PRESIDENTIAL COUNCIL OF THE RUSSIAN FEDERATION FOR CIVIL SOCIETY AND HUMAN RIGHTS INQUIRY ON THE SECOND KHODORKOVSKY-LEBEDEV

CASE EXECUTIVE SUMMARY PREPARED BY DEFENCE COUNSEL OF MIKHAIL KHODORKOVSKY AND PLATON LEBEDEV An official public inquiry into the second prosecution and conviction of ex-Yukos chief Mikhail Khodorkovsky and his former business partner Platon Lebedev was conducted from April to December 2011, backed by President Dmitry Medvedev and involving a group of renowned Russian and international experts. The inquiry identified serious and widespread violations of the law, finding that there was no valid legal basis or evidence supporting the guilty verdict in the second KhodorkovskyLebedev trial, which ran from March 2009 to December 2010, and that the proceedings were severely marred by violations of fundamental human rights. More broadly, the inquiry found that the Khodorkovsky-Lebedev case highlighted widespread systemic problems in Russias law enforcement practices and judiciary. The inquiry prompted calls for an annulment of the illegal guilty verdict and the release of Khodorkovsky and Lebedev, and also for a series of reforms to address the systemic problems illustrated by this case. The inquiry was conducted under the aegis of the Presidential Council of the Russian Federation for Civil Society and Human Rights. All quotes in this executive summary are from the Councils published findings and recommendations.

About the Presidential Council for Human Rights The Presidential Council of the Russian Federation for Civil Society and Human Rights is an official state consultative body established to assist the President in the exercise of his constitutional responsibilities as guarantor of human and civil rights and liberties. The Council informs, advises and drafts proposals for the President on matters within its mandate and facilitates the development of civil society institutions in Russia. This official institution of the Russian presidency was established in 1993, as Russias modern constitution came into force. The 40-member Council is composed of Russias most prominent and highly respected human rights and civil society advocates and experts.

About the Inquiry on the Second Khodorkovsky-Lebedev Case In January 2011, in response to public criticisms of multiple abuses by state officials in the handling of the second Khodorkovsky-Lebedev case, and apparent contradictions between the outcome of the case and numerous standing judicial decisions in other cases related to Yukos, the Council elaborated plans for an independent expert assessment of the case. In February 2011, President Medvedev agreed with the Council that an analytical report drawn up by an independent public expert group would be of interest in addressing public concerns about the case. The Councils inquiry into the second Khodorkovsky-Lebedev case was conducted by a multidisciplinary group of nine independent experts vetted for conflicts of interest and working without remuneration. The group of nationally and internationally renowned experts was constituted of six Russians and three foreigners. The foreigners hailed from Germany, the Netherlands and the United States. This independent group was mandated to study the second Khodorkovsky-Lebedev trial for compliance with Russian and international norms, to identify trends
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in Russias judicial and law enforcement practice and to elaborate possible recommendations for reform. The subject matter of the experts analysis was the 689-page verdict and other official court documents. The nine experts who participated in the inquiry were (in alphabetical order): Ferdinand Feldbrugge, Leiden University, The Netherlands; Sergei Guriev, New Economic School, Moscow, Russia; Jeffrey Kahn, SMU Dedman School of Law, Dallas, Texas, United States; Otto Luchterhandt, University of Hamburg, Germany; Anatoly Naumov, Academy of the Prosecutor Generals Office of the Russian Federation, Moscow, Russia; Oksana Oleynik, National Research University Higher School of Economics, Moscow, Russia; Alexey Proshlyakov, Ural State Law Academy, Yekaterinburg, Russia; Mikhail Subbotin, Institute of World Economy and International Relations of the Russian Academy of Sciences, Moscow, Russia; and Astamur Tedeev, National Research University Higher School of Economics, Moscow, Russia. In December 2011, the Council issued a report in the form of a 400-page blue book containing information about the methodology of the inquiry, the curricula vitae of the experts, summaries of the analyses and final conclusions of the experts, the full reports of the experts and a compilation of extracts of legal norms referred to in the inquiry. This report was posted online on the Councils website 1 and formally submitted to President Medvedev. The Council also issued a set of recommendations flowing from the report.2

Findings of the Inquiry on the Second Khodorkovsky-Lebedev Case The inquiry made the following findings in assessing the verdict, with respect to the legal and factual merits of the case and with respect to compliance with fundamental principles of human rights: The courts findings about the illegality of Yukoss business operations were categorically rejected. The development of Yukoss corporate structure cannot in and of itself be considered evidence of criminal activity. In this regard the actions described in the verdict involve the normal and legally compliant practice of conducting a vertically integrated companys business in a market economy. The companys vertical integration and use of offshore companies for trading oil and oil products were industry norms and not exceptional, neither in Russia nor abroad. Moreover, in its assessment of Yukos, the verdict misunderstands and misapplies fundamental concepts of Russian civil and criminal law. The inquiry experts were somewhat bewildered by numerous plainly erroneous findings of the court, and recalled that a person can only be convicted for a specific crime found in Russian criminal law and committed personally by that person these fundamental requirements of criminal prosecution are absent from the verdict. No evidence proved the allegations of embezzlement or money laundering. The verdict fails to substantiate the alleged embezzlement. Yukoss transfer pricing methods and the differences between intra-Yukos pricing and outside market pricing cannot be held to constitute embezzlement of oil; if Yukos production companies had their costs of production covered and were profitable, it is impossible to validate the conviction for embezzlement in the second Khodorkovsky-Lebedev case. Council member and former Constitutional Court judge Tamara Morshchakova stated that the
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experts found no evidence or substance behind the accusations of embezzlement levelled at Khodorkovsky and Lebedev in the second case. According to the report, with an absence of evidence connected to a coherent legal theory, the verdict is illegal and subject to repeal, and was issued in gross violation of the Constitution of the Russian Federation, the Criminal Code of the Russian Federation, the Code of Criminal Procedure of the Russian Federation, universally accepted principles and norms of international law and doctrinal and judicial interpretation of the applicable law. There were in particular numerous breaches of the European Convention for the Protection of Human Rights and Fundamental Freedoms. The second Khodorkovsky-Lebedev case contradicted judgments in the first Khodorkovsky-Lebedev case and in dozens of other Yukos-related cases, which have not been overturned, and which condemned the defendants to criminal liability for tax evasion and subjected Yukos to punitive taxation on oil sales. In the second Khodorkovsky-Lebedev case, the same Yukos oil previously subjected to punitive taxation was found to have been stolen. However, theft of that oil would have precluded it from being taxed under Russian law. Likewise, dozens of other Yukos-related cases are judicially contradicted by the verdict of the second Khodorkovsky-Lebedev case as is the line of defence of the Russian Federation before the European Court of Human Rights. The defendants were deprived of the presumption of innocence. From the detention of the defendants in the courtroom in a glass and metal cage flanked by guards, to statements made by officials [including Prime Minister Vladimir Putin] concerning the guilt of the defendants prior to the deliberation on their guilt by the court, to legal presumptions in favour of the evidence collected by the state, there were numerous and repeated violations of the presumption of innocence. The court lacked competence and independence. Moscows Khamovnichesky Court, which tried the second Khodorkovsky-Lebedev case before a sole judge, had bogus jurisdiction, both from the points of view of geographical jurisdiction and instance-wise. The prosecutors wanted to avoid by all means a criminal trial at a first instance by jury and at a cassation instance by the Supreme Court. The trial had to end at the Moscow City Court. Evidence favourable to the defendants was not considered or was rejected; evidence that was considered unfavourable to the defendants was of questionable relevance and admissibility. The prosecution was unfairly and consistently granted procedural advantages over the defence. The defendants detention in the courtroom and the conditions of their confinement on remand during the proceedings constituted inhuman or degrading treatment. The proceedings exceeded a reasonable time. Following their arrest and first trial from 2003 to 2005, the 2007 indictment was artificially separated from the indictment leading to their first convictions, notwithstanding their common facts, parties, and legal issues; in 2007, the
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defendants were eligible for release on parole and in 2011 the sentences in their original case would have been satisfied; prosecuting the cases in serial fashion has prolonged their incarceration and left them in a state of uncertainty about [their] fate. The courts interpretation of the facts and the law were unforeseeable. Indeed, it is hard to imagine a crime more unforeseeable than one that depends on a courts post hoc conclusions that the agreed contract price was not of quite the right amount....The courts legal analysis, when conducted at all, is perfunctory and inconsistent with the requirements of the law; and the courts theory of embezzlement is also in sharp inconsistency with the decision of the Supreme Court interpreting these provisions of the Criminal Code. The verdict lacked indicia of a reasoned judgment. In addition, a line-by-line comparison of the indictment and the verdict revealed that the judge simply copied vast tracts of the indictment, verbatim, into the verdict. The court failed to respect the statute of limitations. Some of the alleged offences involved events that occurred before expiry of the applicable 10-year statute of limitations, yet the court nonetheless found Khodorkovsky and Lebedev guilty of those alleged offenses.

Recommendations of the Presidential Council for Human Rights The Council found that the miscarriage of justice in the second Khodorkovsky-Lebedev case was so grave and so obvious that the verdict should be annulled through appropriate legal channels. Proceeding from fundamental requirements of the Constitution of the Russian Federation and Russias international obligations, which do not permit convictions for acts not prescribed by criminal law, and where evidence of a crime is lacking and where due process is not observed, the Council declared it imperative that Russias General Prosecutor refer the case for supervisory evaluation with a view towards repeal of the verdict, and that Russias Investigative Committee also examine the grounds for a review of the case. In terms of broader systemic reforms to restore public confidence in law enforcement and the courts, the Council recommend the adoption of numerous measures based upon the findings of the inquiry, including the following: Expansion of the use of jury trials; Reinforcement of measures ensuring judicial independence; Protections of the right to an effective defence at trial; Restriction of the broad interpretation and application of criminal law; Increased certainty in the application of tax laws; Removal of abusive administrative obstacles that prevent the release of prisoners on lawfully-earned parole;
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Reduction in the use of pre-trial detention in cases of alleged economic crime; Implementation of a broad amnesty for wrongfully imprisoned entrepreneurs. With respect to the proposed amnesty, the Council cited the socially disruptive and economically repressive effects of the wrongful imprisonment of thousands of Russian entrepreneurs who have fallen victim to corrupt state officials. The proposed amnesty which would include Khodorkovsky and Lebedev is described in the findings of the inquiry as a first step towards restoring fairness but also as a prerequisite for halting and reversing the capital flight and brain drain so ruinous for Russia, and for encouraging an inflow into the Russian economy of private investments and of people with entrepreneurial initiative.

Legal Implications of Councils Inquiry The Councils report and recommendations have no judicial force and cannot compel the courts to reopen the second Khodorkovsky-Lebedev case for reconsideration. However, Russias Supreme Court can still remedy the wrongful outcome of the case, and may consider the findings of the inquiry and the recommendations of the Council. Also, Russias Prosecutor General can refer the case back to investigators for review and can petition for annulment of the verdict.

Legal Status of Khodorkovsky and Lebedev Following their Second Trial After their second trial and a failed appeal in May 2011, Khodorkovsky and Lebedev were sentenced to an overall total of 13 years in prison. Counting time served since their incarceration in 2003, their release is now scheduled for 2016. If not for the second trial, Khodorkovsky and Lebedev would have been released in 2011, having completed the 8-year sentence from their previous conviction. Khodorkovsky and Lebedev have continued to lodge appeals in Russia against their second conviction, so far without success. In November 2011, Khodorkovsky and Lebedev also appealed the case to the European Court of Human Rights, which is still considering previous appeals related to their first trial.

Kremlin Delays Presidential Reaction to the Inquiry In December 2011 and then in January 2012, President Medvedev was scheduled to meet with the Council to receive and discuss the findings of the inquiry and the resulting recommendations. On both occasions the meeting was postponed, and as of early February 2012 no new meeting date had been scheduled. The Councils report was nevertheless transmitted to President Medvedev through official channels. Lacking certainty as to a meeting date with President Medvedev yet wanting not to postpone indefinitely the public release of the information, the Council held a press conference in Moscow on December 21, 2011 to announce the findings of the inquiry and the resulting recommendations. It is unclear how President Medvedev will respond to the Councils inquiry, which has underlined the profound crisis of legitimacy surrounding the prosecution of Khodorkovsky and Lebedev and, more broadly, the state of Russian rule of law.

February 1, 2012

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