Former Yukos Head Khodorkovsky to Spend 14 Years in Prison on Convictions

Mikhail Khodorkovsky, the former head of Yukos Oil Co., may serve an additional six years in prison following his conviction in a trial that heightened U.S. and European concerns about the rule of law in Russia.

Khodorkovsky, once Russia’s richest man, will spend a total of 14 years in prison, including the eight years he is serving on previous charges, Moscow Judge Viktor Danilkin said today, after finding him guilty of money laundering and embezzling oil. The 47-year-old will appeal, said defense attorney Yuri Schmidt.

Khodorkovsky has called the charges retribution for his opposition to Prime Minister Vladimir Putin. Originally due for release in 2011, Khodorkovsky will now remain in prison until after the 2012 presidential election that may return Putin to the Kremlin. Putin has denied any involvement in the case.

Platon Lebedev “and I have shown by example that you cannot count on the courts to protect you from government officials in Russia,” Khodorkovsky said in a statement distributed by his lawyers. “But we have not lost hope, nor should our friends.”

The new sentence will run from 2003, when Khodorkovsky was arrested on previous charges of tax evasion and fraud while refueling his plane in Siberia. Khodorkovsky and Lebedev, his former business partner, are already serving eight-year sentences under a 2005 conviction relating to that case.

Yukos, once Russia’s largest company by market value, was declared bankrupt with about $30 billion of tax claims and sold off in pieces when Putin was president.

German Critique

Governments in the U.S. and Europe said the guilty verdict, which Danilkin began reading Dec. 27, further weakened the rule of law in Russia. President Dmitry Medvedev has made ending “legal nihilism” one of the top goals of his administration.

“The trial and the sentence raise considerable questions about the adherence to the principles governing a state of law, and represent a backward step on the path toward the modernization of Russia taken by President Medvedev,” Christoph Steegmans, a German government spokesman, said today in a statement.

U.S. Secretary of State Hillary Clinton said Dec. 27 that the case “raises serious questions about selective prosecution -- and about the rule of law being overshadowed by political consideration.”

Khodorkovsky’s trial is a domestic matter and international criticism is “unacceptable,” Russia’s Foreign Ministry said Dec. 28 in a statement posted on its website. The ministry told the foreign powers to stop pressuring Russian courts.

Investment Climate

Russia’s Micex stock index rose 0.6 percent today, closing at a 2010 high of 1687.99. The index fell 0.7 percent on Dec. 27, when Danilkin began reading the verdict.

Investors had priced a full conviction and long sentence into the markets, Chris Weafer, chief strategist at UralSib Financial Corp. in Moscow, said earlier this week.

“There is no connection between the verdict and the investment climate in Russia,” Putin’s spokesman, Dmitry Peskov, said today by phone. “Thus we can hardly talk about any potential influence on the investment climate.”

Peskov declined to comment on whether the trial and verdict was fair.

German Gref, chief executive officer of OAO Sberbank, Russia’s biggest lender, said earlier this month that Khodorkovsky’s imprisonment was “one of the irritants” to which investors in Russia often react.

“We have our work cut out for us to improve the investment climate,” Gref, who was economy minister when Khodorkovsky was arrested, said in an interview.

‘Thief’ In Jail

Speaking during an annual call-in show this month, Putin said that “a thief should sit in jail,” referring to Khodorkovsky’s 2005 conviction. Medvedev told Russian officials last week to abstain from commenting before the trial was over.

Putin’s comments pressured the court, said Vadim Klyuvgant, Khodorkovsky’s lead defense lawyer.

Khodorkovsky’s mother, Marina, told reporters today that the judge is a professional who couldn’t have written such “nonsense.” She said her son was ready for the conviction.

“This sentence is cruel and absurd,” said Ludmila Alexeeva, who heads the Moscow Helsinki Group, Russia’s oldest human-rights organization. “It proves that there is no independent justice in Russia.”

No ‘Scapegoat’

Most Russians are indifferent to Khodorkovsky, according to a poll of 1,593 people conducted in November, Boris Dubnov, head of socio-political research at the Levada Center in Moscow, said today. About 65 percent of respondents didn’t care about the trial, while 37 percent said the trial was orchestrated.

“The attempt to make a scapegoat and demonize him” for the social and wealth gap in Russia “wasn’t successful,” Dubnov said in phone interview. “The population has understood it’s not about the oligarchs.”

More than a third of Russians, or 36 percent, supported the guilty verdict in 2005, compared with 4 percent who considered Khodorkovsky to be innocent, according to a 2008 poll by the All-Russian Center for the Study of Public Opinion, or VTsIOM.

Khodorkovsky has said he’s prepared to die in prison.

The verdict will be “predictable,” he said in his closing statement on Nov. 2.

“No one believes that you can get an acquittal in the Yukos affair in a Moscow court.”

To contact the reporter on this story: Anton Doroshev in Moscow at adoroshev@bloomberg.net

To contact the editor responsible for this story: Mark Sweetman at msweetman@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.