Mikhail Khodorkovsky's Indictment and Beyond

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Excerpts

In July 2003, Platon Lebedev, a Yukos shareholder and chairman of Menatep was arrested on charges of deception in the 1994 privatization of a Russian fertiliser company, Apatit, and was charged with theft of state property. The Apatit deal had been one of the loans-for-shares deals in which the government sold prized assets for nominal sums to those who made the highest investment pledges. Prosecutors claimed that Lebedev and Khodorkovsky had bought Apatit through a scheme involving fake bidders...

The State prosecutor Dmitry Shokhin alleged, "Lebedev purchased the shares of the company Apatit by criminal ways through creating umbrella companies together with Khodorkovsky and other Yukos members. In 1994, he joined the organized criminal group led by Khodorkovsky with the aim of acquiring shares through deception of major Russian companies in the privatisation period." The news of Khodorkovsky's arrest had a significant effect on Yukos' share price...

During a two-week period in December 2003, Russia's Ministry of Taxes and Duties conducted an On-Site Tax Audit (TA) of Yukos. On 2nd December 2003, the Ministry alleged that Yukos owed $3.4 billion in tax arrears.

A court order was obtained on 15th April 2004 restraining Yukos from disposing or encumbering its assets. The Tax Audit concluded that the defendants had created a complex network of 17 shell companies, which were registered in territories with preferential tax treatment to gain special tax exemptions...