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11/13/2003
Mikhail Khodorkovsky
Back on October 9, 2003, the former CEO of Russian energy
giant Yukos, Mikhail Khodorkovsky, was a guest of the Carnegie
Endowment for International Peace. Of course just a few weeks
later he was arrested on charges of fraud and tax evasion, and on
Tuesday, November 11, he was denied bail.
What follows are some excerpts from his 10/9 presentation.
Understand that a leading investor in Yukos was arrested earlier
in the summer and the company has faced non-stop harassment
for the better part of a year. Thus, some of Khodorkovsky’s
comments are both conflicted and disjointed, but in light of what
was to follow, you can’t blame him.
[Special thanks to Emily H. at the Carnegie Endowment for
granting me the permission to print the following. Also,
Khodorkovsky was speaking in Russian and the translation is a
bit uneven in spots.]
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“In Russia, business is one of the primary conducts of the very
idea of a civil society. Let me explain why.
“Because big business was among the first in Russia to run up
against the need to participate in global processes. We need
integration with international companies, with the international
business community. In order for this integration to be
successful, we need to have comparable conditions in our
respective societies – an independent judiciary. This is the rule.
This is the norm in Western society .Five, ten years ago, when
our business wasn’t trying to integrate, when we weren’t
transparent, an independent judiciary was not something that was
all that important for us. We dealt with our problems in other
ways. But then we discovered that if you want to make your
company transparent, you need to have the infrastructure,
external infrastructure. And the first building block of that is an
independent judiciary.
[On corruption]
“When on the one hand you have big business that has moved
forward towards the global society, comes up against the
bureaucracy specifically the law enforcement bureaucracy, for
whom the previous rules of the game were preferable. This is
not to say that other parts of society haven’t come across this
conflict either. But in order to enter into the conflict, you have to
feel yourself independent .
“My partner, Mr. Lebedev, has been in jail for the past three
months. This, despite the fact that all of the reasons that the
prosecutor gave for why he should not be granted bail have all
proven themselves to be false. An employee of mine, Mr.
Pechugan (sp?), has been in jail for even more than three months,
and we still don’t know what evidence (authorities have),
because there have been five court hearings so far, preliminary
hearings on the Lebedev and Pechugan cases, and each one of
the five has been a closed session, while the defense lawyers
have been forced to sign confidentially agreements, gag orders.
So, we don’t know what evidence the prosecutor has, nor do we
know even whether the prosecutor has any evidence.
“Today, the defense lawyer who defends Mr. Lebedev in court
had his offices searched in a brutish fashion. The lawyers told
me by telephone today in fact that there were no court orders
allowing the searches to begin with. Furthermore, the lawyers
were not allowed to be present during the searches. Now, all of
this is against U.S. law, but it’s also against Russian law.
“We were very worried that the evidence that is going to be
presented in the cases will have been fabricated, because the
measures that the prosecutor is taking right now – for example,
conducting searches in a children’s boarding school – it’s
subsidized by our company – searches in the homes of people
who have been locked up for the past three months. All of this
tells us that the prosecutor doesn’t have any case materials, and
yet they promised the president that they would have some – at
least as, from what we can gather, from what Mr. President said
in his public speeches on the subject.
“Put all that together and you have quite a dangerous situation.
You may ask yourself ‘Why is it that Yukos finds itself at the
center of this conflict?’ There can be any number of
explanations. There is no doubt that Yukos is something of an
example for many Russian companies. Yukos is an example of
openness. Yukos is an example of a Western oriented company.
And yes, Yukos’ shareholders are an example of independent
behavior, independent of the bureaucracy, independent opinion,
and of the actions that are being taken against Yukos are also an
example
“Russia has made its choice in the question between private
ownership and state ownership of property, and the choice was
private property. This choice has already been made, and
nobody’s questioning this choice. The question right now is a
much more difficult choice. Are we going to become a
democratic Russia for the first time in our thousand year history,
or are we going to continue along our thousand year old path of
authoritarianism? This is not a simple choice. But modern
civilization gives Russia no hope of becoming a modern society
in the economic sense without becoming the same in the
democratic sense.”
[On relationship with Kremlin]
“I do not consider that I am in a cold war with the Kremlin .
There’s no doubt that the prime minister (Kasyanov) has gone on
the record about our situation, also from a very democratic
standpoint. On the other hand, there are those people who take
the opposite position.”
[ed. Kasyanov would go on to express his “grave concern” after
Khodorkovsky’s arrest.]
[On oil prices and pressure from OPEC]
“For Russia to consciously decide to reduce production, or more
precisely to reduce exports, doesn’t make sense, because the
market we’re in is a competitive market, and the place that we
move out from is very quickly filled in by our colleagues from
the Caspian region.
“There is another problem. Russian production is very
dependent on transportation. Right now, we’re not able to keep
up with building enough pipeline capacity. And part of the oil –
the crude we produce, we need to ship by rail, and that’s very
expensive. If oil prices drop, it’s possible that Russia will reduce
production out of purely economic considerations.”
[On Moody’s raising Russia’s investment rating vs. political
reality]
“Perhaps someday, investors will be so ethically oriented that
they will invest only in those points on the globe where
democratic processes are in full swing. Today however, they
invest wherever the money is. As far as business goes, Russia is
a great place. I, as a Russian citizen, would also like it to be a
great place to live. But that is not what’s reflected in the
investment rating.”
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And then he was thrown in jail.
Hott Spotts returns November 20.
Brian Trumbore
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