Tuesday, June 14, 2005

From thugs to princes

Khodorkovsky trial in Russia showed the real power of money and how incredibly powerful Khodorkovsky was and still is. It would be wrong to represent this trial as unconditional victory of Putin over the poor oligarch. That was a fierce battle of two very strong opponents and Putin is as much covered with wounds as Khodorkovsky. Although the word ‘oligarch’ is often used ironically if Russia had a weak president we could see and feel what oligarchy really means. A very small group of super rich people could decide what laws to be passed, who should be a president, or how much taxes they would highly allow the state to be taken from their pockets. One could argue if Putin is good or bad but there is one undoubtedly positive thing about him – he an elected politician. Nobody elected Khodorkovsky to be above the president, above the government and above the parliament only because he managed to steal Yukos and became one of the richest people in the world.
With the money stolen from the state Khodorkovsky bought himself reputation as a Western-style “civilized” businessperson. He bought himself the parliament: the whole factions as Yabloko and SPS, or dozens of individual MPs. He was able to do unimaginable things. Like, 80% of Yukos oil was traded through dummy traders – one-day disposable companies whose “CEOs” didn’t even know about their high rank – but Khodorkovsky could buy Yukos the status of a 100% transparent company endorsed by the most respected auditors.
It turned out that a miracle of turning a ruthless thug into a nice and sympathetic businessperson is not such a difficult task. First, make sure that almost all journalists from all respectable Russian and Western networks, newspapers and magazines are many times dined and wined. Make a lot of very expensive and excessive press trips, breakfasts and happenings. Second, don’t spare money on major international PR companies, especially those who have US senators and congressmen among stakeholders. Third, make sure to have major contracts with important lobbyists. And forth, extremely important, make your appearance look civilized: shave those idiotic horseshoe moustache, buy yourself decent glasses and dress more casually. Hire an image maker, for god’s sake! I’m sure if Mr. Khodorkovsky looked on the dock today as he looked in 1997, he wouldn’t win so much sympathy.
Money can buy international amnesia. Before Khodorkovsky didn’t care about journalists they did write about his shadowy deeds or about very strange karma of people who dared to cross Mr. Khodorkovsky’s way. The moment Yukos spent just two hundred million dollars on international PR firms - oh magic coincidence! - all those unfortunate incidents were forgotten.
What a poor state of Russian justice! Judges and prosecutors are so unprofessional! They make so many mistakes! The problem is that a Russian judge makes a month less money than an lawyer of Khodorkovky and hour and Yukos hired dozens of them from all over the world and from the most successful law companies. Is it possible that such a poor and weak Office of Public Prosecutor can win a battle with such a rich individual? Just two years ago Mr. Khodorkovsky was sure: “No way!” Today he’s probably in doubt. The pressure his money put on Putin was immense but Khodorkovsky couldn’t bend him to his will. Many Russians viewed this battle as a fight between David (Putin) and Goliath (global oil corporations).
Russian prosecutors did a huge job. They had to gather almost every little piece of information about Yukos criminal activities. When you are not so brilliant or educated or excessively financed as Yukos, you have to amass your opponent. To my mind, from all the facts prosecutors gathered about Khodorkovky being a thug, just one is enough. Petty entrepreneurs in Russia can be registered as PBOYuL – a private entrepreneur without establishing a legal entity. This status meant to help such people who sell vegetables at an open market and renovate apartments. They pay almost no taxes and do almost no paperwork. So Mr. Khodorkovsky became a PBOYuL himself and was paid by Yukos about 200 million dollars as a private consultant. How ironic! One of the richest persons in the world uses taxation benefits meant for the most poor. And he was among the few who actually made them that poor.


profmarcus said...

i've done some work in countries of former yugoslavia and have found it be to an incredible learning experience... i've been trying to understand as much as i can about the plundering that took place after the break-up and what has happened since... i have been appalled at the damage privatization has done and how it opened the door for oligarchs like khodorkovsky... i was delighted to run across your blog and read your perspectives... i am also pleased to know that, even as an outsider, i have been able to reach many of the same conclusions that you have...

i hope you don't mind, but i reprinted your post on my blog with full credit to you... here is the link...


profmarcus said...

also, i included you in my blogroll...

Dixie said...

I have been reading your blog for a few months now, in an effort to understand what is happening in Russia. Most of the time I understand what you are saying, and when I do not it is because I do not have enough background knowledge of the persons or countries you refer to.

I have never understood just exactly what this person was charged with, and after reading your blog I still don't know. It seems that you really hate this guy, and because of this you are letting your emotions interfere with your usual writing style, which is normally very good.

Your previous poster who was so complimentary to your article is a leftist who has started already pushing Howard Dean for President. These people always talk this way, yell slogans and call people names. They do not engage in intelligent discourse.

You can do better than that.