Khodorkovsky & Lebedev Communications Center

Morning Session.

Mr. Maliy was unable to come to court for work-related reasons, but promised to be back on Wednesday. Mr. Lakhtin informed the court that the prosecution was ready to call another witness. Next to testify was Ms. Elena Timoshenko, former section head in accounting and tax compliance department at YUKOS-Invest, then YUKOS-FBC. Ms. Timoshenko worked at YUKOS and its affiliates from 1997 through 2007.

Mr. Lakhtin began with questions about Ms. Timoshenko's work history. The witness told the court that beginning in 1997 she worked at YUKOS and affiliated companies, including at OOO YukSi and ZAO YUKOS-RM. Her direct supervisor at YUKOS-Invest and YUKOS-FBC was Ms. Gareeva, who answered to Ms. Golub. Mr. Lakhtin asked about the circumstances surrounding Ms. Timoshenko's transfers from one organization to another, but Ms. Timoshenko had little to add to the time line of her transfers, telling the court that she did not remember all the details.

Ms. Timoshenko explained to the court that YUKOS-Invest, probably, had an agreement with YUKOS to provide accounting services to the company and some of its affiliates. Mr. Lakhtin, after confirming that YUKOS-Invest was headed by Ms. Golub, asked what other functions were handled by Ms. Timoshenko's section. Ms. Timoshenko testified that her sectioned tracked investments into investment funds and securities.

Ms. Timoshenko testified that her section at YUKOS-Invest provided accounting services to YUKOS, YUKOS-Invest, YUKOS-Moscow, YUKOS-RM, Muskron and Ratmir. Mr. Lakhtin demanded to know why Ms. Timoshenko's section was entrusted with these companies. The witness testified that companies were allocated by Ms. Golub.

Ms. Timoshenko testified that her section created accounting and tax statements based on the data received from other sections. She explained in detail all the steps taken before accounting and tax statements were created. Tax statements had to be prepared according to tax regulations in force and be ready for filing before appropriate deadlines.

After transferring to YUKOS-FBC, Ms. Timoshenko's responsibilities expanded. Her section, in addition to accounting and tax compliance, her section began tracking short-term financial investments of some YUKOS affiliates. The list of companies her section worked with did not change much, as she added Fargoil to the list. Alta-Trade was added as a form for which her section tracked short-term investments.

Mr. Lakhtin continued to ask for more details of day-to-day operations of Ms. Timoshenko's section, particularly contacts with members and directors of Fargoil, Alta-Trade, Ratmir and Muskron. Ms. Timoshenko did not know who founded the aforementioned companies, but remembered that Mr. Valdes-Garcia was Fargoil's director, Mr. Konoshenko was from Ratmir and Mr. Malahovsky from Alta-Trade. Ms. Timoshenko was not sure where these people were "geographically located," to use Mr. Lakhtin's terminology, but she met with them once in a while, usually about questions related to bookkeeping at the aforementioned companies.

Mr. Lakhtin asked whether Ms. Timoshenko knew where these companies were incorporated and what kind of business activities they were involved in. Ms. Timoshenko testified that Ratmir and Fargoil were registered in Mordovia and wasn't sure bout Alta-Trade and Ratmir. She explained that Ratmir was a petroleum products trader. Mr. Lakhtin demanded to know where Ms. Timoshenko learned this information. Her answer that she saw it in Ratmir's accounting statements did not seem to satisfy Mr. Lakhtin, who asked several more time for the source of her information. Finally Judge Danilkin began striking repetitive questions posed by the prosecutor.

Ms. Timoshenko testified that Ratmir owned some assets, but she did not remember that specifics. In any event, she explained, this information was not something she was particularly interested in when working at YUKOS-FBC.

Mr. Lakhtin asked Ms. Timoshenko about the "type of tax system" used by the aforementioned companies in the territories they were registered in. Ms. Timoshenko did not understand what the prosecutor meant and Mr. Lakhtin could not explain it any better. He tried one more time, asking why these companies were registered in the regions where they were registered. Ms. Timoshenko did not know.

Mr. Lakhtin motioned to read transcript of Ms. Timoshenko's interrogation. Mr. Lakhtin explained that he wanted to read what Ms. Timoshenko told investigators about the tax system in various regions.

Mr. Rivkin noted that Mr. Lakhtin did not offer proof of any material contradictions between what Ms. Timoshenko told the court and the investigator. In addition, he noted that Mr. Lakhtin asked to read one of four transcripts found in the case file.

Mr. Lebedev noted that two out of four transcripts were from interrogations conducted under a case that was never merged with his and Mr. Khodorkovsky's case. He insisted that prosecution should explain how these transcripts ended up in his and Mr. Khodorkovsky's case file. Mr. Lebedev had no illusions about the outcome of Mr. Lakhtin's request, but asked the court not to forget what the case was about.

Mr. Lakhtin attempted to explain that the transcripts could have ended up in the case file because defendants or civil complainants could have asked for their inclusion. Or, Mr. Lakhtin continued, the investigator could have decided to include them - because he could. He noted that many transcripts were added from case #18/41-03 - some at defendants' and their attorney's requests.

Mr. Lebedev explained to the court the issue with Mr. Lakhtin's evasive explanation. He told the court that Mr. Lakhtin did not cite to any procedural document, as required by the Criminal Procedure Code, to explain how a transcript from March 25, 2005, appeared in the case file. Mr. Lakhtin's reference to case #18/41-03 was an attempt to mislead the court, because he did not answer a very specific question - how the aforementioned transcript ended up in the case file. Judge Danilkin ordered for all transcripts to be read into record.

The prosecution asked for a five minute break, which stretched to twenty minutes with everyone waiting for Mr. Lakhtin to return. Mr. Lakhtin read four transcripts. Transcript testimony did not differ from what Ms. Timoshenko testified about in court.

Afterwards, Mr. Krasnov noted that one transcript was less than 3 pages long and contained only one question - despite listing duration of the interrogation at almost 3 hours. [It was clear that investigators did not include all pages in the case file. -Eds.] Another interrogation took 8 hours and 24 minutes, without a record of any breaks, which violated a CCP requirement of not more than a 4 hour uninterrupted interrogation.

Mr. Khodorkovsky, after Ms. Timoshenko left the room, asked the court to note that investigators asked repeatedly whether Ratibor and Muskron, after purchasing crude oil, transported it to Mordovia and Chelyabinsk Region. Mr. Khodorkovsky called it an explicit attempt to mislead the witness, because investigators knew perfectly well that crude oil was never shipped to the regions where companies were registered.

Afternoon Session.

Mr. Khodorkovsky began cross-examining Ms. Timoshenko. She was unable to remember some of the functions she performed, pleading the passage of time. However, she confirmed that her section worked closely with auditors from Pricewaterhouse Coopers, providing all documents the auditors requested. Ms. Timoshenko testified that no one ever asked her to hide anything from the auditors.

Mr. Khodorkovsky asked whether balance statements were created after transactions occurred. Ms. Timoshenko confirmed that they were.

Mr. Lebedev asked whether Ms. Timoshenko was interrogated after December 22, 2006, the last dated interrogation transcript. Ms. Timoshenko confirmed that she was. Mr. Lebedev asked about specifics of preparing tax statements for regulatory authorities. Ms. Timoshenko did not remember all of the specifics involved, but was certain that everything was prepared in accordance with acting legislation and regulations. She remembered that once in a while regulators would conduct an audit, with all payments made if the audit resulted in additional taxes. She confirmed that recalculated amounts were not very significant. Mr. Lebedev asked whether recalculations were significant enough to cause institution of bankruptcy proceedings. Ms. Timoshenko did not remember recalculations rising to those heights.

After a five minute break, Mr. Lebedev asked Ms. Timoshenko whether in her 10 years of work at YUKOS any of her colleagues or superiors pressured her to do anything illegal. "No," Ms. Timoshenko replied with certainty.

Mr. Lakhtin reminded everyone that Ms. Timoshenko affirmed her transcript testimony.

Prior to adjourning, Judge Danilkin informed the defense that tomorrow's hearing would end at 15:30. Mr. Rivkin inquired when the prosecution was expected to tender its reply to Mr. Lebedev's motion, but Mr. Lakhtin was unable to provide a clear answer.

The trial will resume on Wednesday, February 3, 10:30 Moscow Time.