The Other Khodorkovsky Case
Much attention is focused on the latest news of dethroned Russian oligarch Mikhail Khodorkovsky, the imprisoned former CEO of Yukos Oil who is undergoing a new trial in Moscow at the moment. But a second drama is also going on in the six-year-long Khodorkovsky saga -- a $33.4 billion legal battle against Russia being staged by Yukos' divested owners.
In 2003, Russian commandos stormed Khodorkovsky's private jet after he launched a political challenge to then-President Vladimir Putin. He was sentenced to eight years in prison for fraud and tax evasion, and the Kremlin -- backed by western investment banks -- sold off highly profitable Yukos in apparently fixed auctions, mostly to the Russian oil company Rosneft. Also imprisoned was Platon Lebedev, chairman of Bank Menatep, Khodorkovsky's holding company.
Last week, Tim Osborne, a London lawyer who is representing GML, as Bank Menatep is now called, passed through Washington in what has become a routine in the shareholder effort to gather political support for their case in the U.S. and Europe. Osborne visits the State and Energy departments, with congressmen, and has testified before Congress.
Despite Khodorkovsky's imprisonment, his public relations effort remains formidable.
In London, Canadian lawyer Robert Amsterdam is Khodorkovsky's main legal spokesman, writing a much-read blog, delivering speeches and generally talking up his client's cause. Khodorkovsky and Lebedev have another, official web site, too.
In Washington, Osborne is represented by the influential lobbying firm APCO, where he and I spoke. Osborne says that Khodorkovsky is no longer a shareholder of GML, and that the legal battle has no political motive. Yet official interest is almost entirely reliant on western sympathy for the jailed former oligarch. And, if Russia happens to decide that it wants to settle -- something that Osborne doesn't expect -- GML might "do a different deal if Lebedev and Khodorkovsky were part of the equation," he says. Meaning that Khodorkovsky is still woven into the company's fabric.
Despite the loss of the Yukos oilfields, GML retains some $3 billion in assets including real estate, alternative energy investments, cash and bonds, Osborne said. But the oilfields beckon.
The GML case is complicated. It's based on a reading of the Energy Charter Treaty, an obscure agreement meant, among other things, to facilitate the movement of oil and natural gas across multiple borders. It's been signed by 51 states, including Russia.
Osborne argues that, under the treaty, GML can sue in The Hague for compensation for expropriation. GML must persuade the Permanent Board of Arbitration that it has jurisdiction. If GML wins that round, the panel will begin hearing arguments on the merits of the case.
Russia is arguing that it isn't bound to the Energy Charter because the Duma didn't ratify it. Osborne contends that the signature alone obligates, but admits that the assertion "is not a slam dunk" -- in order to make it stand, he needs officials in Brussels, Paris, London, Berlin and Washington to maintain a solid front that the Energy Charter is valid.
"It's really about pressure," Osborne says, "to try to get this raised with the Russians as often as possible by as many people as possible."
In 2003, Russian commandos stormed Khodorkovsky's private jet after he launched a political challenge to then-President Vladimir Putin. He was sentenced to eight years in prison for fraud and tax evasion, and the Kremlin -- backed by western investment banks -- sold off highly profitable Yukos in apparently fixed auctions, mostly to the Russian oil company Rosneft. Also imprisoned was Platon Lebedev, chairman of Bank Menatep, Khodorkovsky's holding company.
Last week, Tim Osborne, a London lawyer who is representing GML, as Bank Menatep is now called, passed through Washington in what has become a routine in the shareholder effort to gather political support for their case in the U.S. and Europe. Osborne visits the State and Energy departments, with congressmen, and has testified before Congress.
Despite Khodorkovsky's imprisonment, his public relations effort remains formidable.
In London, Canadian lawyer Robert Amsterdam is Khodorkovsky's main legal spokesman, writing a much-read blog, delivering speeches and generally talking up his client's cause. Khodorkovsky and Lebedev have another, official web site, too.
In Washington, Osborne is represented by the influential lobbying firm APCO, where he and I spoke. Osborne says that Khodorkovsky is no longer a shareholder of GML, and that the legal battle has no political motive. Yet official interest is almost entirely reliant on western sympathy for the jailed former oligarch. And, if Russia happens to decide that it wants to settle -- something that Osborne doesn't expect -- GML might "do a different deal if Lebedev and Khodorkovsky were part of the equation," he says. Meaning that Khodorkovsky is still woven into the company's fabric.
Despite the loss of the Yukos oilfields, GML retains some $3 billion in assets including real estate, alternative energy investments, cash and bonds, Osborne said. But the oilfields beckon.
The GML case is complicated. It's based on a reading of the Energy Charter Treaty, an obscure agreement meant, among other things, to facilitate the movement of oil and natural gas across multiple borders. It's been signed by 51 states, including Russia.
Osborne argues that, under the treaty, GML can sue in The Hague for compensation for expropriation. GML must persuade the Permanent Board of Arbitration that it has jurisdiction. If GML wins that round, the panel will begin hearing arguments on the merits of the case.
Russia is arguing that it isn't bound to the Energy Charter because the Duma didn't ratify it. Osborne contends that the signature alone obligates, but admits that the assertion "is not a slam dunk" -- in order to make it stand, he needs officials in Brussels, Paris, London, Berlin and Washington to maintain a solid front that the Energy Charter is valid.
"It's really about pressure," Osborne says, "to try to get this raised with the Russians as often as possible by as many people as possible."
1 Comments:
Mr. Osborne will find that the Russian Federation government do not greatly care if issues are raised with them by Western institutions. The Russian Federation government are well accustomed to being on the short end of 26-1 gang-ups of the NATO-Russian Council, with no ill effect on them so far. Therefore, it does not greatly matter if officials in Brussels, Paris, London, Berlin, and Washington line up as Mr. Osborne desires.
The fact is, the West does nothing for the Russian government, while the Russian government does a number of things for the West. Therefore, Mr. Osborne can raise whatever issue he likes, and may gather support in as many Western capitals as he likes, but has not the slightest reason to expect a favorable resolution.
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