Court Finds Khodorkovsky Guilty of Fraud

MOSCOW – Former oil tycoon Mikhail Khodorkovsky (search), who was Russia's richest man before the government dismantled his empire, was convicted Tuesday of fraud and tax evasion and then sentenced to nine years in prison following a trial widely denounced as politically motivated.

The court also ordered Khodorkovsky and his co-defendant, Platon Lebedev (search), to pay more than $615 million in taxes and penalties.

The conviction and sentence came on the 12th day of the laborious verdict-reading process in the most closely watched case of post-Soviet Russia. Outside the courtroom, demonstrators chanted, "Shame! Shame!"

Khodorkovsky, 41, the former head of the Yukos (search) oil company, looked straight ahead as the sentence was pronounced. Prosecutors had asked for the maximum 10 years.

In a statement read outside the court by defense attorney Anton Drel, Khodorkovsky said he would not harshly criticize the judge, noting "the pressure she has come under from the initiators of the case when preparing the verdict."

"Judicial power has been turned into a blunt weapon of the authorities," he said in the statement.

The nine-year sentence includes time served, meaning that Khodorkovsky, who has already spent 583 days in jail, would serve another 71/2 years.

Lebedev was found guilty of the same charges and received the same sentence. Asked if he understood, he answered, "There's not a sane person who can understand what you have said."

The judge then read his sentence again.

Supporters claim Khodorkovsky's trial is part of a Kremlin-driven campaign to punish him for funding opposition parties and to stifle his own political ambitions. The sentence would keep him in prison well past the 2008 presidential election, when a successor to Vladimir Putin (search) is to be chosen, and potentially during the 2012 election as well.

Asked if she had expected the tough sentence, Khodorkovsky's mother, Marina, said: "Of course, I live in this country. ... I lost (hope) the day we elected Putin."

A third defendant in the case, Andrei Krainov, received a 51/2-year suspended sentence.

The court did not sentence the defendants on a charge regarding Apatit, a fertilizer component company in which Khodorkovsky and Lebedev allegedly acquired a large stake by rigging a privatization auction. Although the court considered them guilty, the statute of limitations on the 1994 matter had expired, prosecutors said.

Khodorkovsky's lawyers have 10 days to appeal and they are expected to do so.

The prosecutor-general's office, meanwhile, reiterated Tuesday that new criminal charges against Khodorkovsky are being prepared.

Khodorkovsky is one of the so-called oligarchs who became enormously wealthy during the murky post-Soviet privatization of state industries in the 1990s. Such tycoons are widely resented by ordinary Russians, and demonstrators denouncing him have been a daily fixture outside the courthouse during the verdict-reading.

But there have also been gatherings of Khodorkovsky supporters, who say the trial was revenge for Khodorkovsky's political activities and raised substantial doubt about Russia's commitment to rule of law.

The verdict "shows that in Russia there is no independent court, in Russia there is only the all-powerful prosecutor-general," liberal politician Irina Khakamada said.

Such concerns have spooked many foreign investors.

"It does make people concerned, leery about an environment they don't understand," U.S. Commerce Secretary Carlos Gutierrez told Russian and U.S. business representatives Tuesday in Moscow. "Any time the business community sees something that impacts business and doesn't really understand why, then that's a setback because then businesses will not want to invest."

Khodorkovsky, whose fortune was once estimated as high as $15 billion, has been in jail since his October 2003 arrest when special forces stormed his private plane as it sat on the tarmac at a Siberian airport.

A liberal member of parliament, Vladimir Ryzhkov, suggested that Khodorkovsky's team consider filing an appeal with the European Court of Human Rights, "which will make a decision on the basis of common sense and law," the Interfax news agency reported.

"This verdict is a tragic example of the authorities turning a legal system against an individual for political ends," said Yukos spokesman Alexander Shadrin.

Parallel to Khodorkovsky's trial, Yukos has been battered by some $28 billion in back taxes claims. The company's main production unit was sold off by the state for about $9 billion to meet some of the tax arrears, in a murky auction in which the unit was bought by a shell company and then acquired by state-controlled oil company Rosneft.

On Tuesday, Yukos said it filed a court challenge to that move and also was seeking $11.6 billion in damages. Yukos' shares have plunged about 95 percent in value in the past two years.