Russian court delays Khodorkovsky verdict

Russia today delayed the verdict in the trial of jailed oil tycoon Mikhail Khodorkovsky in a case that has alarmed foreign investors, increased oil prices and called into question President Vladimir Putin’s commitment to democracy.

Khodorkovsky, the founder of Russia’s biggest oil company, Yukos, is accused of tax evasion and fraud – charges many see as political with the goal of putting him in prison long enough to prevent him from being a factor in the 2008 presidential elections.

The verdict had been expected today, but a notice posted at a Moscow courthouse said the verdict in the case of Khodorkovsky and two associates had been postponed until May 16.

There was no signature on the printed notice, which was posted inside the glass door of the courthouse where Khodorkovsky, Platon Lebedev and Andrei Krainov have been on trial for close to a year.

No reason was given for the sudden announcement. The Interfax news agency reported that a court official had said the chief judge in the case, Irina Kolesnikova, had not yet finished writing the sentence.

When asked why the postponement took place, Yevgeny Baru, a defence lawyer, said: “It remains a secret.”

The tycoon’s father, Boris, said the delay came because of the “massive interest” in the trial, and suggested the verdict would be postponed until interest died out.

“They say it is cancelled, fewer will come next time … eventually no one will come,” he said amid a crush of reporters and television cameras outside the courthouse.

The postponement could be due to a combination of factors that could cause embarrassment to Putin. He was due to arrive this evening in Israel, where some see anti-Semitic overtones to the case against Khodorkovsky, who is Jewish.

He is also hosting about 50 world leaders in Moscow on May 9 for celebrations of the 60th anniversary of the Allies’ victory in Europe, and would not want any protests over the case to spoil the pomp.

The trial is the biggest in Russia’s post-communist history, and few people are betting on an acquittal for the Yukos oil company founder.

“Only in a non-democratic country can the president intervene so blatantly in a legal process and control the courts to the extent that he predetermines the verdict and the dates of the court decision regarding his political enemies,” said Leonid Nevzlin, a former Khodorkovsky associate and large Yukos shareholder.

The politically charged trial and the dismantling of Yukos – once considered Russia’s most transparent company – dampened enthusiasm for investment in the country and helped push oil prices to record highs over supply fears at Yukos.

The case is viewed as part of a Kremlin drive to neutralise Khodorkovsky’s political ambitions and cement state control over the strategically important oil sector.

What began with the tycoon being taken at gunpoint from his private jet in October 2003 led to escalating tax claims against Yukos. Then in December, the company’s one million barrels-a-day Yuganskneftegaz unit was auctioned off to pay back a staggering $28bn (€21.6bn) tax bill.

Khodorkovsky complained from his jail cell of Kremlin interference. US investors lost $6bn (€4.64bn) as the relentless assault turned Russia’s biggest blue chip into a penny stock.

Nineteen months after Khodorkovsky’s arrest, once-thriving businesses are reeling as emboldened tax authorities conduct smaller back tax probes. Capital flight tripled last year to $7.9bn (€6.1bn) as a result of uncertainty stoked by the Yukos case. The turmoil is blamed for cutting back GDP growth at a time when oil prices – Russia’s main commodity – are at an all-time high.

US Secretary of State Condoleezza Rice highlighted investors’ concerns while visiting Russia last week. She stressed the Yukos case “has done nothing to stabilise the views of the role of the rule of law in Russia’s economic relations.”

“They need to be rules that people understand,” she said. “They need to be consistent rules.”

While Putin has repeatedly described the case as a just investigation into a corrupt empire, the probe could have been launched against any of hundreds of businessmen in Russia’s cutthroat post-Soviet marketplace – rather than one financing opposition parties.

Alex Goldfarb, an aide to exiled Russian tycoon Boris Berezovsky, ventured the postponement demonstrated that Putin was “between a rock and a hard place” - Western critics and people in his own administration advocating a further crackdown on business.

“It’s a sign Putin is stalling, fearing the moment the sentence is announced there will be tremendous pressure to continue going after big financial groups,” Goldfarb said in a telephone interview from London.

As for ordinary Russians, a guilty verdict would evoke few tears.

Khodorkovsky and his partners enjoy little sympathy with a population that was plunged into poverty after Soviet Union’s collapse and forced to watch as the elite divided up industrial wealth in back-room deals.

State Prosecutor Dmitry Shokhin has called for Khodorkovsky, 41, to receive the maximum 10 year sentence.

Together with business partner Platon Lebedev, the tycoon is charged with rigging a privatisation auction in 1994, stripping profits from a major fertiliser component maker, Apatit, illegally using onshore tax havens to slash Yukos’ tax bills as well as dodging millions in personal income tax.

Andrei Krainov, a former director of the Volna company, which acquired the Apatit shares, is also standing trial.

Putin’s advisers suggested there could be some hope for the men. Andrei Illarionov, an outspoken Kremlin economic aide, said Putin’s state-of-the-nation address on Monday contained hints that jail was not inevitable.

“By maintaining the independence of the court from the executive authorities, a correct and fair ruling may be handed down, freeing the two citizens being investigated from tax terrorism,” Illarionov was quoted by the Interfax news agency as saying.