Mikhail Khodorkovsky Pardoned

[Gator]

After 10 years in prison and the loss of most of his wealth, oligarch Mikhail Khodorkovsky was pardoned today.  The government spin is Putin pardoned him so Mikhail could be with his gravely ill mother in Germany. 

Putin's detractors say the real reason  is an attempt to persuade world leaders to visit the Winter Olympics.  Important leaders are not coming to the Olympics because of Russia's anti-gay/lesbian law.

Mikhail was imprisoned for tax evasion and similar offences.  However, most agree that the real reason was to demonstrate to other oligarchs what would happen if they opposed Putin.

[lordtiberius]

[jone]

Who cares about Khodorkovsky?

I hear there are some real important pardons coming up:

Bring on the RussBabes from Pussy Riot.

[Chicagoguy]

My wife claims that there are a few bodies left behind on his way to ownership of Yukos.      True ?

And in the new Russian tradition it is my guess that some of these assets ended up with people that had more than a passing acquaintance with Putin.

[lordtiberius]

Who cares about Khodorkovsky?

I hear there are some real important pardons coming up:

Bring on the RussBabes from Pussy Riot.

She's probably dead

[mendeleyev]

it is my guess that some of these assets ended up with people that had more than a passing acquaintance with Putin.

No guessing necessary, my friend. 

He had less than a year left on his current sentence so while the pardon is important, even more important was Putin's comments that there would probably not be a third round of charges.

In a land where both individuals and corporations have a flat tax, those who find themselves at odds with Mr. Putin also seem to be guilty of finding ways to commit tax fraud.
 

[lordtiberius]

The performance that landed her in jail:

[mendeleyev]

Mendeleyev Journal:

We knew that the Khodorkovsky pardon was initiated by the Kremlin but at the time couldn't prove it. His attorneys were as surprised as ourselves and Khodorkovsky himself had made no mention of seeking a pardon.


Smiling after release, Mikhail Khodorkovsky at the Adlon Hotel in Berlin.

The two parties, Vladimir Putin and Mikhail Khodorkovsky, were at a stalemate. Putin wasn't going to pardon without an admission of guilt and promise to stay out of politics and Khodorkovsky wasn't going to admit guilt to crimes he clearly didn't commit.

Checkmated, President Putin issued presidential decree number 922 ordering the release of Khodorkovsky from penal colony number 7 in the small town of town of Segezha in Russia's Karelia region. Khodorkovsky was quietly removed from the prison before reporters could arrive and Putin's claim the day before that the former Oligarch had admitted guilt turned out to be hollow.

However the journalists at Kommersant were busy at work and yesterday it was revealed that the Kremlin sent security agents to visit Khodorkovsky to negotiate a release based on behind the scenes negotiations with German Chancellor Angela Merkel, who over the years has served as both a critic but yet a friend of Mr. Putin. President Putin, facing another possible epic failure of the Olympics (does anyone remember 1980?), needs to revise his image--and fast.

Mr. Putin got half of what the wanted: a promise not to run for office or support the opposition. As for Khodorkovsky, he got half of what he wanted which was personal release without admitting guilt and permission to leave the country, however the Putin pardon does not include Khodorkovsky's long time friend and business partner, Platon Lebedev. Lebedev's sentence expires in May of 2014 and barring any new criminal charges he will be released at that time.



Mikhail Khodorkovsky in Berlin with former German Foreign Minister Hans-Dietrich Genscher.
(photo: drugoi/livejournal.)

Khodorkovsky left Russia a day after his release, traveling to Berlin’s Schoenefeld airport on a private jet owned by former German Foreign Minister Hans-Dietrich Genscher. It was Genscher who met him at the airport in Berlin with a waiting police escort to be reunited with his parents and eldest son Pavel. His mother Marina, age 79, also flew to Germany for specialized cancer treatment.

At a news conference in Berlin on Sunday Khodorkovsky went out of his way to steer clear of politics and indicated that he had no intention of running for President of Russia in the future. He did however promise to work on behalf of other political prisoners who remain behind bars.

Khodorkovsky told reporters that a boycott of the Olympics was counter productive and would hurt millions of people, not just the Russian government. As to whether he would return to Russia, Khodorkovsky said that he was free to return but not certain that he'd be allowed to leave again. His German visa is for one year.

[Chicagoguy]

Khodorkovsky also hinted he had enough money to live on. I would like to know more about that story.

[mendeleyev]

Although he was stripped of much of his original wealth by the verdicts, there is somewhere in the neighborhood of $250 million remaining in off shore accounts which his attorneys control. He won't go hungry.

There is however an outstanding $550 million dollar fine that Russia claims so I have my doubts on his returning anytime soon.

He has his detractors but to his credit he gave away millions when he was in business. He gave to a variety of charities and cultural groups, and he funded political and opposition movements which frankly got him in trouble in the first place.

When you own a company it is hard to steal from yourself, yet prosecutors made theft a stake in their cases although they failed miserably to prove those claims. When you live in a country where a flat tax with simple corporate returns are filed, it is difficult to evade taxes and yet that is one of the favourite charges of prosecutors when someone goes crossways with the Kremlin.

The government reissued new tax bills exceeding Yukos revenues from 2002 to 2003. It doesn't take rocket science to understand that in a country with a corporate flat tax rate of 30% (30% at the time but now 20%) that you can't expect a company to pay in taxes more than the company makes in revenues.

The government also went after Yukos for designating some products as containing oil versus being pure oil. That was allowed depending on the product and practiced by every Russian oil company at the time. The tax on those products was 11% versus 30% a healthy difference to be sure. I would again point out that if Yukos was not allowed to use that designation, then why didn't the government go after its own companies for doing the same? Again the practice was to single out Yukos for the political activities of the company owners and management. Companies that kept their mouths shut were free to continue the practice. Even if the government had been right in reassessing taxes for those products it still would have not totaled more than the company's total revenues.

Was he an innocent lamb? Probably not. But if you insist that he be in jail then at least have the intellectual honesty to throw all the other businesspeople from that particular period in jail too. His status as a "political prisoner" was valid because the Kremlin singles out those who get in the way for prosecution and the rest are allowed to move forward as long as they quietly toe the Putin line.

What is also ironic about Khordorkovsky is that he had the balls to suggest that oligarchs like himself pay penalties and taxes for getting industries on the cheap during that time in history. That sounds logical to you and me but everyone else, including the oligarchs protected by the Kremlin, nearly went into labour pains at the very suggestion. That should tell you something about that narrow class of the super wealthy in Russia.

Finally, it didn't help that Yukos was a well run company and as such was an embarrassment to state run oil companies. Yukos paid taxes and paid them in a timely fashion up until the government began issuing reassessments for new tax bills while at the same time freezing Yukos accounts until the new taxes were paid. It doesn't take a genius to figure out that if accounts are frozen then you can't pay reassessments. It was a way for the government to bankrupt Yukos and then a Kremlin friendly entity swoop in to buy assets on the cheap.

Detractors seem to forget that Yukos was formed by the government authorizing a new company to be formed by combining three large Soviet oil firms that were essentially defunct. It was government Resolution 354. Khodorkovsky was a smart operator and soon had business humming to the tune of 20% of Russia's oil production was being handled by Yukos. The success of Yukos made the state run oil firms look inefficient and bloated, which they were. That didn't exactly endear him in the eyes of the Kremlin either.

[lordtiberius]

His imprisonment is disgraceful.