Russia's oil and gas industry has had its share of drama over former OAO Yukos head Mikhail Khodorkovsky, who was convicted and sentenced to 8 years in jail in 2005 for major fraud and tax evasion.
Khodorkovsky has been on trial again before a Moscow court since Mar. 3 and faces more than 20 years in prison over embezzlement allegations. But the oilman has now opened a new front in his battle with Moscow.
The European Court of Human Rights recently announced that Yukos is suing the Russian government for a record $98 billion. Talk about a counter attack. The former Yukos boss thinks big, and knows the case will serve as a foil to the trial in Moscow.
The European Court of Human Rights initially said the case would be heard in November, but it has since postponed the hearing in order to allow the recently appointed judge to become familiar with the file—doubtlessly a thick one.
Yukos's claims
In its bid for a hearing, Yukos claimed that Russia's tax authorities engineered the company's bankruptcy by handing out disproportionately high fines for financial irregularities.
In its application, Yukos said there was a "lack of proper legal basis" for handing out the fines as well as a "selective and arbitrary prosecution" of its business.
Between 2000 and 2003, Russian judges found Yukos guilty of tax fraud on several occasions, with Yukos eventually forking over €13 billion in unpaid taxes and another €6 billion in penalty charges.
Along the way, Khodorkovsky was convicted and sentenced to jail. His supporters have condemned the trial as politically motivated to keep Khodorkovsky—a critic of Prime Minister Vladimir Putin—out of politics altogether.
Analyst BMI grants that Yukos former shareholders achieved a moral victory in getting the European Court of Human Rights to hear the case, but says it is "doubtful that Yukos will come away victorious in the end."
Moscow worried
That may be, but Moscow is clearly worried as evidenced by its recent efforts to manipulate the outcome of the hearing.
That much became clear in August when the court announced that a Russian judge on the panel, Valery Mussin, had resigned—after having been named a director at Russia's state-owned OAO Gazprom—in order to avoid a conflict of interest in the Yukos matter.
Russian President Dimitry Medvedev then named another judge, Andrei Bushev, as a replacement. That's the very same judge who now needs more time to study the file. It is not clear how much time the newly appointed judge will require, but the hearing will be delayed for as long as he—or Moscow—needs.
As for Khodorkovsky, he seems to have accepted his fate for the moment: "Today I am a prisoner, no more, no less."
Tomorrow, of course, is another day.
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