The Russia Conundrum

Further legal abuses included the selective and retrospective application of laws – selective because such sanctions were never invoked against any entity other than Yukos, and retrospective because the law in question did not exist at the time of the alleged offence. For instance, the prosecution charged that Yukos had used a specially legislated low-tax zone to reduce its tax burden, a fact we never hid, and a scheme of which other Russian oil companies also took advantage. Indeed, the Kremlin itself had encouraged the creation of low-tax zones in order to boost economic activity in areas that were suffering through the post-Soviet transition. The Russian tax authorities had explicitly approved Yukos’s use of such mechanisms for reducing the company’s overall tax burden. Yet, the prosecution now sought to class this usage as a crime. The tax authorities reopened Yukos’s tax returns from previous years that had already been signed off and accepted. They ruled that the use of regional tax shelters was illegal – despite the Russian Audit Chamber having declared them legal just a few months earlier. A representative of the tax authorities specifically confirmed that, at the time of the supposed infringements, the tax reduction methods in question were widely used and considered legal, while the legislation was only changed thereafter, with new rules entering into force shortly before my trial began. Other oil companies operating in Russia used the same methods to reduce their overall tax burden, but only Yukos was subjected to a tax reassessment and prosecution. The Organisation for Economic Co-operation and Development (OECD) concluded that the proceedings against Yukos were therefore ‘a case of highly selective law enforcement’ which demonstrated how ‘Russia’s courts are subservient to the executive … and its prosecutors highly politicised’.

We knew full well that the court would find Lebedev and myself guilty on all counts, so the nine-year prison sentences we were handed in May 2005 came as no surprise. We appealed, because there was no reason not to appeal, but we didn’t hold out great hope. In September 2005, in a one-day hearing, the court rejected the arguments put forward in our application, while reducing our sentences from nine to eight years in a show of simulated magnanimity. The fact that the judges could review hundreds of bound volumes of evidence from a case that had lasted a year in the space of just a few hours might have surprised outside observers; but it was entirely understandable to Russians. The appeal was rushed through, ensuring a conviction in time to prevent me filing papers to register as a candidate in the forthcoming parliamentary elections, which would have placed me firmly in the public eye during the campaign. When I politely pointed out to the appeal judge that I was by law permitted to address the court and to be represented by my own lawyer, I saw the panic in his eyes, before he denied my requests with a witty legal quip, ‘You’re not in Strasbourg here!’

Counting the prison time we had served since our arrests in 2003, Platon and I were scheduled for release in 2011 – but this evidently did not suit Vladimir Putin. In 2009 he ordered us to go on trial again. This time, we were accused of embezzling the entire oil production of Yukos over a period of six years leading up to 2003, around 350 million metric tons of oil worth over $25.4 billion, and of laundering all the proceeds from the sale of this oil to the tune of over $21.4 billion. We were found guilty once more and ordered to remain in prison until 2016. We appealed to the European Court of Human Rights and won favourable rulings that had no effect whatsoever on the Russian authorities.

I had assumed at the outset that I would spend two to four years in jail. It’s not that I was looking forward to it, but I was ready to do that. It turned out to be more than ten. I suppose my assessment of how far the justice system could be perverted was naive. But, even after losing a decade of my life, I continue to believe that freedom, democracy and civil rights cannot be contained by even the harshest of jailors.

CHAPTER 11

ARRESTED DEVELOPMENT

Putin’s anti-Westernism, his wanton confiscation of private property and the corruption that flows from the highest levels of the Kremlin have devastated the prospects for any renewal or progress in the Russian economy. Why would anyone trust a mafia state that appropriates the resources of the nation and seizes the businesses of individuals solely to enrich itself? Why would global investors choose to invest their money in a country run by such a treacherous regime, and why would the Russian people continue to accept the abuses to which their leaders subject them?