Khodorkovsky & Lebedev Communications Center

Testimony Dates:

May 20.

Bio:

Mr. Victor Demchenko is a former minority shareholder of VNK and, after VNK was liquidated through merger with YUKOS, of YUKOS.

Testimony Summary:

Mr. Demchenko, who confirmed several times during the hearing that he only owned VNK shares and no shares of any of VNK's subsidiaries, insisted that there was no difference between VNK shares and shares of its subsidiaries.

Mr. Demchenko did not know what Messrs. Khodorkovsky and Lebedev were charged with and attempted to evade this line of questions. Finally, he told the court that Messrs. Khodorkovsky and Lebedev were charged with stealing assets from the shareholders. [Mr. Demchenko joined a line of previous witnesses who were testifying in a case not knowing what the case was about. However, Mr. Demchenko's ignorance was compounded by the fact that he was not a witness but a complainant in this case. -Eds.]

Mr. Demchenko testified that he became a shareholder of YUKOS after his VNK shares were exchanged for YUKOS shares in early 2003. He admitted that no one forced him to either sell or exchange the shares and that YUKOS complied with the letter of the law when the exchange was made. He said that shares were exchanged automatically and he did not take any action prior to or after the exchange. Mr. Demchenko admitted that he never contested the exchange in court.

Mr. Demchenko confirmed that, as a YUKOS shareholder, he was paid dividends. Mr. Demchenko forgot whether he was paid dividends for 2004, 2005 and 2006. He insisted on remaining a YUKOS shareholder to this day. Then, after being asked whether the prosecution informed him that YUKOS was liquidated in 2007, Mr. Demchenko told the court that he heard about it somewhere.

Mr. Demchenko insisted that he wasn't aware of YUKOS offering VNK minority shareholders a chance to exchange VNK shares or YUKOS shares in as early as 1998. He insisted that he did not get an offer for exchange, although he did not know what happened to other shareholders.

Mr. Demchenko testified that he did not have any proof he purchased VNK shares in 1997. Asked if he may have any copies from VNK shareholders registries, for any of the years he owned the shares, Mr. Demchenko testified that he may have had something before, but did not know where these documents could be.

Mr. Demchenko admitted that he was not the only VNK shareholder to not have been paid dividends. In fact, none of the shareholders were paid dividends, which included YUKOS, the majority shareholder. Furthermore, Mr. Demchenko admitted that he did not know of any violations of the law concerning the non-payment of dividends. He went so far as to tell the court that YUKOS and VNK always complied with legal formalities.

Mr. Demchenko testified that he found out about the exchange of VNK subsidiaries shares for YUKOS shares sometime in 1999 from other VNK shareholders. Mr. Demchenko admitted that he became aware that each exchange had a reverse exchange clause only after hearing Mr. Khodorkovsky's testimony. He confirmed that he was not aware of anyone challenging the exchange in court and he, certainly, did not do that. He explained that the only lawsuit he filed which had any connection with VNK was a suit against the government, attempting to have the court issue an injunction against the VNK privatization auction. Mr. Demchenko admitted that the real purpose of his lawsuit was to gather documents for subsequent litigation he was contemplating filing against YUKOS.

Mr. Demchenko testified that he met Mr. Lebedev in person once, sometime during Bank MENATEP's bankruptcy. It seems that Mr. Demchenko, through no actions of his own - or so he testified - was appointed to represent interests of about 200 Bank MENATEP's depositors, of which he was one. According to Mr. Demchenko, he met Mr. Lebedev once to negotiate return of deposits to all the people he represented. Mr. Demchenko told the court that he enjoyed meeting Mr. Lebedev and found him very polite and personable. Mr. Demchenko admitted that, although it did not happen immediately after his meeting with Mr. Lebedev, every individual depositor he knew of had all of the funds on deposit with Bank MENATEP returned to them.

Mr. Demchenko testified that no one explained to him who a "civil complainant" under Section 44 of the Criminal Procedure Code was. He told the court that he wrote a letter to investigator Karimov, explaining his claims, and was informed that he was being added to the case as a civil complainant. Mr. Demchenko confirmed no one explained to him that VNK shares were not subject of any of the allegations made against Messrs. Khodorkovsky and Lebedev. Mr. Demchenko insisted that the subject of the criminal did not matter to him - he turned to the prosecutors for help, the prosecutors added him to the case and the court should decide whether what they did was correct or not.