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La Croix: The Political Maneuvers Behind the Khodorkovsky Affair

Below is an exclusive translation of an article from the French newspaper La Croix about the overtly political maneuvers behind the Khodorkovsky affair.

The Russian state completes the dismantling of Yukos The break-up of the Russian energy giant will have been the major affair of Vladimir Putin’s second term of office MOSCOW – From our correspondent “Today, Yukos is finished”, states Vikto Gerashchenko, its Chairman now divested of the powers of the board of directors of Russian black gold’s fallen giant, as he waivers between nostalgia and irony. “They’ve sold everything… Even the rights to the brand!” he reveals frankly as he sits on the tenth floor of the Moscow head office of the oil group formerly run by the oligarch Mikhaïl Khodorkovski. A sad visit. While the billionaire is serving an eight year prison sentence in Siberia, this building, once the symbol of the new, privatised Russian economy, now lies silent and deserted. As for the office of Viktor Gerashchenko, the man who dreamt of saving Yukos by launching vain last-ditch attempts to avoid bankruptcy, it is now as empty as the as the “out of work” chairman’s diary. “Shortly, even these offices will pass into the hands of the state oil company that bought the remains of the group, he concludes. Nevertheless, eight months after Mikhail Khodorkovsky’s arrest and one year after the legal action against Yukos for tax fraud, the oligarch chose Viktor Gerashchenko in June 2004 to play an “intermediary” role between the authorities and the group. He recounts, “As soon as I was appointed, I called the Kremlin. For two weeks nobody called me back. Then, I finally obtained a meeting with an assistant to the director of the presidential administration, one of my personal acquaintances. He was clear and direct: No agreement is possible as the Kremlin does not trust Mikhail Khodorkovsky. Since then, no further contact whatsoever. Testimony that alone confirms the political maneuvers behind the “Yukos affair”. In 2003, Mikhail Khodorkovsky’s private group dominated Russian oil and its boss was the richest of the country’s oligarchs. At the time, Yukos was considered a model of western-style management and was planning a merger with an American major, as well as seeking new channels for exporting to China. As for the billionaire, he used to dream out loud of building a new and more transparent Russian society and was funding several political parties. None of them would confirm this, even if they were developing presidential projects. However, Mikhail Khodorkovsky was unpopular: Russians had not forgotten the way in which he profited from the chaotic privatisations of the 1990s to become rich very quickly. “The Kremlin is suspected of stirring up the Yukos affair to send a warning to all the other oligarchs and to cut short Khodorkovsky’s various ambitions”. The affair was launched to shut up his former boss and also to place his group’s oil assets under State control. A dual objective now acknowledged by the Kremlin. “Why was Khodorkovsky’s arrested? He was not paying his taxes and he was stealing oil. But also, he is the only oligarch to have said that he would buy the Parliament. Imagine if the boss of Total were to say that in France!”, replies a highly-placed person in the presidential administration. As a result, under the pressure of legal proceedings for tax evasion, Yukos has been dismantled and sold off bit by bit to pay the group’s sudden debts (around 26 billion dollars). Auctions have been held that resembling a wholesale sell-off, and from which Rosneft has been the main beneficiary. From being small and archaic just three years ago, the state oil group has now become the Russia’s oil leader. The company is chaired by one of the main figures in the Kremlin administration. Its rise started with the acquisition of Yukos’ main subsidiary, which enabled it to triple its production overnight. That was in December 2004, at the outcome of the first auction, described as a “farce” by independent observers. Two and a half years later, after a final sleight of hand via a mysterious unknown company, once again Rosneft recovered Yukos’ modern head office. Since then, several of Mikhail Khodorkovsky’s former employees have let themselves be seduced by the sirens of the state group and are now working for it. Without any scruples, as for example, the former Yukos communications director, who was so ready, at the heart of the “affair”, to brief journalists on the games being played by the Kremlin and Rosneft. “You have to make a living…”, Gerashchenko today states ironically. Since those days, he has embarked on a new career: political opposition to President Putin… BENJAMIN QUÉNELLE Russia critical of the European gas pipeline Yesterday, Russia’s first vice-minister of foreign affairs criticised the European project to build a gas pipeline across the Caspian Sea. “Why do it, if lower-cost delivery routes exist?”, he asked. This comment was deliberately aimed at the Nabucco project, supported by the United States and the European Union. The aim of this project is to build a 3,300 km gas pipeline by 2012 in order to supply Western Europe with gas from the Caspian Sea, and by circumventing Russia. Andréi Denissov continued by stating “Russia is not against healthy business competition in the energy sector, but it is quite a different matter when the deliberate objective is to push a certain country out of co-operation plans because you do not like it for purely political reasons.” The new gas pipeline could transport up to 30 billion cubic metres of gas a year and would contribute to reducing Western Europe’s dependency vis-à-vis Russia. The European Commission estimates that, by 2025, between 10% and 15% of the gas used in the European Union will come from the Caspian region.