02 January 2011
By Stephen Lendman On
October 25, 2003, Khodorkovsky (below called MK) was
arrested for tax evasion and corruption, dating from
when the Soviet Union dissolved and state
privatizations followed. "Behind every great fortune
lies a great crime," explained Honore de Balzac.
Billionaire Russian oligarchs, like MK, illegitimately
amassed great fortunes, avoiding prosecution during
Yeltsin's tenure (1991 - 1999).
Beginning in 1991, various socio-economic measures
were implemented without public discussion or
parliamentary approval. Most important were Yeltsin's
personal directives, creating a billionaire
aristocracy handed the economy's most important,
profitable sectors, free of charge - literally a
license to loot.
Changes began slowly under Vladimir Putin and Dmitry
Medvedev, though not easily. The rot is so widespread
and deep. Oligarchs like Boris Berezovsky fled to
London, Moscow2, taking with them great fortunes.
Others staying behind wish they'd after Medvedev
announced during an October 2008 Council to Combat
Corruption session that:
"Corruption in our nation has not simply become
wide-scale. It has become a common, everyday
phenomenon which characterizes the very life of our
society. We are not simply talking about commonplace
bribery. We are talking about a severe illness which
is corroding the economy and corrupting all society." As a
result, prosecutions followed. Some 2009 examples
against bureaucrats included: --
Nevelsk Mayor Vladimir Pak's suspension and charge of
embezzling 56 million rubles ($1.5 million); --
two Ministry of Internal Affairs (MVD) Main
Directorate officers detained on suspicion of
accepting over $100,000 in bribes; and --
MVD Lt. Col. Dmitry Luzgin charged with extorting $1
million from Russian Real Estate House management.
According to MVD figures, annual Russian corruption
ranges from $20 - $40 billion. In 2006, Alexander
Buksman, deputy general prosecutor first deputy,
estimated annual corruption at $240 billion, involving
business and bureaucrats. However, a combination of
legal loopholes and close private-public alliances
lets most offenses go unpunished.
Major Media Defend MK On
October 29, (four days after his arrest), a New York
Times editorial headlined, "Putin's Old-Style KGB
Tactics," saying:
"After laboring to project the image of a rational,
law-abiding statesman, President Vladimir Putin of
Russia has reverted to the vengeful violence of his
old employer....(Arresting MK) was a serious mistake,"
citing market plunges "on the fear that the Kremlin
was showing its true authoritarian colors." An
earlier August 13, 2003 Times editorial headlined,
"Moscow Machinations," saying:
"....nobody knows for sure whether President Vladimir
Putin is personally behind the sudden crackdown on the
giant oil company Yukos....What is clear is that the
Kremlin's strong-arm tactics have little to do with
battling economic crime and a lot to do with power and
the coming elections in Russia." An
October 28 Washington Post editorial claimed "no one
is safe from arbitrary prosecution, or from the
political whims of the Kremlin, and the US State
Department suggested that MK's arrest involved
"selective prosecution," adding that "We are concerned
about the rule of law, about maintaining the basic
freedom of Russians." In
fact, MK was summoned for questioning. At the time he
headed Yukos and was Russia's richest oligarch,
ranking 16th on Forbes billionaires list. Today, he
faces years more in prison. More on that below. The
Times railed about "masked agents" arresting him
instead of pursuing him in court. In fact, he defied a
court order to appear before prosecutors. Only then
did arrest follow. Other allegations suggested Yukos
involvement in murders or attempted ones, targeting
bureaucrats or business competitors who interfered
with company operations. One was committed on MK's
birthday, apparently a gift to the boss.
MK's Background He
began as a Stalinist bureaucrat. In 1987, he used his
Komsomol district committee control to organize
Menatep, a commercial enterprise to promote inventions
and industrial innovations. It later became one of
Russia's largest banks. In the 1990s, through ties
with Kremlin bureaucrats, he used funds stolen from
the state and unwary investors to amass huge holdings
in formerly state-owned enterprises at a fraction of
their value. In 1995 he bought Yukos assets for $300
million. In 2003, its market value was $30 billion, a
100-fold ill-gotten gain.
Why MK Was Targeted
Besides corruption and tax evasion, political motives
were also in play. Allegedly he was bankrolling
opposition parties, breaking an unwritten agreement to
stay out of politics in return for the state keeping
quiet about illicitly gotten riches. Key
also were deals he was negotiating with ExxonMobil and
Chevron for up to a 50% stake in Yukos, violating
Kremlin policy to keep Russian control of state
resources in government or home-grown private hands.
In addition, MK had White House political ties. For
example, before becoming Bush's National Security
Advisor and Secretary of State, Condoleeza Rice was a
Chevron board member for 10 years and had a tanker
named in her honor. It was then quietly renamed the
"Altair Voyager."
Another factor was public hostility toward oligarchs,
so pervasive that prosecuting them is politically
popular. US anger is a combination of geopolitics and
defending predatory capitalism's rapaciousness,
notably because of America's own criminal class. For
decades, a Washington-corporate cabal shifted
trillions of public wealth to private hands,
especially to omnipotent Wall Street. At issue is
shielding them at all costs so corrupt practices can
continue until everything worth owning is stolen.
Before MK's arrest, Yukos was privately held.
Afterwards, company assets were bought by
state-controlled Rosneft. Then, the majority
state-owned Gazprom (the world's largest natural gas
company) bought oil giant Sibneft. In 2006, Putin
decided against further nationalizations, but
continued oil/gas industry control by having industry
giants like Lukoil maintain close government
connections.
Moreover, to stay in charge, state-owned Transneft
controls pipeline transportation. In fact, it's the
largest Caspian Pipeline Consortium (CPC) shareholder.
Russia wants its production leveraged to control
transport and refining to maintain power over EU and
neighboring state customers. As a
result, the idea of selling large Yukos or other major
resource company assets to foreign buyers is anathema,
especially to Big Oil giants. MK also wanted Russia's
pipeline monopoly broken with a private one to shift
the flow of oil. It was like declaring war on the
state and got him incarcerated. On
May 31, 2005, he was convicted of fraud and tax
evasion and sentenced to nine years in prison, later
reduced to eight years. In March 2009, he and Platon
Lebedev (billionaire, former Group Menatep CEO and
close MK associate) were tried for embezzlement and
money laundering. On December 27, 2010, both men were
convicted, and on December 30 sentenced to 14 years
imprisonment, including time served. Lebedev also was
convicted in 2005.
Rallying Round the Thief
Again, The New York Times came to MK's defense in a
December 28 editorial headlined, "What Rule of Law,"
saying:
President Dmitri Medvedev can prove his "rule of law"
credentials "by using his pardon power to ensure that
(MK) faces no additional prison time after being
convicted on trumped-up embezzlement charges this
week. (He's) already served seven years as a result of
Mr. Putin's judicial vendetta against him."
Fairness and truth were never NYT long suits,
editorially defending a world-class criminal, guilty
of predatory rapaciousness. On December 28, the White
House said: "We
are deeply concerned that a Russian judge today has
indicated that for the second time (MK) and Platon
Lebedev will be convicted. We are troubled by the
allegations of serious due process violations, and
what appears to be an abusive use of the legal system
for improper ends." No
nation more egregiously violates rule of law
principles than America at home and abroad. No other
more heinously spurns human rights, civil liberties,
due process, judicial fairness, and democratic values.
None also are more unjustifiably self-righteous. No
broadsheet is more hypocritical than The Times,
tainted by decades of supporting wealth, corporate
interests, and imperial wars. Daily, its agenda is
visible, arrogantly supporting power over popular
interests, even mega-criminals deserving condemnation.
Indeed, truth and fairness were never NYT long suits.
Nor America's.
Stephen Lendman lives in Chicago and can be reached at
lendmanstephen@sbcglobal.net. Also visit his blog site
at sjlendman.blogspot.com and listen to cutting-edge
discussions with distinguished guests on the
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