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Yukos Founder Sentenced to Nine Years for Fraud and Tax Evasion

  • Bill Gasperini

Former CEO of Rusian oil gaint Yukos, Mikhail Khodorkovsky stands behind bars at a court room in Moscow

A court Moscow found the former director of Yukos Oil company guilty of fraud and tax evasion and sentenced him to nine years in prison. The trial of Mikhail Khodorkovsky and his top business partner has called into question Russia's commitment to the rule of law and democratic change.

The court ruling came after a year-long trial against the man who was head of Yukos, once Russia's largest oil company.

The verdict came after a detailed reading of numerous charges against Mikhail Khodorkovsky, once Russia's richest man and head of a company seen as the most transparent in post-Soviet Russia.

The trial has been highly politicized since the 41-year-old businessman was arrested at gunpoint a year and a half ago.

Most analysts say Mr. Khodorkovsky angered the Kremlin by openly funding opposition political parties. He also sought foreign investment to build a private oil pipeline, something that has always been controlled by the state.

While the criminal case has been heard, the government effectively dismantled Yukos, selling off its prime assets to pay a back tax bill of over $27 billion.

Company officials complained this was a deliberate move to destroy the oil firm because all of Yukos' liquid assets were frozen, making it impossible to pay the tax bills.

All of this has soured the foreign investment climate in Russia and damaged the reputation of President Vladimir Putin.

"This is also a pretext for a further attack on business, by not only the tax ministry but others," said Robert Amsterdam, one of Khodorkovsky's defense lawyers. "And I think that's something that every foreign investor needs to be concerned with. They're not only burying Khodorkovsky with this judgment, but they're burying their hopes for foreign direct investment."

Kremlin officials insist that the long, drawn-out "Yukos affair" is strictly a matter of cracking down on fraud and corruption.

But after the verdict was read, Mr. Khodorkovsky was quoted as saying the trail is a "gross miscarriage of justice."

Mr. Amsterdam says that an appeal will be filed soon.

However Mr. Khodorkovsky isn't out of the woods yet. Prosecutors recently announced that new charges for money-laundering will soon be brought against him.

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