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Prisoners of the Yukos Affair: Vladimir Malakhovsky

Source: HRO.org (Info), 01/07/11

· The Yukos Affair

Vladimir Malakhovsky, testifying as a witness, said he had received no illegal instructions or threats whatsoever from Mikhail Khodorkovsky or Platon Lebedev. Vladimir Malakhovsky described as “nonsense” the charges brought against the joint owners of Yukos that they stole all the oil produced by the production companies from 1998 to 2003.


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Vladimir Malakhovsky is the former general manager of the Ratibor company.

Arrested on 10 December 2004, Vladimir Malakhovsky (as well as Vladimir Pereverzin, Yukos’ deputy director for external debt, and Antonio Valdés-García, general manager of Fargoil) was charged by the Prosecutor General’s Office of the Russian Federation with large-scale theft committed by an organized group and money-laundering.

In June 2006, proceedings began in Moscow’s Basmanny court. On 5 March 2007, Vladimir Malakhovsky was found guilty of crimes under Article 160, Section 14 of the Russian Federation Criminal Code (“large-scale theft of property by an organized group”) and Article 174.1, Section 3 of the Criminal Code (“legalization [“laundering”] of money or other property by prior collusion”).

The Basmanny court sentenced Vladimir Malakhovsky to 12 years in prison in a strict regime penal colony.

On 21 June 2007 at an appeal hearing Moscow City Court upheld the verdict. At the same time, the appeal court reclassified the defendant’s actions from Section 4 to Section 3 of Article 174.1, which qualifies as a lesser offence. However, Vladimir Malakhovsky’s sentence was left unchanged.

The prisoner maintains that he is innocent.

According to the verdict, the oil produced by Yukos subsidiaries Yuganskneftegaz, Samaraneftegaz, and Tomskneftegaz / Eastern Oil Company, was delivered at artificially low prices to the companies Fargoil and Ratibor which were registered in zones with favourable tax regimes in Mordavia and Evenkia. These firms then transferred the crude oil to Rutenhold Holding Limited and Pronet, which sold the oil at market prices, taking the revenue to foreign offshore companies.

The Moscow Basmanny Court was held in closed session.

State Prosecutor Irina Shlyaeva asked that Vladimir Malakhovsky be sentenced to 11 years in prison, the same as Vladimir Pereverzin. Judge Elena Yarlikova, however, sentenced the former general manager of Ratibor to a term in prison longer than that requested by the prosecutor. The 12-year sentence given to Vladimir Malakhovsky was one of the most severe handed down to persons charged with economic crimes in the course of the Yukos affair.

When asked by journalists to clarify why the court handed down a longer sentence than that requested by the prosecution, Pavel Silkov, lawyer for Vladimir Malakhovsky, replied: “How can you comment on the absurd? Unfortunately, the court upheld the position of the Public Prosecutor’s Office, which asserts that guilt is always beyond doubt.”

The defence claims that the sentences given to Vladimir Malakhovsky and Vladimir Pereverzin contradict three previous court decisions relating to the Yukos affair.

Firstly, the verdict issued by the Supreme Court of the Russian Federation in the case of the former manager of Samaraneftegaz, Pavel Anisimov, who was given a suspended sentence of two-and-a-half years’ imprisonment for the company’s failure to pay taxes.

Secondly, the verdict in the case of the manager of Yuganskneftegaz, Tagirzyan Gilmanov, who received a suspended sentence of three years’ imprisonment for aiding and abetting tax evasion by the company.

Thirdly, the verdict in the suit brought by the Federal Tax Office against Yukos’ auditor, PriceWaterhouseCoopers. The court judged that from 2000 to 2004, the company’s auditor was “an actual participant in the implementation by Yukos of illegal tax schemes”.

From these three verdicts, it follows that Yukos actually owned the oil produced by its subsidiaries, and transactions with the oil conducted with the participation of Yukos affiliates were conducted for the purpose of tax evasion.

Meanwhile, when sentencing Vladimir Malakhovsky and Vladimir Pereverzin, Judge Yarlikova pointed out that they allegedly stole the oil. According to her, the oil was not the property of Yukos, but of its subsidiaries.

The Basmanny district court, and subsequently Moscow City Court, refused to grant the defence application to allow previous court verdicts to be considered by the court.

On 18 August 2010, Vladimir Malakhovsky testified as a defence witness at the second trial of Mikhail Khodorkovsky and Platon Lebedev in Moscow’s Khamovnichesky district court.

56-year-old Vladimir Malakhovsky was transferred from the strict regime Penal Colony No. 14 in the village of Sukhobezvodnoe, Semenovsky district, Nizhny Novgorod region. Brought to the court in handcuffs and escorted by guards, he did not testify against the Yukos management.

The witness stated that the parts of the oil company for which he was responsible worked in accordance with the legislation then current, and engaged in the purchase and sale of crude oil and petroleum products.

Each year, audits were conducted by various auditors to verify that the accounts were in order. “I had no basis for doubting the auditors’ reports. As far as I know, it was even the Audit Chamber of the Russian Federation which conducted the last audit,” Vladimir Malakhovsky also said.

According to Vladimir Malakhovsky’s testimony, the Yukos Oil Company more or less completely paid its subsidiaries in full for contracts in the purchase and sale of oil. If there were debts, they were minimal, accounting for 1 - 2%, and only existed because the payments had not yet fallen due.

Vladimir Malakhovsky also claimed that he had no knowledge of any large-scale shortfall in oil or revenue.

Vladimir Malakhovsky, testifying as a witness, said he had received no illegal instructions or threats whatsoever from Mikhail Khodorkovsky or Platon Lebedev. Vladimir Malakhovsky described as “nonsense” the charges brought against the joint owners of Yukos that they stole all the oil produced by the production companies from 1998 to 2003.

Addressing the former head of Menatep Bank, Malakhovsky exclaimed: “Finally we have met!”

Vladimir Malakhovsky recalled that Basmanny court had found him guilty of theft as part of an organized group, of which Mikhail Khodorkovsky and Platon Lebedev were also members. Malakhovsky remarked: “We have only ever met in Court.”

He added that he had met another of his alleged ‘accomplices’, Vladimir Pereverzin, in exactly the same way, in Court.

Text prepared for publication by Vera Vasilieva, HRO.org
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Rights in Russia,
13 Jul 2011, 23:08
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