The “NTV” TV channel presented to the public the documentary “The Bloody Empire of Mikhail Khodorkovsky“, which describes how the oligarch stole from the state the “Yukos” oil company, as well as other crimes he committed, including the organisation of murders. The Federal News Agency presents its readers with a transcript of the film and complements it with its own information.
Mikhail Khodorkovsky is a former owner of the “Yukos” oil company. He served ten years in prison for the non-payment of taxes and fraud. On December 20th 2013 he was released and immediately left Russia.
The journalists of the FAN received unique documents that have not been published anywhere before. The investigation sheds light on the crimes of Mikhail Khodorkovsky, which were not covered by our colleagues from NTV working on the film.
How Khodorkovsky shareholders were betrayed
It was possible to find out that the revenues from the oil stolen by Khodorkovsky in 1998-1999 accumulated in the accounts of foreign companies, coming through two channels. Foreign companies included “Behles Petroleum S.A.” (Switzerland), “South Petroleum Limited” (Gibraltar Island), and “Baltic Petroleum Trading Limited”.
At the same time, Khodorkovsky and members of his organised group appropriated revenues, hiding 90% of revenues from “Yukos” minority shareholders. I.e., “Yukos” executives betrayed their shareholders. Foreign companies reacted to such audacity and tried to return their money. Minority shareholders under US citizen Kenneth Dart wanted to convince foreign courts that Khodorkovsky and other majority shareholders were engaged in theft.
OIL THEFT IN 1998-1999 (title)
Oil-producing enterprises –> Yuganskneftegaz, Samaraneftegaz, Tomskneft VNK –> JSC Yukos Oil Company –> Internal resale between front companies of the closed administrative-territorial formation of the cities of Lesnoy and Trekhgorny –> JSC Yukos Oil Company (commissioner) –> Behles Petroleum S.A. –> South Petroleum Limited + Baltic Petroleum Trading Limited –> Final foreign buyers (flow chart)
The mechanism of theft: by transferring the functions of the management organisation of the controlled by MBKh and PLL to the company “Yukos EP”, they took possession of the right to dispose of oil producing enterprises and started to transfer oil to the company “Yukos”. The crime was concealed by the conclusion of fictitious contracts of sale and general agreements. (1st bullet point)
Oil was withdrawn from producing enterprises at a price from 250 to 600 rubles, and sold at market prices that exceeded the purchase price 3-6 times. (2nd bullet point)
In the course of public accusations, “Yukos” executives were forced to rebuild the theft scheme and conditionally show that oil raiders, as well as offshore companies in which stolen funds are legalised, are controlled exclusively by “Yukos”.
LEGALISATION 1998-2004 (title)
SEVERAL HUNDRED COMPANIES (central upper box)
Profit generated from the resale of oil and petroleum products at Russian shell companies (upper far-left box)
Sale of oil and petroleum products by Russian shell companies. (bottom far-left box)
Foreign offshore founder (upper left-central box)
Foreign companies Routhenhold Holdings Limited and Pronet (lower left-central box)
Foreign real buyer of oil and petroleum products (upper right-central box)
Foreign offshore founder (lower right-central box)
Foreign offshore founder (far-right box)
Dividend (all upper green arrow labels)
Export (bottom left green arrow label)
Sale (centre bottom green arrow label)
Russian border (vertical text on the left parallel with green line)
Thus, allegedly, they do not go beyond the perimeter of its possession. The corresponding deceptive corporate structure was built on this.
Khodorkovsky’s International organised criminal group
Khodorkovsky did not act alone. Let’s remember the names of the associates of the fugitive oligarch and now main sponsor of the opposition in Russia. Once all of them even lived nearby in the elite village of “Yablonevy Sad”.
- Platon Lebedev has been Khodorkovsky’s business partner since 1987. Former co-owner of Yukos. He was in prison for more than ten years for fraud and the non-payment of taxes.
- Leonid Nevzlin is the right hand of Khodorkovsky, former co-owner of Yukos, and is wanted.
- Mikhail Brudno is the former co-owner of Yukos, has worked with Khodorkovsky since 1987, and is wanted.
- Vladimir Dubov is the former co-owner of Yukos and is wanted.
The citizen of Germany Frank Rieger was one of authors of the tax evasion scheme. He and a certain Bruce Mizamor were appointed members of the organised group as persons managing the stolen money. In particular, the Vice Presidents of LLC “Yukos Moskva” Bruce Mizamor and Frank Rieger, as well as the citizen of the Russian Federation Sergey Kecha, were appointed directors of the company “Yukos Hydrocarbon Investments Limited” .
The latter company, in turn, through an option agreement with JSC “Yukos Oil Company”, owned the Brittany Assets Limited company, where Mizamor, Rieger, and Kecha were also appointed directors.
Stolen money of “Open Russia”
Members of the organised group, without disclosing this part of the assets to JSC “Yukos Oil Company” and its minority shareholders, and hiding from taxation of the Russian Federation, disposed of them at their own discretion.
But at the same time, auditors in the financial statements of the company record the following facts of the embezzlement and appropriation of funds:
- From the accounts of Belmont Finance Corp., where dividends were received from the seller of “Yukos” oil products, “Pronet Holdings Limited”, $14,456,000 were sent to a charitable trust – “Open Russia Foundation”, managed personally by Khodorkovsky. Another $100,000 was transferred as a gift to the United States Library of Congress;
- Using the accounts of the companies “Hasley Holding Limited”, “Argenta Business Management Coralleaf Limited”, and LLC “Fargoil”, members of the organised group illegally wrote off $160,961,872 by the acquisition for 735,000,000 rubles of a promissory note of CJSC “Metamedia” with a book value of 5,060,480,293 rubles;
- $135,360 was debited from “Hasley Holding Limited” by “Yukos” executives to “Hermitage Rooms” and $110,000 to Thor Heyerdahl Research Center as a donation from the “Open Russia Foundation” managed by Khodorkovsky;
- $206,080 was debited from “Yukos Hydrocarbons BVI” to the “Northern Basketball League”.
In fact, consolidated accounting was not carried out, employees of the Department of Consolidated Accounting of the Treasury of LLC “Yukos Moskva”, under the leadership of financial director Mizomor, provided the auditor only with information about the turnover of individual companies allegedly included in the holding company. Information on actual expenditures and the use of funds of “Yukos” subsidiaries not included in the consolidation perimeter was hidden from auditors and minority shareholders.
Fraud in Europe and the United States
Using the indicators of the high level of capitalisation of JSC “Yukos Oil Company” only in the interests of his own enrichment, Khodorkovsky and his group sold their shares of JSC “Yukos Oil Company” on the securities market at a high price. During 2000-2003, Khodorkovsky, Lebedev, and other majority shareholders sold about 15% of the shares of JSC “Yukos Oil Company” worth about $2 billion through ADR and GDR systems to US and European citizens and companies.
Moreover, when applying for permission to sell shares via a Form 6 to the United States Securities and Exchange Commission (SEK), Khodorkovsky and Yukos CFO Bruce Mizamor fraudulently assured that the oil company does not have any risks that could lead to the impairment of its shares. In this way they concealed that they evade taxes and commit the theft of its main products – oil.
Crime in the Netherlands
Khodorkovsky and a company of associates violated the law not only of Russia, but also of the Netherlands – they sold shares to the subjects of the Kingdom, lying about the true state of affairs of the oil company. The actions of Khodorkovsky, Lebedev, and Mizamor, who sold “Yukos” shares to buyers in the Netherlands, fall under article 334 of the Criminal Code of the Kingdom of the Netherlands.
Article 334: “Any person who, with the intention of benefitting himself or another unlawfully, drives up or drives down the price of commodities, stocks or other securities by disseminating false information, shall be liable to a term of imprisonment not exceeding two years or a fine of the fifth category”.
Thus, Khodorkovsky and his group, having sold “Yukos” shares in the Kingdom of the Netherlands, committed an offence under article 334 of the Criminal Code by spreading false information about the value of these securities.
In the context of the criminal case opened in June 2003, an organized group headed by Khodorkovsky took active measures to siphon the capital stolen from “Yukos” shareholders. This was done to the detriment of minority shareholders.
At the same time, “Yukos” leaders realised that after the disclosure of the facts of tax evasion and other financial fraud, the value of “Yukos” shares would fall sharply, and it was necessary to save the situation.
The instrument for obtaining money was the decisions of foreign courts. The criminal oligarchs received them through fraudulent evidence presented by the top managers of “Yukos”.
Cayman Islands oil pirates
Bruce Mizamor, Stephen Theede, and David Godfrey, controlled by the organised group led by Khodorkovsky, who were directly involved in tax evasion and the withdrawal of the company’s profits to offshore, later, after their criminal activities were exposed, left Russia in 2004. They moved to the Netherlands. In order to evade tax sanctions, they transferred the foreign assets of “Yukos” to the leaders of the organised group. In particular, the assets of the Dutch company “Yukos Finance B.V.” were seized in this way.
In 2013, the Khodorkovsky Group established the “Quadrum Atlantic SPC” foundation in the Cayman Islands with the help of trusts actually owned by them. This fund was handed over to “Quadrum Global” in 2013 by members of the organised group, appointing Oleg Pavlov as director.
Khodorkovsky’s organised criminal group owns assets around the world
On behalf of “Quadrum Global”, members of the organised group Khodorkovsky, Lebedev, Brudno, and Dubov, who are beneficiaries of assets transferred to the “Quadrum Atlantic SPC” fund, continue to legalise funds stolen under the pretext of dividends from ownership of shares of JSC “Yukos Oil Company”.
They now manage assets totalling over $2 billion in the form of:
- Real estate in the United States, among which there are nine hotels with a room stock of about 2,200 in the states of Florida, Illinois, Manhattan, and an office building in downtown New York;
- An office building with a total area of 86,000 square metres in central London;
- A shopping centre with an area of 65,000 square meters in Tbilisi;
- Housing of 127,000 square metres in Ho Chi Minh City, Vietnam.
Thus, Khodorkovsky and his group laundered their criminally obtained property. This is an offence under Part 4 of Article 174.1 of the Criminal Code of the Russian Federation (money-laundering), for which they have not yet been held accountable.
As the FAN is aware, the Investigative Committee of the Russian Federation initiated criminal proceedings against Khodorkovsky and his associates on the grounds of the crimes described in article 174.1 of the Criminal Code of the Russian Federation.
Federal News Agency
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