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Last updated: May 18, 2005 1:54 pm

Court signals guilty verdict on Khodorkovsky

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The trial of Mikhail Khodorkovsky, once Russia's richest man, was adjourned again on Wednesday. Mr Khodorkovsky looks set to be convicted on at least four criminal charges, marking the culmination of President Vladimir Putin's campaign to wrest control back from the wealthy oligarchs who came to dominate the country in the late 1990s.

Three judges began reading their lengthy judgment and legal arguments on Monday and continued on Tuesday and Wednesday after the 10-month trial of Mr Khodorkovsky and his business partner Platon Lebedev on seven charges of fraud and tax evasion. They denied the charges. The court has now been adjourned until Thursday but it is believed the hearing could drag on for several days yet.

While no verdicts were announced, Mr Khodorkovsky's lawyers said the judges' language left little doubt that the verdict on the four charges covered on Monday would be guilty.

The case is widely seen in Russia as punishment of a businessman who was using his wealth to gain political influence, funding opposition parties and lobbying hard against laws he disliked.

The authorities have also used huge back-tax claims against Yukos, formerly Mr Khodorkovsky's oil company, as justification for renationalising its biggest production unit, restoring state control over a key asset.

Yukos said in a statement that the allegations of impropriety and fraudulent activity by the company were “false, unfounded and without merit.”

The Kremlin has insisted that the case is simply about financial wrongdoing by Mr Khodorkovsky and his associates. It has been at pains recently to characterise the group as “Russia's Enron”, drawing parallels with the fraud at the US energy giant.

The former Yukos chief's lawyers were gloomy on Monday night about prospects for anything other than a guilty verdict on the three remaining charges.

“I have said from the beginning he was going to be convicted, and nothing I heard today was able to shake those views” said Robert Amsterdam of Mr Khodorkovsky's defence team. Anton Drel, his Russian lawyer, said the judges were repeating the prosecution's summing-up “with the same grammatical mistakes”.

The prosecution has asked for the maximum 10-year sentence for the two defendants. Charges covered by the judges included personal tax evasion of several million dollars, illegally obtaining shares in a fertiliser company in a 1994 privatisation and “malicious failure to obey a court order” to return the shares.

The judges repeatedly referred to Mr Khodorkovsky and Mr Lebedev as leaders of an “organised criminal group” the central charge against him.

Other charges include alleged fraudulent use of transfer pricing at the fertiliser company, tax evasion by Yukos, and expropriation of Yukos property.

Even guilty verdicts may not end legal action against the defendants. The Russian prosecutor's office said last Friday it was preparing new charges of money laundering after finding evidence that senior Yukos officials had illegally transferred $6bn (€4.7bn) to tax havens. Yukos denies the allegation.

Analysts saw the disclosure as an attempt by the authorities to emphasise the size of alleged crimes at Yukos.

Mr Putin, in an interview with Israel television last month, drew direct parallels between the Yukos affair and Enron, pointing out that some defendants in the forthcoming Enron trial could face 20 years in jail. “But we do not write any letters there,” Mr Putin said.

Condoleezza Rice, US secretary of state, warned last month that Washington would be watching the outcome carefully “to see what it says about the rule of law in Russia”.

The Yukos affair has scared investors, raising fears over lack of respect for property rights.

Slowing investment growth in the first quarter led to a fall in economic growth. But Russia's remaining oligarchs privately say they are wary of getting involved in politics and are focusing on their businesses.

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