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. Last Updated: 07/27/2016

Khodorkovsky Calls Charges a Farce

Itar-TassPolicemen standing Wednesday outside the Indoginsky District Court in Chita, where Monday's hearing was held.
Jailed former Yukos CEO Mikhail Khodorkovsky dismissed the money-laundering charges brought against him this week as a "shameful farce" aimed at keeping him in prison until after the 2008 presidential election and predicted that judges would find him guilty after a short trial.

"Those who devised the Khodorkovsky affair to steal Russia's most successful oil company ... are afraid to see me free and want to insure themselves against my release on parole," Khodorkovsky said in a statement posted on his web site late Tuesday.

"The court, a subservient instrument of the power vertical, will of course deliver a guilty verdict," Khodorkovsky said in his statement. The case was a "shameful farce, which has nothing to do with justice," he said.

Prosecutors brought charges against Khodorkovsky and his business partner Platon Lebedev on Monday in the east Siberian city of Chita, where the two are being held. They are currently serving eight-year sentences on fraud and tax evasion charges. The men now stand accused of embezzling and laundering $23 billion to $25 billion in oil revenues through offshore trading companies and Khodorkovsky's Open Russia foundation, defense lawyers say.

If convicted, they face up to a further 15 years each in prison. The charges mean that they will likely have to stay behind bars pending the trial and throughout the hearings. If it were not for the charges, the men could be considered for parole later this year.

Yukos' former CFO Bruce Misamore on Wednesday defended the oil company's sales practices, saying the latest charges against Khodorkovsky and Lebedev were a result of the Russian government's misunderstanding of basic accounting principles.

"From what I know about the charges, they are 100 percent completely false and they arise from the complete ignorance by the Russians of international accounting standard practice," he said in a conference call from Tampa, Florida. "All of the transactions were conducted at a market price."

Prosecutors have not detailed the latest charges but have said that from 2000 to 2003, Yukos officials sold crude oil through two trading subsidiaries, Fargoil and Ratibor, both registered in tax havens, at knockdown prices. These companies resold the crude internationally, thus illegally stripping Yukos of profits, prosecutors say.

Misamore countered that Yukos charged a fair domestic price for the crude. "Take the Urals blend world market price, detract the Russian export duty and transportation cost in order to deliver it to the border and you come up with a very reasonable approximation of the Russian domestic crude oil price," he said. "People don't understand that when they see Russian domestic crude oil prices and think they are held down artificially low that there's actually a mathematical relationship." Other Russian oil companies were using the same arrangement to sell their crude, he said.

The Moscow Arbitration Court on Wednesday ordered Fosagro, a company created by Khodorkovsky, to return the government's 20 percent stake in Apatit, the country's biggest fertilizer maker, RIA-Novosti reported. Fosagro acquired the stake in 1994.