khodorkovsky was involved in establishing that organization. Page 46 of the Bill of Indictment. However Khodorkovsky told the court that the signature on the specified constituent instruments was not his. He did not sign such documents. And he does not know anything about how those organizations were established. Very well. If that is what the defendant said then at least his testimony should be disproved and [the Prosecution’] argument must be corroborated. It must be proven that this is not so. He says this is not his signature. Then a graphologist is required to prove otherwise. The Prosecution has not offered any evidence to disprove Khodorkovsky’s statement. That is, neither the investigation, nor the court commissioned or conducted a graphologist’s review of that signature. None of the witnesses examined in court refuted Khodorkovsky’s assertion that those documents contained somebody else’s signature. Therefore, Khodorkovsky’s testimony that he did not sign the constituent instruments of those entities is the only reliable evidence under this charge. Similarly, evidence that in 1992 MFO Menatep was a higher tier firm with respect to NTP Menatep, AO TD Menatep, AO Menatep Invest, and JV RTT does not confirm that Khodorkovsky established an organized group. It only indicates that the business developed in a normal manner. That is a situation where, in a group of companies, one clearly is above the others. Who cares how many subsidiaries and branches there are out there? Does that fact alone confirm that there is a criminal group? In addition to the above-mentioned official documents, such as constituent instruments, incorporation papers, internal reporting documentation, Krainov’s weekly planners have been attached to the case file. I must spend a little extra time on those. After somewhat illegally seizing and attaching those to the case file the Prosecution did not even bother to demonstrate these documents to the alleged author of those records. Just to find out whether or not he actually made those notes. If he did – what do those records mean and what was their purpose? He should have been questioned in that regard. None of that has been done. Simply: they see some records and feel free to interpret them any way they want. And they tend to interpret them in only one way – as proof of the defendant’s guilt, in particular, as proof that there was an organized group and that Krainov, as the alleged author of those records, was part of it. For reasons mentioned above Krainov himself did not make sure that he said something about it. This is how they arrived in court. Your honor, to your credit, you disagreed to this opportunity not to study these documents (sic – transl.). You asked Krainov to approach. You showed him these records. And you asked him, just as the investigator should have done as part of the investigation a long time ago. As the prosecutor should have done here, in the courtroom. And you asked Krainov. I will further say what answers he provided and what all of this means. I can say that on the whole the Prosecution’s baseless and far-fetched conclusions with regard to entries in Krainov’s weekly planner confirm in fact the actual entries, not the conclusions. And the baseless conclusions have been fully refuted by his testimony in court. And simply by the logic of events. Examined by the members of the court, specifically by the members of the court, you conducted the examination on March 24 of this year during a court session, with regard to entries in his weekly planner, Krainov explained each entry demonstrated to him. For instance, according to Krainov’s testimony regarding entries made on April 21 and 23, 1997, “Dorna-audit, Pravus”, available on page 36, vol. 210, it became obvious that the investigation had misconstrued that record. Based on that entry, the Prosecution concluded that it was a reference to managing work involving documents of AOZT Pravus. Including an audit of the company Dorna-audit. In the meantime, defendant Krainov, the author of those records, testified that some of the entries had not been made in his handwriting, that he had nothing to do with them. He also explained that he was General Director of the company Dorna, which, just like AOZT Pravus, was a JV RTT customer, and that audits of those two companies were necessary. An appropriate note was made and a record was made. The question is: what does it have to do with the alleged criminality? Very well. The Prosecution may not believe Krainov who made the entry. Then it must provide proof that he lied here, that he offered this interpretation in his own interests, but in fact a different interpretation, one thought of by the investigation, is correct. We have not heard anything along those lines. Therefore, we can say that this entry was construed arbitrarily. There was no company by the name of Dorna-audit. (sic – transl.) And it was not to conduct an audit. With respect to a diagram drawn on pages of the case file on July 1-8, 1996 (sic – transl. Maybe it should be smth like ‘a diagram attached to the case file and dated July 1-8, 1996), which is mentioned here, AOZT Volna, Apatit, M- Trust, and Apatit-Trade, page 92, vol. 210, Krainov answered your questions by explaining in detail under what circumstances those diagrams had been made. He testified in court that the drawing was related to an investment program under implementation by AOZT Volna, that he had drawn the diagram while talking to Chernyshova who provided an explanation about the relationship between Menatep, Trust, and Volna, and also between Volna and Apatit or its lenders. In the meantime, this diagram was identified as proof of Khodorkovsky’s involvement in the criminal group. It is biased and accusatory. How can this be interpreted as evidence that Khodorkovsky was involved? And that he established some criminal group and was a member of it? Very well, Chernyshova was an employee of Bank Menatep. So, what? Does that mean that Khodorkovsky can be held responsible for any employee’s acts? And what was so criminal in what Chernyshova did? Moreover, as far as this diagram and records in general, I will allow myself to say that certain activities, in particular, in this regard *. Can you really believe that a grown-up person, who, judging by his testimony, does not have a below-average IQ, would have kept open records of a criminal group's dealings for several years? Writing down the criminal group's every step, complete with diagrams? Just so that the distinguished Prosecutor should one day be able to tell this court, “There, you see – he was indeed part of a criminal group.” Do such things really occur in criminal groups? You have been doing this job for some time: have you ever encountered anything like it? Ever heard of someone doing such a thing? Quite on the contrary, all these entries in the weekly planners show that no one here was even contemplating any wrongdoing. Everything was being done confidently and at ease, things were being noted just as a reminder. Had Krainov ever written down anything of a criminal nature in his weekly planner, he would in all likelihood have tried to tear that page out as soon as possible, hide it, burn it, eat it – do anything to keep it from being seen by anyone else. I might have accepted it had it been a question of a few records that survived by accident over many years. He forgot to take care of them, so they slipped through. But we are talking several years of weekly planners here, year after year. Not one page is missing. And now all of that purportedly proves the existence of a criminal group? This kind of reasoning sounds downright naive. Take the entry dated January 6, 1997, which reads: "Apatit-Trade originals Moscow Tarakhnenko S.A. 925-75-26" (Case file vol. 210, page 7). Your question to Krainov, is, quite appropriately, "What does it mean?" He tells you that Tarakhnenko worked at the Legal Department of Rosprom. In December 1997 he requested original documentation pertaining to Apatit- Trade, a client of JV RTT. He clarified that this entry indicated the need for a meeting, to be attended by Tarakhnenko. Not a criminal group gathering, but an official meeting to discuss the annual balance sheet of Apatite Trade. Is that a crime too? That had been the reason for Krainov to contact Tarakhnenko. What kind of criminal intent could one possibly read into all this? Now concerning the entry of January 6 – "Gorbunov (*)" – and similar entries on other dates in January 1997 (case file vol. 210, pages 7-8, 11, 13). As Krainov has explained to the court, at that time he had been informed by Gorbunov, an employee of JV RTT, about a client seeking to register a business within the preferential taxation area in Kalmykia. That is what these entries in Krainov's weekly planner were all about. So what, may I ask the Prosecution? Is there anything criminal about it? What does it prove? Does it prove the existence of any group whatsoever? Let me explain to Your Honors the origins of another entry, "7 ref. 11.19 of 18.07.96 Prokofiev.” Of course, the Prosecution seized right upon it. There, Prokofiev, Khodorkovsky's former assistant. And if someone was once Khodorkovsky's assistant, it means crime was involved. A group was involved. Now what does Krainov say? He says that Prokofiev's outgoing reference number is cited here, and, possibly, it had to do with a request for some documents or client data. One has to ask oneself, does this amount to any evidence of a group having existed? Of Krainov being part of it? Of Khodorkovsky being its leader? Even if the notorious Prokofiev is in fact mentioned here. The Prosecution reads this entry in conjunction with another one, appearing on the reverse side of page 74 in volume 210 of the case file: "Riv Korall.” Here is what it says: "As seen from these two separate entries, Krainov is again working with Prokofiev, who is in charge of foreign companies' documentation. He has to approach the Korall company.” So they asked him about it. Did Krainov validate the Prosecution's fantasies? No, he rebutted them. What did the Prosecution offer as counter-argument? Nothing. Therefore, we have to accept Krainov's word. We have no right to do otherwise. Furthermore, when questioned by the court about his notes on meetings with Prokofiev, Krainov testified that he only knew Prokofiev as Khodorkovsky's advisor. That he did work with him on legal matters and that they had meetings every two or three months. When necessary, those meetings included lawyers, people specializing in company registration, finance officers, account managers. He stated all that when he was examined on March 24 of this year. Thus, suspicious as the Prosecution might be about Prokofiev, eager as it might be to assert that a criminal group was at work by virtue of Prokofiev being Khodorkovsky's assistant, Krainov's account is clearly one of very routine business transactions. What kind of a criminal group are we talking about if the meetings included lawyers, experts, accountants, etc.? All those were perfectly legal activities that could naturally be expected from Prokofiev and Krainov. I have to speak in Krainov's defense since he chose not to respond himself. Here is some more unsubstantiated, totally arbitrary speculation concerning records that contain Prokofiev's and Gusarov's telephone numbers. There is no denying the fact that Prokofiev worked with Krainov, as he was supposed to. What all these entries show is that they were indeed acquainted and exchanged phone calls. What's wrong about it? Why must it lead us to believe that some kind of a criminal group was involved? Neither Prokofiev, nor Khodorkovsky, nor Lebedev, nor Krainov ever were part of any criminal group. And if those numbers do appear in the diaries... What does it mean, in and of itself? It has just been postulated, and we are not denying it, that he contacted Prokofiev, they had meetings together and so on. It is only natural that Prokofiev's number had to be noted somewhere. Yet it is presented to us as an independent piece of evidence. Evidence of what? The existence of a criminal group. Based on these records of Prokofiev's and Gusarov's telephone numbers, the Prosecution concludes that Krainov as member of an organized group played a part in the movement of funds as planned by Khodorkovsky and Lebedev, the group's leaders. Such is the arbitrary – not to use a stronger term – interpretation placed by the Prosecution on a telephone number found in a diary. Just saying it is baseless would not... I am finding it hard even to choose the right words to characterize this kind of conclusions drawn from such an innocuous circumstance, i.e. from the presence of a telephone number in Krainov's weekly planner. Regrettably, neither Krainov himself nor his counsel have come up with an adequate response to this interpretation, which I find outrageously biased. I do realize, Your Honors, that listening to an analysis of each and every entry made by Krainov in his weekly planners would be a tedious and boring exercise. It is not my intention to go through them all. There is a huge number of them. Still I believe I have to bring to your attention the more typical examples, since these notes figure very prominently in the Prosecution's case as presented in the Bill of Indictment. On the same subject of the telephone numbers of Prokofiev and Gusarov – it is amazing how many conclusions are drawn just from these two numbers – the Prosecution even uses the following language: "Given that Khodorkovsky and Lebedev had put Prokofiev and Gusarov in charge of the transfer of funds abroad, Krainov's diary entries show how the members of the organized group interacted with one another.” * It is hard to fathom in what way these things might be connected. No explanation is provided as to why the phone numbers of Prokofiev and Gusarov in Krainov's diary show that all these people interacted with Khodorkovsky and Lebedev. Then again, why was it a criminal interaction? Finally, there is a new list of accomplices suggested here by the Prosecution. Among them we find Khodorkovsky, Lebedev, Krainov, Prokofiev, and Gusarov, although on other pages of the indictment it is asserted that * were members of an organized group. I shall address this later on. The allegation that Prokofiev and Gusarov were part of a group is not consistent with the way the indictment has been formulated. On February 15 of this year Krainov was presented with page 113 (reverse) of case file vol. 210. To this he stated that he was aware of “Djamblik” being a founder of Joy. What “Djamblik” stood for he did not know, nor did he know why he had acted on its behalf. Given that, the Prosecution takes an arbitrary view of everything that follows. The diary reads: "33 081 US dollars Djamblik*, 4,482 US dollars M-Trust, Ural-Myed" (this is on page 115 of vol. 210). In the opinion of the Prosecution, this substantiates the charge that the organized group members have acted through the Djamblik and Joy companies to fraudulently appropriate the shares in OAO Apatit. It is entirely unclear in what way the mentioning of these company names and amounts can substantiate any accusations of fraud in general and of fraud against Apatit in particular. No explanation is offered. This is a perfectly arbitrary construction. Furthermore, many if not most of these diary entries contain a number of abbreviations. That is where interpretation becomes totally frivolous. For example: "Fax to David Coogie Gibraltar about prof. prop. and clear registration procedure com. X.” The investigators believe this means a fax to David Coogie about proper and clear registration procedures for Khodorkovsky's company. Just a single initial is enough for them to come to this conclusion. One is at a loss as to what made the investigator think that this letter X, which appears in the Krainov diary in quotation marks and might represent a Latin "X" as well as a Cyrillic "Kh", stands for Khodorkovsky's name. Please note the quotation marks around this letter. This form of abbreviation is typically used for company names, not those of individuals. Russian syntax rules also require the use of quotation marks around company names. Moreover, it would actually be more logical to suggest that this refers to a company name. Especially since this same letter reappears later on, again in quotation marks. This time, however, it so clearly points to a company that the investigators no longer have the nerve to claim that it stands for Khodorkovsky. "Koval - "X" is left without any comment whatsoever. There is no way to tell what the investigator's theory is on that one. Quite obviously, an entry of this kind, whatever its meaning, whether it is or is not Khodorkovsky or some other "X", does not in and of itself prove the criminal nature of anyone's actions either. It is impossible to comprehend why it is seen as evidence of a group. This is about ascertaining the legality of company registration. Why is it a crime? Why is this a criminal group? No one can tell. Then there is this record, for example: "Money for reg. on Tuesday for 10 org.", on page 129, case file vol. 210. That did some decoding, and look what they came up with: "Krainov again was instructed to ensure the registration of another 10 front companies.” The investigators do not specify on what grounds they have concluded that some kind of instructions were given or that some kind of front companies were involved. Now if we take an unbiased approach, how is this possible? There is simply nothing that allows such a meaning to be read into this. But then, of course, we are free to read anything we want into this. Except that we have to prove it is indeed the meaning of what is written. It gets ever more exciting from here. An entry reads: "New – Koval.” The Prosecution attributes this entry to activities carried out by the organized group in 1996. It is however self-evident that an entry that appears in the weekly planner for the year 1995 and is dated September 29, 1995, does not fit within the timeframe of the activities implied by the Prosecution, which took place in 1996, almost a year later. The interpretation of the actual words is also incredibly unique. The Prosecution believes that Krainov instructed Koval to take certain steps with regard to the company NW Nordwest AG. Why this particular company? There is nothing in this entry to suggest any instructions were issued. Also, it says "New" in English, rather than "NW.” Where did the "NW" come from? Just by dropping one letter they attach a completely false interpretation to this record. Quite obviously, if "new" is what it says, it has nothing at all to do with the above-mentioned company, NW Nordwest AG. It is further alleged that Krainov's entries in his weekly planner for the year 1996 indicate his participation as member of an organized group in the fraudulent acquisition of 20% of shares in OAO Apatit. Let me explain once again. These notes go back many years. Here they are, the weekly diaries that for some reason he chose to preserve as the years went by. All of them have been seized. And now the Prosecution is trying to use them randomly to explain any episode they please, even when there is no correlation either in time or in substance to what actually took place. Never mind that the year does not match. Never mind that it remains a mystery why such a record appeared in the first place. This way they can use those records to prove anything, be it the group theory or the allegations of criminal acts against Apatit. Anything at all that Krainov only might have been involved in, even if in fact he was not. The subsequent entries allegedly show active participation by Krainov as an organized group member in the fraudulent appropriation of 20% of Apatit shares. Even the entries referred to in the indictment do not contain any information about organized group activities or about any criminal acts against the said joint-stock company. Moreover, even the formal indictment admits that everything having to do with the acquisition of Apatit shares occurred in July 1994; yet here we are talking about entries made in 1996. These records have been offered as proof that shares were acquired illegally back in 1994, two years before the records were made. However, from an unbiased standpoint, they would, if anything, appear to prove the legitimacy, the legality of every action taken. Thus, the entry dated September 16 in the case file refers solely to the re- registration of AOZT Korall. A benign, straightforward matter, it would seem. Based on this entry, and without any supporting argument, the investigators arrive at the following conclusion: "It was Krainov and his department, rather than AOZT Korall as represented by its General Director, that actually effected the movement of funds via the AOZT Korall accounts being used.” But there is nothing here about the movement of funds, no relationship is mentioned. Even supposing it was Krainov – although I cannot understand how he was involved and why this record in itself can support the conclusion that Krainov and his department effected the movement of funds – but let us suppose we accept it. Where does Khodorkovsky come into all this? Why a group? One cannot just declare, "This proves that a group existed.” This record simply mentions AOZT Korall. Another record cited goes as follows: "Prokofiev. Ch. F. 25 billion. Our share 12.5 billion. 38% voting = 38% of 80 billion. 15% voting shares. 40 billion rubles. Evenly between Korall and Joy.” This is about very serious things, it shows that the person involved was doing business, calculating shareholders' equity, the number of voting shares and so on. Based on this record, the investigators state: "Krainov accepted for action the instructions to shift the shares held in a Russian company out to controlled entities.” Where does this follow from? Can you see any logic behind this particular interpretation? Is it backed up by anything? Who told us that this is the actual meaning of this record? Did Krainov say that? No. Are we allowed to impose such an arbitrary explanation on any record picked at will, and use it as a basis to assert the existence of an organized group? I am saying this because the Prosecution maintains that a group was deliberately organized with criminal intent, to commit crimes. All these allegations are as baseless as the ones already mentioned. There is no reason whatsoever to claim that any kind of instructions were issued to Krainov, let alone that Krainov accepted them for action, or that such instructions were issued to him as member of a group, or that they came from Khodorkovsky or, perhaps, from Lebedev. Yet another entry by Krainov is seen by the Prosecution as proof that Krainov was instructed by the organized group leader to perform transactions with funds belonging to four companies. However, this entry, appearing on page 84 of case file volume 210, equally does not contain any information concerning any instructions received, or concerning any organized group or leaders thereof. No mention is made of Khodorkovsky or Lebedev, who, according to the Prosecution, were running the organized group. It is not even specified which one of the groups referred to in the Bill of Indictment the investigators have in mind. I shall return to this later. The following record is quoted in the Bill of Indictment: "1) TDM – Vostrukhov 921 00 05 (voting + for renaming); 2) Prokofiev – s/acct. 15 enterprises; 3) Dovghilo – 1, 34 companies; 4) Braz-Zakharov" (vol. 210, page 86). The investigators think it means "a directive was received" from Vostrukhov, and "instructions were given" by Prokofiev. Why, how, on what grounds? No idea. But this record per se does not indicate any directives given or instructions issued by anyone to anybody. Furthermore, such an assumption runs counter to the Prosecution's own logic elsewhere. Namely, the Bill of Indictment makes clear that Prokofiev and Vostrukhov were not members of the organized group. It is therefore hard to understand why they were issuing instructions to Krainov, who, according to the Prosecution, was actually a member. This is impossible to understand. It would have been easier to understand if a member of a group who is involved in crime directed someone, instructing someone to do something. No, we are told, it was Vostrukhov, himself not a group member, issuing some kind of instructions to a member of the group that was running it all. What was Vostrukhov then? The same record also mentions the names of Dovghilo and Zakharov under items 3 and 4, the latter preceded by the word "braz.” This could refer to Zakharov's brother, or a double surname, or I don't know what else. It is obvious that the self-serving theory offered by the Prosecution does not explain these names appearing alongside those of Vostrukhov and Prokofiev. [Vostrukhov and Prokofiev] are not the only ones mentioned here. It is a listing of similar items: one, two, three, four, including Dovghilo and Zakharov. What, then, were the roles of Dovghilo and Zakharov? Why are Prokofiev and Vostrukhov being singled out? Equally unfounded references to instructions allegedly received by Krainov are made on pages 62, 63, and 64 of the Bill of Indictment. One can therefore conclude that the Prosecution's reading of the records made by Krainov in his weekly planners is speculative. It is used to back up arbitrary assertions of criminal action by an organized group. Yet you are well aware that speculation is no proof and that it, along with an utterly frivolous interpretation of facts, cannot serve as a basis for indictment. A few words about Prokofiev. He has been mentioned quite often by both parties. I only have the following to add. First of all, Prokofiev had indeed been an assistant to Khodorkovsky for a long time, but not all the time. You will recall Khodorkovsky's testimony to the effect that he did not take Prokofiev along when he moved to another job, and that Prokofiev stayed on. You have heard two witnesses testify that, apart from working as Khodorkovsky's assistants for some time, both Prokofiev and Moiseyev had business ventures of their own. They could also have acted upon instructions from other executives of Bank Menatep. You have heard as much from Khodorkovsky himself. There is of course no reason to dismiss out of hand this testimony by people who have actually worked as Khodorkovsky's assistants for a while. Moreover, the fact that they have been his assistants is what lends credibility to their words. They knew because they worked there. One of them spent some time sharing an office with Moiseyev. I remember the Prosecutor saying to her, "Well, then how come you did not know if others had their own business ventures too?" She replied she only knew that about Moiseyev. – "Why Moiseyev and not the others?" But it should have been clear from her explanations. She had shared an office with Moiseyev for a few years. Do you believe she should have known as much about people who sat on different floors and may have met her occasionally at best? This was a person with whom she spent several years working side by side. Of course she knew much more about him than about anybody else. And so she said, “Yes, I know it from him. He was engaged in other business activities.” Has anyone proven the contrary? Even supposing this testimony does not convince everyone. He says it is not reliable enough. What then? There is doubt. Who should receive the benefit of the doubt? The Prosecution? No. That's not what the law stipulates in cases of doubt, of reasonable doubt. It is not enough just to say, “Don't trust them because they have been co-workers: they are being partial.” That does not suffice. They have to be proven wrong. Even when we ourselves said that testimony by people appearing in court the next day after they were interviewed at the General Prosecutor's office cannot be taken at face value, all we meant was caution. We never say such testimony should be disregarded. We examine it, we compare it to other testimony and we note that on some points it is not accurate. But when it comes to witnesses for the Defense, we are told, “These are people who were acquainted with Khodorkovsky, they may have been his friends, so don't trust them.” But who should be trusted instead? We are not being told that. Have they produced another witness who would testify that these people are lying and that Prokofiev never had any other business ventures? He may have spent a long time working for President Gorbachev, but still Khodorkovsky was the only person he ever knew or dealt with? No such document has been produced. But if that's the case, Your Honors, I kindly ask you to abide by the law and acknowledge that this testimony has not been rebutted by anyone. Therefore we have no right not to believe this testimony coming from three people, i.e. Khodorkovsky and two others. And if we have any doubt, it must be resolved in the defendant's favor. May I draw your attention to the fact that, apart from Krainov's diaries, the Prosecution's case is not supported by any documents pointing to the existence of a group. Nor does the witnesses' testimony contain anything to that effect. The Prosecution has brought about 70 witnesses before this court. This is quite a few. We are not talking 2 or 3, or 5, or even 10 people, but 70 people. Among them were Bank Menatep employees Graudin, Ushanov, Borisov, and Gorbunov; Pozdnyakov, General Director of Apatit, and some of its employees: Ageyushkina and others; RFFI Chairman Sokolov and RFFI employee Rzheshevsky; Komarov, former governor of the Murmansk oblast; Rashina, Polyanskaya and Mukhaev of the Murmansk oblast Property Fund; Klassen, General Director of NIUIF, and NIUIF employees*, as well as many others. 70 people. Can you recall just one of them saying anything even to infer the existence of a criminal group? It could not have acted in a vacuum, could it? According to the various versions of events that are being offered here – and I shall have more to say about this – it existed since 1990, i.e. for ten years. Yet no one heard anything about it. No one suspected a group had been organized and was engaged in criminal activities. Neither the Prosecutor General's office that opened a number of investigations, nor the tax authorities, nor the Control and Audit Department. No one, ever. Is such a thing possible? As I am going to discuss later, according to the Prosecution, a huge number of people were in this group. Still no one around was aware of anything. Not one witness ever mentioned that such a group may have existed, or that its members ever got together, or even... Let’s assume it was deeply under cover. Yet suspicions could have arisen at some point, someone could have noticed some strange meetings taking place, like Krainov and Khodorkovsky getting together in private and holding secret conversations. Something like that must have happened over the years, had they belonged to a single group committing crimes together. Yet no one had even the slightest suspicion. And now they tell us it has been shown that such a group existed. To prove the existence of a group it is also asserted – at least by inference, and sometimes explicitly – that a number of entities were operating under Khodorkovsky's control. The supporting arguments are similar in many cases, yet different in others. One alleged proof is based on the fact that certain organizations were founders of other organizations. But first of all, founders do not necessarily exercise control over the entities they establish, either by law or in practice. Such entities have a perfectly independent legal status, and founders do not have unlimited authority to intervene in their operations. There is no law stipulating such authority. A founder can establish a company, but that's the end of it. The company has a life of its own, and it does enjoy the full rights of a separate legal entity. Therefore just because someone has founded a company certainly does not mean he controls it. However this is very often the only argument made: once a founder, always in control. At least one would expect the entity in question to have been founded [by the defendant] directly. Yet we also hear of entities he founded, which later became the founders of other entities, which in turn founded still others. This entire chain, we are told, is still controlled by the initial founder. If that is the case, I assure you that any company at all can be shown to be controlled by another. For this is the way it always happens: companies get founded by someone, some of them close down, others emerge instead. All are related to each other. Many were spawned by entities of a totally different nature. Therefore the notion of a founder being in control of operations is totally false and has no basis in law or in practice. For sure, the founder has certain rights. But that does not mean an entity he founded is fully under his control and must take orders from him. A few words about the Flora company, for instance. They are referring to specific testimony by Solomko who allegedly confirmed it was controlled. This is not true. During his entire examination Solomko said nothing about any kind of organized group. Nor does his testimony support the notion of control, in fact he says nothing of this kind. However badly one may have wanted to hear it from him, it is simply not in his testimony (so far I am only talking about the existence of a group). Nor is it in the testimony by Zakharov, who never told the court he was aware of any organized group. To back up its charges about a group the Prosecution invokes testimony by witnesses Suvorov, Lebedev, Borisova, Kolupaeva, and Borodina. Some of these people have not even appeared in court. Their testimony has never been read out. Therefore discussing it now would be inappropriate. And in any event it did not contain any evidence of a group in the first place. Suvorov, one of those being cited, testified both before and during the trial that JV RTT had been providing accounting services to various companies. The same was described by Lebedev before this court. Borisova stated that the company Joy is a corporate securities trader. Thus, all of them were talking about specific, perfectly legal activities. So did another witness, Kolupaeva. Borodina said she had had several jobs: Bank Menatep, JV RTT, OOO YuFK. She had also worked as a foreign company representative. Neither in her testimony, nor in that of all the witnesses I have just listed, i.e. Suvorov, Lebedev, Borisova, Kolupaeva, and Borodina, do we find any indication of criminal activity by any of these companies. Strictly in economic terms, in business terms, the evidence assembled in the case does show that the association of enterprises under Group Menatep Ltd. could be defined loosely as a financial and industrial group. That would be a close enough, though of course not a precise definition. It was, in accordance with the Federal Law on Industrial-Financial Groups of November 30, 1995, "a combination of legal entities operating as parent and subsidiary companies or having pooled all or part of their tangible and intangible assets.” Under Article 2 of the same law "the purpose of such a group is to achieve technological or economic integration with a view to implementing investment projects and programs or other projects and programs aimed at offering more competitive goods and services to broader markets, raising production efficiency and creating new employment.” This is a fair description of the activities of Group Menatep Ltd. and of YUKOS. What the Prosecution does is effectively supplant the notion of directing a business organization with that of directing an organized group. Indeed, those were business enterprises. They had indeed combined for the lawful purposes that I just described. Consequently, it was an association of business enterprises, of legal entities. And indeed Lebedev and, to a greater extent, Khodorkovsky, directed their operations. But this does not mean they were directing an organized group as charged in the case we are now hearing – the kind of organized group that, according to the Prosecution, was involved in crime. Thus, in a few instances some evidence of my client having directed an organization of sorts does exist. But it is not being used to show that he was doing legitimate and proper business. Rather, it is used to allege that some kind of organized group was at work committing crimes. Meanwhile, and contrary to the Prosecution's claims, firmly established facts are there to prove that it was actually a question of legitimate business entities, at times acting together, rather than a group formed with criminal intent. Thanks to personal efforts of Khodorkovsky and Lebedev, transparent business practices were implemented in line with strict international requirements. Bank Menatep adopted enhanced transparency and corporate governance standards. The activities of Group Menatep and of Oil Company YUKOS were audited by such reputable, world-renowned auditing firms as Ernst & Young and PriceWaterhouseCoopers. Moreover, Group Menatep actually made public its audit reports and financial statements for 2002 and 2003, including by posting them on its website. All of this is equally compelling evidence against the existence of any organized groups. It proves that Khodorkovsky's entrepreneurial activities in the companies he headed were absolutely open and transparent, hence they were entirely legitimate. More clear and irrefutable evidence to counter [the charges] can be derived from the very manner these charges were brought against Khodorkovsky. I would like to make this a special point, and I can’t emphasize it enough, because the absence of any group follows even from the way the indictment is formulated. Had a group really existed, had it been established, the indictment could have been straightforward. Let us look, however, at what it actually says. According to Article 171, parts 2 and 3, a Determination to Arraign must include a description of the offence, indicating the time and the place where it was committed, the other circumstances to be proven, as well as the specific actions the defendant is charged with under each of the invoked provisions of the criminal statute. [Article] 220 requires the Bill of Indictment to contain a statement of the charges, i.e. of what has been spelled out under [Article] 171, meaning those charges that were set forth in the Determination to Arraign. Thus, one should specifically bear in mind that the Bill of Indictment may not go beyond the charges which have been brought, and must be fully in line with those charges. Meanwhile, Your Honors, in total disregard of the above legal provisions, both the Determination and the Bill of Indictment are written in a way that makes it impossible to defend against the charges brought. On top of that, the narrative of the indictment actually broadens the charges made previously. The first thing that not only impairs any legal defense but at the same time, as I am firmly convinced, also makes it impossible for you to accept that a group has ever existed, is the fact that the Determination fails to name the members of the group, i.e. accomplices in the crime. Nor does it specify their respective roles, or the time and place their complicity arose by virtue of acceding to the group, or mention other circumstances that need to be established. The Bill of Indictment also contradicts itself as to the form of complicity incriminated to Khodorkovsky. Thus, the section dealing with tax evasion starts with a reference to an organized group and then, on several occasions including the final statement of the charges, refers to crimes committed by a group of persons acting by previous concert. You don’t need to be told that these are two entirely separate legal notions with different implications. One defines the nature of the crime, the other does not, and so on. Furthermore, on a number of occasions Khodorkovsky’s actions are treated explicitly under the Criminal Code article contemplating offences committed by a group of persons in a preliminary conspiracy, rather than as part of an organized group. A legitimate question arises as to what actually took place. Just a group of persons in a preliminary conspiracy, or an organized group? It is impossible to understand precisely which form of complicity is incriminated to Khodorkovsky in each of the episodes, since he is being charged with different forms of complicity in the same crime, committed together with the same persons. This kind of an indictment actually makes no sense at all. As I have said, there is in fact no evidence to show where, when and how a group was organized. Therefore the Determination contains no specifics as to when, in what way and to which of its members individual roles were assigned. It merely contains a few general statements about the assignment of roles. How? Where? When? By whom? What were the specific individual responsibilities? There is nothing on that. It is very frequently mentioned that one or another group comprised some unidentified persons – for that matter, almost exclusively persons not identified by the investigation. Under these circumstances, it is impossible not only to establish a clear division of functions, but even to ascertain the role of every individual. It remains totally unknown what parts they played. Nor does the Determination clarify such things as what was it that made the criminal group organized and stable. After all, they insist the group was organized, don’t they? And so forth. Now, this brings us to an all-important circumstance that makes it impossible for a verdict to recognize the existence of a group. The Determination states early on (vol. 214, page 235) that the criminal group was set up in 1994. That is in volume 214, page 235 of the case file. So far so good, we were prepared to work based on that date. But as we continued reading we found another paragraph, on page 244 of the same volume and in the same Determination, claiming that the group was established in 1995. Right there and then it was of course clear that such a discrepancy was inadmissible and contrary to the law. But, we thought, later on it would be straightened out somehow. Yet the Bill of Indictment then goes even further, claiming that Khodorkovsky, Lebedev, Krainov, and Chernyshova had been leaders and active participants in the establishment and operation of such and such enterprises ever since 1990, that they had put together a network that ran commercial front entities as part of fraudulent and other criminal activities. In other words, reference is made to an association of accomplices dating way back to 1990. In addition, as you may well remember, some other dates were also cited. So far three of them have been discussed, namely 1994, 1995 and 1990, as marking the establishment of the said network. Later, the year 1999 was also mentioned, and then again 1997. Lebedev’s indictment states in so many words that the group was organized in 1997. So, when was it set up, after all? Are you again being invited to use your own discretion? Is it once again so that we do not know and therefore are completely unable to defend on this count? It must be either or. Either the charge should be dismissed, if we are talking of a single group, for it is totally unclear when such a group was formed. And if the indictment stipulates that it happened in 1990, and in 1993, and in 1994, and in 1995, and in 1997, you can’t just take a pick. The court is not in a position to do that, even if it does arrive at some conclusion. That would be absurd. It is not a decision to be made by the court. Rather, a concrete charge should be presented, indicating a specific year. And then it will be up to the court to ascertain whether or not it actually happened that year. But reciting instead a whole decade between 1990 and 2000… Incidentally, I omitted to say that the year 2000 was also mentioned in this context. So they invite us to pick a year within that range, when a criminal group or merely an organized group was formed. This alone makes it impossible to accept that such a group ever existed, because the Prosecution itself has failed to reveal – apparently not knowing for sure – when it was set up. And how could they possibly know, if it is perfectly self-evident that no such group was ever set up. Not by anyone, not ever. This is the first glaring contradiction, a fatal flaw that makes it impossible for the court to agree to the existence of a group. An indictment that does not specify when the group was established deserves no serious discussion. I am just speaking in terms of years, not even asking to know the month, let alone the date. If, as they say, it was set up, that must have expressed itself in some tangible form. What was it? A get-together? Correspondence? Exchange of phone calls? How does one set up a group? Something must have taken place. It should have been stated, for example, that during such and such months calls were made and returned, meetings were held, arrangements made. And that was how the group came into being. Its mastermind was so- and-so. Nothing of this kind is there, Your Honors. As if that were not enough, there is yet another circumstance that unequivocally rules out the existence of a group. Оh yеs, there is something else I should mention. If the assumption is that there was just one group, it’s unclear what exactly it was. It could be argued of course that perhaps there were several different groups. Maybe a group was formed in 1993, but dissolved in 1995. Or maybe one group was at work in 1993, another one was set up in 1995, and still another emerged in 1997. But this is not what the Prosecution says. They keep referring to one and the same group throughout. Even though that claim is completely invalidated by some other circumstances, and I’m coming to them now. Those circumstances have to do with the fact that the Determination is quite inconsistent on the question of who, in the investigators’ opinion, directed the conspirators, how many leaders there were and of what sort. Just look: initially, on page 235 of the case file, the Determination refers to Bank Menatep employees – presumably all of them, since there are no qualifications such as “some”, “part of”, “from such and such departments” – as members of an organized group, controlled by its leaders. This implies that there was more than one leader. It is stated further that the organized group operated under the leadership of Khodorkovsky and Lebedev. See relevant passages in volume 214, pages 236, 239, 243. That is understandable. First they speak indefinitely in plural, and then more specifically about activities conducted under direct Khodorkovsky’s and Lebedev’s guidance. Sometimes they elaborate still more. In some instances it is even asserted that the conspirators operated under direct orders from Khodorkovsky and Lebedev. That is to say that while someone somewhere in ZATO was doing something, Khodorkovsky and Lebedev were directly supervising it all – see volume 214, page 251. This really stretches one’s imagination. You see, things were happening in different cities and towns, in different places and at different times – and now it is being claimed it was all directly supervised. Then again, so far there have been two putative leaders. But as we continue reading, we find that to be wrong: Lebedev, it now turns out, was not a leader but a subordinate to Khodorkovsky, who alone directed the entire group. Indications to that effect are to be found in volume 214 on pages 237(6?), 248, 240, etc. So who, after all, led the group? Both Khodorkovsky and Lebedev? Or Khodorkovsky alone? Were I to defend just Lebedev, I would say, “I’m sorry, but the language here says Khodorkovsky alone, so it’s only him. That’s it.” Fortunately, this is not the way it is being done, as we understand that neither of the two was a leader of some non-existent group. Yet in a formal discussion of the Determination we have to point out the contradictions in this regard. But there is yet another divergent statement in the language, namely that Khodorkovsky and Lebedev were not the only leaders in the group. As we go on reading, we find in the same Determination – which in the beginning claimed that there were two of them and later that it was just Khodorkovsky – a reference to plans having been made by an organized group, which was led by Khodorkovsky, Lebedev and other members of the organized group. This is as good as it gets! How many and who were the leaders, after all? Neither their number, nor their names are disclosed, as we no longer know what other members of the organized group are meant here. But they were leaders too. Again, the Prosecution reverts to the multiple leaders theory. Moreover, those leaders remain unnamed and their number is not limited in any way. The phrase “and other members of the organized group” allows for a potentially infinite number. In another paragraph they forgot to mention Lebedev, saying that some activities were directed by a different setup of leaders, namely Khodorkovsky and other members of the organized group. There, once again leaders included “members of the organized group.” In some instances Lebedev is not named as a leader. Anyway, leadership remains undefined. A statement to that effect appears in volume 214, page 241. Let us now revisit the membership of the group itself. Here, I must tell you, one gets utterly confused. First, when describing the fraud at OAO Apatit, they say that the organized group included Bank Menatep employees, without specifying their number or their names. All of them, presumably? Also those employed by “other legal entities controlled by the bank.” Can you imagine what kind of a group it was – an organized group comprising Bank Menatep employees and those of other legal entities controlled by the bank? And there are so many legal entities that have been listed among those controlled by the bank! All of them, we are told, were members of the organized group. And of those entities controlled by the bank, by Khodorkovsky and the leaders of the organized group. (sic – transl.) Which leaders of the organized group this time? Further on we take note of direct evidence that he was not actually a leader, “The organized group also included Lebedev and Chernyshova.” On many previous occasions he was mentioned as a leader along with Khodorkovsky. But, thankfully, in this particular case God only knows who the leaders were, they remain unidentified. Rank-and-file members of the organized group, however, included Lebedev and Chernyshova. But that is not all: enter Mr. Krainov. This is precisely what it says, “Krainov entered into the organized group.” When did he do so, who opened the doors to usher him in? That remains unclear. Krainov didn’t tell us anything about it. He may have entered and exited right away, for all I know. So, what the Determination literally implies is that all employees of the bank and of the legal entities controlled by the bank, as well as by Khodorkovsky and by certain leaders of the organized group, were members of the organized group that committed fraud at Apatit. As I said earlier, no names of those people are provided, their number is not stated. The Determination does however mention Abramov, Graudin and Solomko, but not as members of the group. This is what it says about them: “They acted according to a plan devised by members of the organized group.” Which appears to mean that they themselves were not members of the group. That is to say, some members of the group prepared for them, i.e. for Abramov, Graudin and Solomko, an action plan. Interestingly enough, the Prosecution believes that just one year later, i.e. in 1995, a similar crime was committed – which, they say, was exactly the same – by another criminal group consisting of Khodorkovsky, Lebedev and some other persons not identified by the investigation. All the previously mentioned and presumably identified bank employees and staff members of some unknown, controlled legal entities, who used to be members of that group, had somehow evaporated, their place taken by certain unidentified persons. Moreover, the Determination claims that the heads of front companies were fully controlled by Khodorkovsky. Fully controlled – no more, no less. In their private lives too, probably. Members of the organized group controlled them too, since they were serving as heads of companies operating under the control of Bank Menatep. Hence, in accordance with the Prosecution’s logic, the heads of controlled companies were not themselves members of the criminal group. But it has just been asserted that they were. It must be either one or the other. Apart from that, the text mentions the names of the following employees of Bank Menatep and MFO Menatep, who were not included in the organized group: Smirnov, referred to more than once, Zverev, Golubovich, Chernyshova, Ushanov, and Tsarkov. Well, life has been especially tough for Chernyshova – now she is a member of the group, and an active one to boot, now not a member at all, just pursuing some other activities and getting drawn in from time to time. Thus, the investigation first maintained that employees of Bank Menatep and other controlled legal entities were members of the organized group. But later, when specific names were mentioned, such as Smirnov, Zverev, Golubovich and others whom I referred to above, they apparently were not perceived as members. They were just controlled by members of the group. Let us, come back to Chernyshova as an example. Whereas in the beginning, as I said, the Prosecution describes her explicitly as a member of the organized group – on page 235 of the case file – a bit further on in the text, on page 250, she is a member no more. Khodorkovsky is, among other things, accused of doing something “by defrauding budget funds through unlawful refunds of excess taxes” … I am leaving aside the question of who might be competent enough to parse this phrase – “by defrauding budget funds.” So, budget funds were defrauded. Maybe such things exist, maybe one day I will learn. And the defrauding was committed through “unlawful refunds of excess taxes.” Well, well. In the section of the Determination devoted to this episode it is indicated that those acts were committed by “Khodorkovsky, Lebedev and other persons acting together with them as part of an organized group.” Who those persons were is not specified. And then, after a comma, it goes on to say “Spirichev and Karfidov”, who, it appears, were not part of the group, but still acted together with them. Thus, a literal interpretation of this language suggests that the group consisted of some unknown persons, while Spirichev and Karfidov were not part of it but were used in one way or another. Another section, though, states that this very crime was committed by an organized group which, apart from Khodorkovsky, included Lebedev, Spirichev and Kartashov, joined by two ladies, Chernikova and Karaseva. And then there were, after all, the “de-facto leaders” of Oil Company YUKOS. What is meant by “de-facto leaders” is something I would like to know. Not just leaders, but “de-facto leaders.” This seems to suggest that there were also some figureheads at Oil Company YUKOS, other than the real bosses. Well, if they say so... But look, this time Karfidov is not there anymore. Instead, probably out of respect for the position existing at the time, fresh entries are added – Kartashov, Chernikova and Karaseva. And those mysterious “de-facto leaders” of Oil Company YUKOS, who were not mentioned until now. This is all about the same thing, the same operational group, which, it is claimed, was well organized and followed a single coordinated plan. No mention is made of anyone entering or leaving the group. Just one entry was reported, which involved Krainov. Nobody else is said to have entered. They simply exist, they get named suddenly and vanish afterwards. So, once again, the Prosecution lists a different group of conspirators from those that allegedly committed the other imputed crimes. That is in comparison with other crimes. But even with regard to one and the same crime, they maintain it was committed by different groups of accomplices. Information on who was involved in tax evasion – another crime – is also extremely inconsistent. First of all, the form of complicity in the crime is not specified. Thus, it is first consistently described in the appropriate section as an organized group, and later on as a group of persons acting in a preliminary conspiracy. Moreover, in some instances it is claimed that acting in conspiracy with Khodorkovsky was a group that included some new persons not identified by the investigation. At the same time, persons are named as implicated in the crime without any reference to their being members of a criminal group. Second, listed initially among the members of the group are Khodorkovsky, Lebedev, Kartashov, Spirichev, Chernikova, Karaseva, and the “de-facto leaders” not identified by the investigation. So far the setup remains the same. But subsequently in the Determination new names come up: Koval, Kobzar, Krainov, Khvostikov, Gorbunov, Alekseyev, Zverev, Kozhevnikova, Borisov, and Dunayev. Whether all or some of them were conspirators is not spelled out. What is more, the Prosecution itself refutes that those persons were involved in the crime. Thus, Koval and Kobzar are referred to as heads of the legal entities that founded OOO Business-Oil. However, it was only their names, the Determination goes on to say, that Khodorkovsky allegedly used to misappropriate shares as a member of the organized group. If so, that means they themselves definitely were not members of the group. Hence, neither Koval, nor Kobzar were members of the organized group in this case. Krainov and Khvostikov are listed as figureheads of OOO Business Oil. Does it mean that they, too, were not part of the group? The Determination goes on to state that Khodorkovsky had misappropriated Apatit shares on behalf of Krainov and Khvostikov. Are we to understand Krainov had nothing at all to do with that? Listen to what the Prosecution says, “On behalf of Krainov and Khvostikov shares were previously misappropriated by Khodorkovsky.” Gorbunov is mentioned in the Determination as the head of one of the companies that founded OOO Forest-Oil. It is noted that his name was used in the misappropriation of shares. Therefore he was not part of the group either. Kobzar, Khvostikov, Kozhevnikov and Chernikova are listed as executives of OOO Wald-Oil, and Koval and Zverev as heads of legal entities, which had founded OOO Wald-Oil. That being said, some of them were initially named among the group members. Then Koval, Khvostikov, Kozhevnikov, Kobzar, and Chernikova were excluded from the group. In the Determination Khodorkovsky is charged with non-compliance with a court ruling over the Apatit episode. What about the group in this case? He acted together with other members of the organized group. Very well. As simple as that. Some other persons. Structurally this episode fits into the part of the Determination dealing with alleged fraud at OAO Apatit, which, as has been noted before, the Prosecution claims was committed by an organized group comprising employees of Bank Menatep and of other legal entities. It appears, however, as if the [non-]compliance with the court ruling was the work of some other persons, since that’s what it says: “other persons” – with other members of the organized group. Other persons, which means other than those mentioned in connection with the above fraud. Consequently, these other persons could not have been Bank Menatep employees or employees of controlled legal entities, as the Prosecution believes both the former and the latter were involved in the fraud at OAO Apatit. Who, then, were those others? Meanwhile, this section also mentions Krainov, and Alekseyev, and Gorbunov, and Tarakhnenko. Were they part of the group? Or were they not? So far we are not told. But the investigators are of the opinion that other members of the organized group were involved also in non-compliance with the court ruling over the OAO NIUIF episode. There is simply no way to comprehend what could have been the membership of that organized group, which consisted of “other persons.” The problem is that up to this point the Determination was about fraudulent actions by an organized group consisting of Khodorkovsky, Lebedev, and “persons not identified by the investigation.” Do you appreciate the depth of absurdity the Prosecution is sinking into? Was it possible not to mention this? After all, we have to have something to defend against. Something has to be stated in writing – such as, who was involved in every episode. Yet here it says that NIUIF shares were misappropriated by Khodorkovsky and Lebedev together with “persons not identified by the investigation.” Later on, it was Khodorkovsky and some “other persons” who fought the court ruling. What kind of nonsense is this? Can one defend against it? Can one even bring such things to a court of law? The part of the Determination dealing with the theft of property at Apatit is really beyond the pale. The organized group allegedly set up by Khodorkovsky has a totally different membership once again. It includes Brudno, appearing out of nowhere, as well as Guriev, Lebedev and other persons who have not been identified. Once more, the entire group is composed of new people. On the embezzlement episodes the Determination states that Khodorkovsky acted as part of an organized group jointly with Lebedev and other persons not identified by the investigation. So the first time it was just some other persons who had not been identified. This time it is still other persons, not identified either. What is it about – other persons, same persons? We are completely off into the realm of the abstract. Some unidentified persons... Finally, the charges under [Article] 165, concerning the Apatit episode, do not contain anything at all about the composition of the organized group. Khodorkovsky is mentioned here along with “persons acting together with him as an organized group.” Just “persons acting with him as an organized group.” Not other persons, or third persons, or even unidentified persons. Nobody knows what kind of persons. And of course, there is no way to tell who these persons are. Thus, the charges of setting up and directing an organized group, brought against Khodorkovsky, are manifestly, grossly self-contradictory and contain no clear indication of when, where and under which circumstances the group was formed and who its members were. Hence they were brought in flagrant violation of parts 2 and 3 of Article 171 and, consequently, in gross violation of the rights of the defendant. May I reiterate and underscore that the contradictory and unfounded nature of these charges, as well as their lack of clarity, do not stem from technical non-compliance with the new Code of Criminal Procedure, nor do they stem from any negligence or errors on the part of the Prosecution; they result from the fact that no organized group or groups ever existed in the first place. No groups have ever been formed with criminal intent. What did exist was a legitimate business serving the common good and yielding tremendous benefits for our society – while, of course, also making money for the business people involved. Such is the origin of all the egregious inconsistencies in the Prosecution’s case. It is simply impossible to prove something that never took place. For this reason not a single date is indicated precisely, even to the year, nor is the group’s membership, nor the exact number of people or the names of the group’s leaders, nothing at all. Consequently, the charges against Khodorkovsky of performing any actions regarded by the Prosecution as crimes committed by an organized group or a group of persons in a preliminary conspiracy are invalidated by the materials in the case. The reason these charges were brought was apparently to be able to ask for a disproportionately heavy sentence should any of the defendants be found guilty, and, should any erroneous, improper or illegal conduct be established on anyone’s part, to be able to blame it on Khodorkovsky as the group leader. This is patently obvious. Once there is a group and someone has committed something, it is always possible to claim Khodorkovsky was responsible as one of the group’s members, indeed its leader. If a group does not exist, then even when something has been established, such a claim cannot be made unless guilt is proven explicitly. I have to add that even when there is a group, every defendant must be shown to have broken the law – unlike in a criminal gang, where a person can be held responsible for all the gang’s actions simply by virtue of membership. The very act of joining a gang implies consent to the perpetration of crimes. But even with a criminal gang it still has to be shown that at least one was aware of the kind of gang he was joining. This, however, does not apply to a group. Even if someone has been part of an organized group, it is necessary to establish specific actions by that particular person, which were aimed at achieving criminal aims. None of this has even been attempted. Therefore, regardless of whether the acts Khodorkovsky is charged with have been proven or not, whether he has committed them or not, whether or not any of those acts actually contain elements of crime, the absence of proof that a group was involved in their commission means there is no basis for any of them to be treated as actions by a group that might fall under part 3 of Article 33 and Article 35 of this country’s Criminal Code.