A Dangerous Humiliation for the Siloviki

yukos032708.jpgThe decision this week from a Dutch court ordering $850 million in compensation to be paid to Yukos shareholders is just the latest in growing string of legal victories against the Kremlin – bringing not only optimism but also concern of the repercussions. The ruling may be the first of several to return up to $2 billion worth of Yukos’s Dutch assets back to the shareholders, opening up precedent for further compensation in other jurisdictions. On top of many other legal reverses in international courts over the past year relating to the Yukos, Khodorokovsky, and Lebedev cases, the Dutch decision has defined a limit on how much Rosneft will be allowed to plunder of what was once Russia’s most dynamic and transparent energy corporation. These defeats are piling up, and I expect we will soon see vengeful reprisals.

We have argued since day one of this case that if any impartial rule of law court were to have the opportunity to review the vastly inflated tax claims, the bankruptcy proceedings and illegal fixed auction of the main assets, not to mention the political show trial of Khodorkovsky – they would overwhelmingly rule that the Russian Federation had conducted not a series of trials, but a purge. With the facts on the table, the state’s expropriation of Yukos will be found to be illegal.Now that some foreign courts are finally getting the opportunity to review the case, the long untold prophecy of the prosecutor’s counterfeit legalism is coming home to roost … and more than anything, it is humiliating and terrifying to those who have pocketed the lion’s share in this theft, and have largely built the foundations of Russia’s new authoritarianism on the profits of these stolen properties.The stakes are high: a publicly traded state-owned energy company, with asset swaps and major participation of other energy firms and major international financial groups, understands that it doesn’t actually legally own the majority of its assets. The idea of a real court ruling against their unlawful holdings is unacceptable to many Kremlin-connected bureaucrats who have personally benefited from the expropriation, and may be exposed to criminal charges.We’ve seen cruelty, absurdity, and a tremendous suspension of disbelief from Russia’s politicized procuracy – and honestly I wouldn’t put it past them to take drastic measures against all Yukos-related individuals with new invented charges. We’ve seen them use medical blackmail against a dying man in order to extract false testimony, we’ve seen the use of blood libel against a former company owner, and a conveniently timed set of new charges applied against Khodorkovsky right as he was up for parole before the elections.What preposterous outrage to expect next from this craven administration, I dare not speculate. But when it comes, the illegitimacy will be flagrant, the evidence invented or non-existent, and the expediency many years too late. Stalin’s KGB chief Lavrenti Beria used to say during the Great Terror: “show me the man, and I will find you the crime.” I’d rather support another vision of Russia put forward by a lawyer, who has spoken earnestly about gutting the procuracy of so-called “legal nihilism” – creating a system where rules mean more than power once again. Now that is a goal we should all support.