Kasyanov Testifies Yukos Case Is Political

Former Prime Minister Mikhail Kasyanov said Monday that he approached then-President Vladimir Putin three times for an explanation on the Yukos crackdown before Putin indicated that it was because Yukos owner Mikhail Khodorkovsky had bankrolled the Communist Party.

Kasyanov, who was fired by Putin and is now an outspoken critic of the Kremlin, spoke for the first time about the meeting with Putin while testifying on Khodorkovsky's behalf in a Moscow court.

Khodorkovsky and a second Yukos owner, Platon Lebedev, are being tried on embezzlement and money-laundering charges in a second trial that could add 22 years to the eight years they are already serving for a conviction on fraud and tax evasion charges in 2005.

Kasyanov told the Khamovnichesky District Court that the changes were politically motivated and contradicted the everyday practices of oil companies.

“By the end of 2003, I had a clear understanding that both were arrested under political motives,” he said.

Kasyanov said he tried to talk with Putin after Lebedev was arrested in July 2003 and Khodorkovsky was arrested in October that year, but Putin refused to discuss the issue with him. Only on the third try did Putin reply, he said.

“I asked Putin to clarify what he knew about the situation, but he refused twice, and then he gave me an answer," Kasyanov said.

"He said Yukos financed Yabloko and the Union of Right Forces, political parties that it was allowed to finance, but also the Communist Party, which it wasn't allowed to.

"Then I asked him what he knew about the charges brought by the Prosecutor General's Office, and he replied that the Prosecutor General's Office knew best.”

Khodorkovsky was detained just weeks before State Duma elections in a crackdown that his supporters say was Kremlin punishment for Khodorkovsky's political and commercial ambitions.

Yabloko and the now-defunct Union of Right Forces, liberal parties that lost their Duma seats in the December 2003 elections, have acknowledged being partially financed by Khodorkovsky. Speculation surfaced at the time of Khodorkovsky's arrest that he had also supported the Communist Party, which won a scant 13 percent of the vote, its worst showing in years, but the Communists denied it.

A Communist Duma deputy, Sergei Obukhov, said Monday that he knew of no instance of his party accepting money from Khodorkovsky.

"The information on our funding is open and transparent, and no one has found any evidence of our party being funded by Yukos so far," he told The Moscow Times. "If you find any evidence, please show it to us."

Yabloko leader Sergei Mitrokhin said that Khodorkovsky had funded his party for about a year, until his arrest, and that the arrangement had received Putin's blessing.

"The information was public and the money was transferred in an open manner. No dummy companies were involved," Mitrokhin said by telephone.

"It is true that at the time there was a rule, an unofficial one, of course, that Putin assigned companies to fund certain parties. Everyone got funds with his permission," he said.

Calls to the cell phones of former Union of Right Forces leaders Boris Nemtsov and Irina Khakamada went unanswered.

Putin's spokesman Dmitry Peskov said he had no knowledge about the conversation described by Kasyanov and could not confirm whether it had taken place and, if so, what had been discussed.

Khodorkovsky last month asked the court to summon Putin along with more than 250 other witnesses, but the court rejected the request as "premature," noting that Khodorkovsky himself was still testifying at the time.

The court, however, agreed to summon several members of Kasyanov's Cabinet, including Industry and Trade Minister Viktor Khristenko and Sberbank chief executive German Gref, who are supposed to testify next month.

Kasyanov on Monday seemed to confirm speculation that Putin and Khodorkovsky had a falling out as the result of a meeting the two attended with other business leaders in February 2003.

“In 2003, during a meeting between Vladimir Putin and businessmen, Mikhail Khodorkovsky spoke about openly corrupt deals like, for example, the acquisition of Severnaya Neft by Rosneft,” Kasyanov said.

“The president's reaction was extremely harsh. He said Yukos wasn't privatized in a transparent manner, either. Starting from that point, I got the feeling that the authorities were going after businesses,” he said.

State-owned Rosneft bought Severnaya Neft, a minor oil company, from Senator Andrei Vavilov in early 2003 for $600 million, a price that analysts said amounted to double the market price.

Kasyanov said his own disagreements with Putin regarding his policies started shortly after the meeting. Putin fired Kasyanov in February 2004.

Turning to the ongoing trial against Khodorkovsky and Lebedev, Kasyanov derided prosecutors' charges that the two stole 350 million metric tons of oil worth $30 billion between 1998 and 2003.

“The volume reported [to have been stolen], the 350 million metric tons of oil, is comparable to the amount that Yukos could drill," he said. "But talking of a theft on this scale — my answer is no, that just can't be true.”

Prosecutors summoned 51 witnesses, including former Yukos senior executive Alexei Golubovich and former bankruptcy commissioner Eduard Rebgun, before wrapping up their case in March. But none directly confirmed that they had witnessed oil theft.

Speaking about the essence of the charges, Kasyanov said it was normal practice for the subsidiary to sell oil to the parent company at a discount.

“Of course those were the internal prices. They differed from those on European stock exchanges and were significantly lower,” he said. “It's hard to imagine that the oil price in Omsk would be the same as, for example, in Rotterdam."

He said eight of the other nine companies that drilled 90 percent of the country's oil and gas did the same.

In terms of tax payments, he said, Yukos consistently ranked in the middle or better in comparison with other oil companies. He said he wasn't informed about any problems regarding Yukos at the time.