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Is there more to Moscow than Money, Power, and Politics?

March 7, 2009

Not at the moment.  With the trial of Mikhail Khodorkovsky beginning in Moscow today, the question on the tip of most people’s tongues is whether the call to order will be cliche or change.

The prosecution of Khodorkovsky for money laundering, tax evasion, and embezzlement (among other things) is believed by many to have been conceived in the womb of Putin’s political insecurity shortly after the fall of the USSR.  Either by coincidence or cliche, Khodorkovsky’s jet was stormed by the Russian police in Siberia shortly after he bought Moscow’s influential Moskovskiye Novosti newspaper and hired a controversial investigative reporter known to have been critical of Putin.  During this time, Khodorkovsky further magnified his political influence and standing in Moscow by supporting all political parties, including the Communist Party–not just the party of which he was a member (which did not support Putin).

So who is Khodorkovsky?  In the late ’80s, he was a loyal communist in the USSR who started a business that would become Menatep Bank.  After the fall of the USSR, Khodorkovsky gained significant wealth and influence as he bought major state companies, like YUKOS Oil, at state auctions.  Khodorkovsky maintained a controlling interest in YUKOS as a result of Menatep being a majority shareholder; however, his apparent “mistake” was believing his newfound post-USSR freedoms were inalienable.  It is widely reported that it was only as he was reaping the financial and political benefits of those freedoms, that his jet was stormed by the Russian police.

That was in 2003.  Khodorkovsky has been in Siberia ever since and, since 2005, has not been seen in public until today.

Khodorkovsky’s defense has put PM Putin’s hand-picked successor, President Medvedev, in an undoubtedly painful bright light, as it alleges that the prosecution is the love-child of Putin’s affair with unchallenged power.  It appears the allegations are not simply fodder for a “plan ‘B'” offense, but that they may be supported by credible evidence of government misconduct.

To further add to the spotlight on this epic archetypal Moscow drama, the EU Court of Human Rights (EUCHR) rercently released its January 29, 2009, order accepting YUKOS’s corruption complaint against Russia.  It could be the highest valued case the EUCHR has accepted to date considering that YUKOS alleges at least 34B in retroactive taxes.  That remains to be seen; however, the EUCHR’s exertion of jurisdiction is arguably not most siginificant to the political climate surrounding Khodorkovsky’s trial in Moscow for that reason.

YUKOS was declared bankrupt by the Russian courts in 2006 and certified as officially ceasing to exist, all of its assets having been sold, on November 12, 2007, well before the EUCHR litigation was initiated (click on the EUCHR link to see its Order detailing the facts).  Consequently, there were, inter alia, colorable issues of standing.

The EUCHR invoked essentially the same rules that exist in US law in accepting jurisdiction despite Russia’s objections, to wit:  (1) The case presents facts capable of repetition yet evading review; (2) it presents important [moral] and legal issues that should not go undecided (I bracket “moral” only because American courts address legal issues, not moral issues); and–most significantly–(3) that the Court could assume jurisdiction even though YUKOS did not exhaust its appeals in Russia because litigation in the Russian courts was futile.

Given the EUCHR’s international credibility, its declaration that YUKOS wasn’t required to exhaust its appeals in the Russian courts because it was an obvious exercise in futility, makes the international spotlight on Khodorkovsky’s trial in Moscow all the brighter.  Though I’m sure he’s not in the courtroom, with Khodorkovsky’s trial on the heels of the EUCHR decision, all eyes are on President Medvedev to see if Moscow has outgrown its cliches.

Of course, I’ll be watching to see if politics trump truth, as is the cliche in far too many white collar prosecutions from Moscow . . . to Miami.

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