Khodorkovsky & Lebedev Communications Center

The morning ritual of attempting to get the feed into the press-room to work took longer than usual. About 20 minutes passed before bailiffs on the second floor informed the court that they could see and hear Courtroom #7.

Morning Session.

As he told the court yesterday, Mr. Khodorkovsky began a question-and-answer session, meant to fully inform the court on terminology and topics relevant to the trial. Before turning to the first question, Mr. Khodorkovsky explained that he may repeat some of the earlier testimony, but these questions were of increased importance.

"What comes out from the well at the oilfield?" Mr. Khodorkovsky told the court this question was very important - the indictment alleges that crude oil was being embezzled at the wellhead the moment it came out of the ground. But what came out of the ground was a mixture of oil - as low as 4% or as high as 98% - with water, mineral salts and other substances. For YUKOS, the average oil content was only 30%. Mr. Khodorkovsky told the court that YUKOS called this mixture "wellhead liquid" or "hydro-carbon raw materials." This terminology was not invented by YUKOS - it was used in official government documents

As a slide depicting numerous steps the mixture had to undergo before becoming commercial-grade oil was being projected on the wall, Mr. Khodorkovsky reiterated that he was not the one to invent the term "wellhead liquid," as asserted in the indictment. Mr. Khodorkovsky read a passage from Russia's Tax Code and from Government Standard (GOST) where the term was used. Furthermore, the terminology is used in documents from the Fuel and Energy Ministry and the Environment Ministry.

"What is commercial-grade oil and where does it come into existence?" Mr. Khodorkovsky asked the court to note that "commercial-grade oil" and "crude oil" mean the same thing. GOST uses "commercial-grade oil." Mr. Khodorkovsky told the court that crude oil comes into existence after the wellhead liquid was processed at the processing facility. Mr. Khodorkovsky told the court that there are different types of crude oil and a slide with a picture of 15 volumetric flasks filled with crude oil appeared on the wall. Mr. Khodorkovsky, noting that he wasn't going to try the court's patience by bringing a batch of crude oil samples, asked the court to note that each flask contained a different colored liquid - but all were "crude oil." Mr. Khodorkovsky noted that after processing crude oil from each of the three production companies is easily distinguishable, but does not necessarily match with the Urals type of crude oil. After processing, crude oil arrives at Transneft's measurement nod.

"Where does crude oil produced by Yuganskneftegaz, Samaraneftegaz and Tomskneft cease to exist?" A slide, previously shown, depicting crude oil from YNG, Rosneft and TNK being transferred into Transneft pipeline, was projected onto the wall. Mr. Khodorkovsky explained that crude oil, processed from the wellhead liquid and with clearly identifiable producer characteristics, ceases to exist upon being deposited into the Transneft pipeline. The pipeline mixture has different characteristics of density, sulfur content, color.

"Why is the difference between crude oil as an item and crude oil ownership rights being underlined?" Mr. Khodorkovsky explained that production companies sell their crude oil before it's produced. Due to the technological realities of the crude oil industry, all of these transactions are in fact "futures contracts," because oil is produced every day, but contracts cover a period of time. Next, the ownership rights are often resold, several times, even before the crude oil arrives at a refinery.

Mr. Khodorkovsky gave an example, as a slide depicting a transaction YUKOS participated in the 90s was shown on the wall. Mr. Khodorkovsky explained that the Russian Federation decided to sell crude oil to Cuba. Yuganskneftegaz sold the ownership rights to YUKOS, YUKOS sold them to a Cuban refinery, Cuban refinery sole them to a Venezuelan company, Venezuelan company sold them to American refineries, while they sold them to Saudi Arabia, which sold them to European refineries. The actual YUKOS crude oil - Mr. Khodorkovsky told the court that it was both difficult and time-consuming to ship Russian crude oil to Cuba - was transferred into Transneft, which had the equal volume offloaded to European refineries. The crude oil that arrived on Cuba came from Venezuela, while Saudi Arabia sent crude oil to American refineries. Mr. Khodorkovsky told the court that this was a typical transaction. He asked the court not to fall into prosecution's trap and think that crude oil and crude oil ownership rights always flow in the same direction to the same parties. The physical and transactional flow of crude did not match, more of then than not. Mr. Khodorkovsky explained that physical crude oil was transferred from a production company to Transneft and was documented with transfer acts - which are missing from the case file. Transactional crude oil was transferred between seller and purchaser with a purchase contract and a transfer act.

"Was I the owner of crude oil produced by YUKOS subsidiaries, converting it for my own use?" Mr. Khodorkovsky told the court that from the moment crude oil was processed until the moment it ceased to exist by undergoing refining into petroleum products it was owned by juridical persons. Mr. Khodorkovsky told the court that no physical person ever asserted being owner of the crude oil.

Mr. Khodorkovsky explained that under Article 47 of the Civil Code, as well as Part 3 of the Federal Law on Corporations, a juridical person has ownership rights to a property - not its shareholders.

Same applied to VNK subsidiary shares. No physical person ever asserted ownership of those shares. Mr. Khodorkovsky noted that, on the contrary, VNK's rights to manage and dispose of these shares were fully supported until the company was liquidated through merger.

"Why should YUKOS consolidated reporting be trusted if PwC recalled its audit and the prosecution asserts that the reporting was falsified?" Mr. Khodorkovsky told the court that YUKOS consolidated reporting for years 1998 through 2003 was drafted according to US GAAP. The reporting summarizes, using standardized rules, operations, balances and profits of all companies within the YUKOS perimeter. Mr. Khodorkovsky, citing Article 105 of the Civil Code, told the court that US GAAP consolidation rules fully complied with the Russian Civil Code, but these rules are a bit stricter than rules under Russian Accounting Standards. A decision to include the company into YUKOS consolidation perimeter hinges on whether there is management control - regardless of the percentage of shares owned.

Mr. Khodorkovsky explained that for a VIOC US GAAP reporting was more accurate, because excluded all intra-company transactions, allowing for a more comprehensible analysis of what happens within a VIOC. YUKOS consolidated reporting was approved by the Board of Directors, was available through YUKOS website and was delivered to banks and investors.

Mr. Khodorkovsky told the court that from the view point of this trial figures for crude oil production volumes, revenue and profit were the most important. Also important was the information on how profits were spent. Mr. Khodorkovsky noted that, after carefully reading the indictment, no doubt was cast on any of these figures. Mr. Khodorkovsky told the court that PwC was forced, illegally, to recall its conclusions - based on documents of undetermined authenticity, shown in investigative cabinets. Mr. Khodorkovsky told the court that he can no longer rely on PwC's reports - but he can still rely on the reporting itself, because it was his.

Mr. Khodorkovsky went over the arguments investigation used to argue that YUKOS consolidated reporting was fraudulent. He dismissed their assertions that the beneficiary agreement between shareholders had any impact on consolidated reporting. Mr. Khodorkovsky told the court that it was PwC who decided, after realizing that the agreement was not part of YUKOS shareholders' plot to artificially increase YUKOS share price, that information about the agreement was not material to the audit.

Investigator's assertions that YUKOS purchased MENATEP collecting right for the benefit of shareholders without any benefit to itself was disproved by investigators themselves, only a few pages later, as the indictment states that YUKOS received its own shares in return for transferring these rights. Mr. Khodorkovsky told the court that this is what happens when 10 investigators write the indictment without checking what the others are doing.

About Behles Petroleum, Baltic Petroleum and South Petroleum, Mr. Khodorkovsky assured the court that no property of a physical person was ever consolidated with a corporation. Even if BBS were owned by Mr. Lebedev and him - it would be a circumstance and not something that would impact on revenue, profit or crude oil production volumes found in consolidated reporting.

Mr. Khodorkovsky noted that only YUKOS subsidiaries were named victims in this case. PwC never recalled their audits and their reporting, where subsidiaries state that nothing was stolen, is not in doubt.

"Why was the price at which YUKOS production subsidiaries sold their crude oil to YUKOS not the same as the so-called market price?" Mr. Khodorkovsky noted that this should not even be a topic of analysis - "price" results from a contract. If there's a contract - there's no embezzlement.

Mr. Khodorkovsky told the court that "market price" was a price at which an independent seller could sell his product to an independent purchaser on competitive terms without any necessity to do so. YUKOS production subsidiaries had no choice - the technological reality was that they had to sell their crude oil or stop the production. Furthermore, there were no independent purchasers who could off-take the volumes of crude oil being produced. By definition, there could not be a "market price" for crude oil produced by YUKOS production subsidiaries.

Mr. Khodorkovsky showed a slide with six different steps in crude oil exports, each with a different price. He told the court that prices depended on the region, the quantity, the sea port and the destination, amongst others. He still did not know why investigation chose Rotterdam and Augusta for price comparison. When investigation asked for average prices from the Economic Development Ministry, they received a range of prices. Mr. Khodorkovsky told the court that no one denied that the price in Rotterdam was higher than in Yuganskneftegaz, but there was no market in Yugansk.

"Why aren't production companies selling their crude oil?" Mr. Khodorkovsky explained that production subsidiaries did not have sales divisions, and it would have been difficult and unprofitable to create these. Mr. Khodorkovsky told the court that the Russian Federation agreed and read a passage from its filing in Strasbourg, where the Russian Federation told the ECHR that Yuganskneftegaz did not have an independent sales division and to create one would have required time and funds. Mr. Khodorkovsky asked the court to imagine him convincing 300 or so world-class specialists to come to live in the City of Strezhevoy, where Tomskneft was headquartered, because he wasn't going to find locals with necessary qualifications. "How much would I have had to pay them to come live and work there? Or in Yugansk?" Mr. Khodorkovsky asked.

"Why wasn't crude oil sold on behalf of the production companies or YUKOS itself?" Mr. Khodorkovsky told the court that originally this was crude oil was traded but the practice changed due to economic and legal risks. He explained that with various risks involved it was easy to freeze everything with an Arbitrage Court ordering an arrest of assets.

"Why were YUKOS traders registered in Closed Autonomous Territorial Regions (ZATO) and so on?" Mr. Khodorkovsky told the court that this was also a common industry practice. Mr. Khodorkovsky told the court that the law allows choosing where a company can be registered - so certain factors, such as tax incentives play a role. But not all trading companies get registered in regions with preferential tax treatment - others are registered where crude oil was to be produced, like in Evenkia.

"Why have foreign-incorporated crude oil traders?" Mr. Khodorkovsky explained that crude oil being sold for export could be sold at several points. Selling it at a measurement node minimized the risk, but also lowered the price because expenses were at a minimum. Other points of sale included sea ports on Russian side of the border, on a ship, in Amsterdam or even at the purchaser's storage facility. What the foreign-based traders allowed YUKOS to do was to make additional profit by selling crude oil between somewhere between the Russian border and storage facility of the purchaser. Mr. Khodorkovsky told the court that majority of traders are registered in Geneva, Antwerp, Bermuda and BVI. He added that until 2000 YUKOS simply did not have the expertise to have such traders, but after 2000 YUKOS took over that side of the business as well, with the profit being consolidated into YUKOS.

"Why were directors-‘signers' (terminology used in the indictment) necessary for operating, trading and financing companies?" Mr. Khodorkovsky told the court that the institution of nominal executive directors - appointed and with limited powers - is widely used around the world and in Russia. Mr. Khodorkovsky explained that nominal directors had an important power - they were the only ones who could sign the document on behalf of the company they represented. In certain instances circumstances demanded that a director be present at the place of incorporation - Gibraltar, Isle of Man, some of the ZATOs, but the people were not necessarily qualified to run all operations - except that they retained the right of signature.

Furthermore, Mr. Khodorkovsky explained that YUKOS strictly enforced the front-office/back-office functions. While the sales rep/manager working with clients may be tempted to go outside the company regulations, the person whose responsibility it was to sign only if everything was duly verified has little of that temptation. Mr. Khodorkovsky reminded the court that the nominal directors who testified in court were very clear that they never signed documents unless they contained prior pre-approval from necessary departments. That was how they knew whether to sign or not - without even knowing what the substance of the document may have been.

And, finally, in order to comply with certain tax regulations, PwC demanded for certain of the companies to have directors that were not on YUKOS's payroll. All appropriate government agencies knew that - everyone knew that crude oil arrived from YUKOS, but under agreements with the trading companies. Everything was transparent. Otherwise PwC could force YUKOS to lower the consolidated profit by the amount needed to allocate for tax reserves. According to Mr. Khodorkovsky, YUKOS strictly followed demands made by PwC.

"How was the victims' will in relation to the crude oil formed and was there a will?" Mr. Khodorkovsky reminded the court that Yuganskneftegaz, Samaraneftegaz and Tomskneft were corporations 100% shares of which were controlled by YUKOS beginning in 2001. Their will was effectuated by their management, their Boards and their shareholders. As far as crude oil was concerned - the only technologically possible action that the companies' management could take was to transfer the crude oil into the Transneft pipeline. Board members and shareholders knew of that fact and never objected.

"In what manner was the victims' will formed in relation to crude oil ownership rights?" Mr. Khodorkovsky told the court that prior to 2001 the companies' shareholders had to approve all transactions with interested parties. The general agreements between Yuganskneftegaz, Samaraneftegaz and YUKOS have not changed since 1996, while between Tomskneft and YUKOS since 1998. None of the transactions have been contested in court. After 2001, even the need to get shareholder approval was eliminated - YUKOS consolidated all share in these companies. YUKOS-EP was the management company for all three production subsidiaries, while Mr. Khodorkovsky was either its Chairman or the representative of the company's only shareholder - YUKOS. After YUKOS became the only shareholder in all of its production subsidiaries, it confirmed all general agreements as was necessary for preparation of SEC Form F-1. Mr. Khodorkovsky reminded the court that he had the full authority to confirm these agreements and the only way he could have them revoked was by a vote of majority of YUKOS shares. With a chuckle, Mr. Khodorkovsky told the court that the person who voted the majority of YUKOS shares was sitting right next to him and hadn't complained.

"Where is the crude oil and shares which the indictment alleges had been stolen?" Mr. Khodorkovsky told the court that he knows with utmost certainty that prosecution is fully aware that crude oil was transferred into the Transneft pipeline, they know that the ownership rights for exported crude oil were transferred to ultimate purchasers, while ownership rights to domestic crude oil disappeared as the crude oil was refined into petroleum products. Mr. Khodorkovsky reminded the court that he explained in detail what happened to the revenue and profit. He told the court that he knew what happened to the company's assets - that information is available from Mr. Rebgun's report created when he was YUKOS bankruptcy receiver and from reports created by RFFI when it was auctioning off these assets. Mr. Khodorkovsky told the court that he did not agree with Mr. Lakhtin's statement that talking about Mr. Rebgun was irrelevant - the prosecution alleges that something was stolen, yet that something is later found. The situation for someone convicted of murder changes if the allegedly dead person shows up alive.

Mr. Khodorkovsky told the court that "the money wasn't killed." It was used to acquire assets, which were later sold by one victim - RFFI - to another - Rosneft. Mr. Khodorkovsky reminded the court that the unknown BaikalFinansGrup bought 100% of Yuganskneftegaz's voting shares - while YUKOS had only 38% in 1998. And as far as VNK subsidiaries shares - they belonged to YUKOS after merger with VNK and were sold to Rosneft in 2007.

"Did Yuganskneftegaz, Samaraneftegaz and Tomskneft management conclude contracts based on misrepresentations?" Mr. Khodorkovsky told the court that the YUKOS CEO and as the Chairman of YUKOS-EP he knew that crude oil was transferred to Transneft, that when it was exported and sold to the ultimate purchaser it would be at the so-called "world market prices." Mr. Khodorkovsky reminded the court that YUKOS-EP employees were specialists in the field and it was unrealistic to think that they did not know these facts.

"Were the crude oil purchase agreements concluded based on impermissible collusions between the representatives of both sides?" Mr. Khodorkovsky explained that YUKOS-EP representatives acted in accordance with decisions made by YUKOS-EP - the sole executive of all three production companies. These decisions were approved by the sole shareholder of all the companies - YUKOS. None of these have ever been challenged. The Russian Law on Corporations states that these decisions were final. Mr. Khodorkovsky told the court that with the circumstances as they were who needed to collude with whom?

"Were these agreements the most advantageous to [the production companies]?" Mr. Khodorkovsky told the court that guessing was not appropriate. Agreements were concluded by duly authorized executives, no one else, and were not challenged by those who had the authority to do so.

"What commercial reasons prompted purchase of crude oil from production companies at transfer prices and not at Rotterdam and Augusta ones?" Mr. Khodorkovsky told the court that Rotterdam and Augusta prices were immediately commercially unrealistic, because the crude was sold in the production regions, prior to all of the expenses that were involved in processing, shipping, customs and others. Furthermore, delivery to places like Rotterdam and Augusta were limited by Transneft's technological capabilities.

"Why was the purchase price paid to production subsidiaries lower than so called ‘independent sales'?" Mr. Khodorkovsky explained that independent sales were relatively small volumes of crude oil being sold to small refineries in places like Bashkiria and were meant to help those refineries to keep operating at capacity. There was also an added risk - selling to an independent purchaser carried a risk that the oil would not be off-taken from the Transneft pipeline, with Transneft not allowing the crude producer to transfer more crude into the pipeline.

"Why did the use of transfer pricing result with most of the profit settling on other YUKOS subsidiaries and not the production companies?" Mr. Khodorkovsky explained that YUKOS production subsidiaries were located in the middle of the VIOC's technological chain. Because of the numerous other companies - from service to traders - being involved, there was no substantive reason to transfer all profit to production subsidiaries. Mr. Khodorkovsky reminded the court that pretty much all YUKOS subsidiaries worked on "cost-plus" basis. The risk was carried by the corporate center. That was why most of the profits were at its disposal to be utilized in the interest if the entire group. All of the shareholders agreed - either by voting or by conclusive actions, such as acceptance of dividend payments.

"What do I know about transferring crude oil onto ‘balance'?" Mr. Khodorkovsky told the court that he did not know what the prosecution meant, he could not understand how "transferring to balance" could be means of embezzlement and his attempts to receive an explanation from the prosecution have failed. Mr. Khodorkovsky added that this put him at a disadvantage in defending himself.

"Who established, and why, the monthly auctions for the right to enter into crude oil purchase agreements?" Mr. Khodorkovsky told the court that he was the one to make a decision to conduct the monthly auctions, at the urging of regional governors, most insistent of who was the governor of the Tomsk Region. Mr. Khodorkovsky told the court that the law required mandatory auctions for crude oil purchase contracts for government agencies only. YUKOS and its subsidiaries never were such government agencies. However, the governors thought that by having auctions they may attract buyers who would buy the crude oil at higher prices, thus increasing the regional tax the production company would pay. However, other crude oil companies who could possibly buy the quantities that were being auctioned off had no extra capacity for refining that additional crude oil - and they could not simply export it due to a strict quota system. However, to argue with regional governors over this issue made little sense - so auctions were organized.

Mr. Khodorkovsky told the court that he was finished with the questions and offered the court and the prosecution an opportunity to question him on anything he'd said so far. Otherwise, he would move on to the indictment, analyzing those parts where his name is mentioned. He added that this could take quite a long time. Prosecution, as they intimated before, declined to question Mr. Khodorkovsky at this stage.

Afternoon Session.

Mr. Khodorkovsky told the court that, while preparing his testimony, he made a conscious effort to stay within the indictment. However, he knew that he needed to spend time examining the issue of "complicity." Mr. Khodorkovsky, citing the Criminal Code, reminded the court that criminal liability is based on committing an act, which can be a failure to act, also. However, for the charges of embezzlement and laundering a conscious act is required, because one cannot steal without acting. Section 171 of the Criminal Procedure Code requires the investigator to describe with particularity specific acts that lead to criminal liability. Furthermore, actions which are not alleged to be criminal cannot serve as grounds for a verdict.

The commentary to section 14 of the Criminal Code describes action as "display of activity, mechanical body movement, including gestures and words." Mr. Khodorkovsky told the court it should be obvious that thoughts do not fall under this definition.

However, the indictment was replete with words like "organized," "controlled" and "ordered" the organized criminal group." Mr. Khodorkovsky told the court that these were just the investigator's opinions and they could be correct or incorrect. However, these assertions gain substance if they point to specific actions. Then qualification can be made, defendant can contest it and the court can evaluate it. Mr. Khodorkovsky explained that any other interpretation denied him a chance to defend himself and allowed the government to accuse anyone of anything.

"Khodorkovsky and Lebedev, under Putin's leadership..." Mr. Khodorkovsky gave a practical example. He told the court that Mr. Putin lead Messrs. Khodorkovsky and Lebedev, just as he was the leader the entire country. Writing this without explaining the external indicators of criminal action made for an empty exercise. However, if one added that he signed an order - then one can prove whether "he signed or did not sign." Mr. Khodorkovsky told the court that if there was no description of the activity - there was no complicity.

With that, Mr. Khodorkovsky turned to the indictment. As the pages from the document, with portions highlighted and magnified, were being projected on the courtroom's wall, Mr. Khodorkovsky began a meticulous examination of what was attributed to him personally.

He told the court that he examined [the indictment] in detail, looking for a description of his actions. He was only able to find one specific description of the actions he took - on February 02, 1997, Mr. Khodorkovsky signed an agreement between YUKOS and Rosprom, under which Rosprom became the executive body of YUKOS. Mr. Khodorkovsky confirmed that as the Chairman of Rosprom he signed that agreement, as he was authorized to do by the extraordinary shareholder meeting. The anti-monopoly regulators approved the agreement. Mr. Khodorkovsky explained that decision to turn over executive functions to Rosprom allowed Mr. Muravlenko to retain the honorary position of the President of YUKOS, while Mr. Khodorkovsky, being the Chairman of Rosprom, became the head of YUKOS. In 2000, Mr. Khodorkovsky's title changed to the Chairman of the Executive Committee of the YUKOS Board of Directors.

Mr. Khodorkovsky explained that if the prosecution continued to argue "embezzlement" one had to presume that when the production company "entrusted" crude oil to its executive - YUKOS-EP - the latter had the legal authority to be so entrusted. That authority legally came from one entity - YUKOS. And if that authority came from YUKOS, it meant that the decision to grant YUKOS-EP that authority was made by Mr. Khodorkovsky.

Mr. Khodorkovsky told the court that the only act fully described in the indictment - the signing of the agreement - was done by him on the basis of a full legal authority. He explained that this is confirmed by the fact that he was being charged with embezzlement in connection with events that took place in 1998 and on.

Mr. Khodorkovsky began his analysis on Page 2. [M. B. Khodorkovsky], P. L. Lebedev and other persons that comprise the organized group, having committed a number of crimes in 1994-1996, namely the fraudulent acquisition of shares in OAO Apatit, the acquisition of the products of this company, using their right to the strategic and operative control over the company, continued their criminal activity in the organized group... Mr. Khodorkovsky told the court that with the very first phrase the government began lying to the court. Mr. Khodorkovsky told the court that only a final court verdict can state that a crime was committed. Mr. Khodorkovsky told the court that prosecution knew with certainty that Meschanskiy Court never convicted him on this charge and this charge was dropped. Mr. Khodorkovsky asked the court how he was supposed to work with the indictment where the very first sentence was a lie.

Page 2. In the process of committing new crimes - the misappropriation and legalisation of property, attained by illegal means, Khodorkovsky, Lebedev and other members of the organized group used the same means to commit crimes on behalf of dummy commercial organizations, registered to order and with monies belonging to the members of the organized group, both in the Russian Federation and abroad... Mr. Khodorkovsky asked the court how "the means" could be the same if no crime was committed.

Page 2. These companies were under the control of the organized group, as they were established and headed by managers who were private individuals controlled by Khodorkovsky and Lebedev, including in connection with the subordinate nature of the work in Bank Menatep, or in AOZT [closed-type joint stock company] MFO Menatep, or in JV RTT. The organized group, headed by Khodorkovsky, when committing new crimes, continued to use the services of the international holding secretarial company Valmet Group Limited (Bermuda) (formerly known as Riggs Valmet), which had branches in Switzerland (Valmet S.A., Geneva), the Isle of Man (Valmet Isle of Man Limited, Douglas), the Netherlands (Valmet Trust Management B.V., Rotterdam), Gibraltar, Ireland, Spain, Cyprus, Mauritius and the Seychelles. This secretarial company provided Khodorkovsky and the persons acting with him companies, registered in offshore jurisdictions and the services of nominee directors and bank account managers under their instructions.... Mr. Khodorkovsky told the court that he was being assigned actions of the organized group, which he allegedly headed, without even being told what those actions were. Speaking of the "organized group" that allegedly came together in 1994-1996 to commit crimes in 1998-2003, Mr. Khodorkovsky told the court that he did not take any actions to organize any group in order to commit any crimes. The shares were not stolen and prosecution was unable to prove otherwise. If they tried - he would defend himself. Mr. Khodorkovsky told the court that not even an allegation of him contacting anyone by phone call or by mail with instructions to do something was being made.

Page 3. Khodorkovsky and Lebedev, knowingly aware that on 13 November 1995 the RF State Property Control Committee ratified the plan for privatisation of OAO Oil Company YUKOS (in accordance with which: the total number of shares was 6,628,174 at a nominal value of 1,000 roubles, of which 45% are secured in federal ownership for three years, 33% are sold under an investment tender, 7% are passed for subsequent placement on the securities market, 7.96% are subject to sale on special cash auctions and 7.04% are subject to sale to company employees) decided to use these circumstances in order to acquire ownership of shares in this joint stock company... Mr. Khodorkovsky told the court he did not know why events that took place in 1995 were even relevant to the charges. Furthermore, what was illegal about knowing that an auction would take place? Mr. Khodorkovsky told the court that everyone likes to speculate about the "loans-for-shares auctions," but he was not charged with anything related to those auctions, nor did anyone ever challenge YUKOS privatization in court. Mr. Khodorkovsky told the prosecution that if they wanted to charge him in connection with YUKOS privatization - they should do so, otherwise why continue to bring it up.

Page 3. To do this they and other members of the organized group provided 43,745,580,000 non-redenominated rubles from Bank Menatep in 1995 under the guise of loans to the companies under their control. After this and under their direction, these monies, as a contribution to the authorized capital, were used to establish ZAO Laguna, where the General Director was A. V. Zakharov, an employee of JV RTT. On behalf of ZAO, participating in the investment tender for the sale of 33% of the shares in OAO Oil Company YUKOS, to a volume of 2,187,279 shares to a value of 43,745,580,000 of non-redenominated rubles, Khodorkovsky and Lebedev guaranteed the acquisition of this shareholding... Mr. Khodorkovsky told the court that the government uses words like "sham," "under the guise," "fictitious" and others throughout the indictment, but did not deign it important enough to explain anywhere what was being meant by these words and phrases. He reminded the court that he provided the court with his own understanding of this terminology in motions from April 20 and September 11, 2009. [Please link to these reports]

Page 3. Khodorkovsky and Lebedev, using ZAO Laguna for cover, actually obtained this shareholding into their command... Mr. Khodorkovsky told the court that he confirmed he owned a majority of YUKOS shares through a holding company. This was widely known and confirmed by him publically on previous occasions. However, even with this publically known information, the government still failed to describe with particularity any of his actions. According to Mr. Khodorkovsky, combined with the government's refusal to explain what this has to do with crude oil embezzlement, he was left without an opportunity to adequately defend himself.

Page 4. On 23 December 1996 Khodorkovsky and Lebedev, on behalf of Bank Menatep, arranged a commercial tender for the sale of the 33.3% of the shares in OAO Oil Company YUKOS that belonged to the government and which were held as security in Bank Menatep, whereupon they made provision for the company ZAO Monblan, which they controlled (the general director of which was A. V Kraynov), to be found the winner of the tender. In accordance with the agreement, signed by Kraynov with Bank Menatep the outward appearance was created where ZAO Monblan came to be the owner of 745,663,500 shares in OAO Oil Company YUKOS on condition of payment of 160,100,000 US dollars to the bank and the provision of investment of 200 million US dollars in the course of 1996-1998. Actually ZAO Monblan and Kraynov were fully controlled by Khodorkovsky and those acting with him, and, therefore, this company was only a nominal owner of shares of OAO Oil Company YUKOS... Once again, Mr. Khodorkovsky told the court that if one was to talk in the abstract, then Mr. Lebedev and he were under Mr. Putin's control beginning in 1999, because the latter became prime-minister, then president.

Mr. Lakhtin objected, telling the court that Mr. Khodorkovsky should find other people to use as examples. As everyone was wondering why, Mr. Lakhtin told the court that it wasn't "correct" to use this particular word association. Mr. Khodorkovsky told Mr. Lakhtin that Mr. Putin may be someone very special to the prosecutor, but to Mr. Khodorkovsky he was the person who was directly involved in issues connected with the crude oil companies, including YUKOS.

Mr. Khodorkovsky suspended his testimony for the day and Mr. Rivkin filed a motion asking the court to issue summons to Mr. Putin to come to Khamovnicheskiy Court and to testify. Mr. Rivkin explained that defense previously took steps to contact Mr. Putin, but the response from the Justice Ministry informed them that required procedural steps included summons from the court. Mr. Rivkin, noting that Mr. Putin was not immune from testifying, asked the court to issue these summons. In support of the motion, Mr. Rivkin reiterated that Mr. Putin had direct knowledge of the events that took place between 1998 through 2003 and told the court that Mr. Khodorkovsky had very specific questions he wanted to ask Mr. Putin.

Prosecution did not need any time to prepare its response. Ms. Kovalihina, silencing Mr. Lakhtin with an unobtrusive gesture, told the court that Mr. Khodorkovsky was still testifying and was only on page 6 of the 150 pages of the indictment order. According to Ms. Kovalihina, this made defense's motion premature.

Judge Danilkin agreed and DENIED the defense's motion to call Mr. Putin to the witness stand as being premature, because Mr. Khodorkovsky was still testifying.

Next, Mr. Lebedev filed with the court another report of crime. As he did on April 23, May 18, June 16, June 29 and July 30, Mr. Lebedev provided to the court additional examples of indictment falsification and the prosecution's failure to act to protect his constitutional rights against false accusations of crimes being committed. Today's example was a passage from the indictment containing six falsehoods in one sentence. Using the case materials and witness testimony, Mr. Lebedev identified and disproved each of the assertions.

In the following motion, Mr. Lebedev argued that prosecution, in accordance with the Code of Criminal Procedure, should offer evidence for the assertion which he identified in his report of a crime as being false. If the prosecution is unable to offer this evidence, then Mr. Lebedev asked the court to order the prosecution what the source of that evidence was.

His second motion concerned the entry into evidence of a notarized examination report of the GOST standards and an order from the Ministry of Fuel and Energy, which identified and described "wellhead liquid."

Mr. Lakhtin told the court that  theprosecution need time to examine Mr. Lebedev's filings. Judge Danilkin informed the parties that the trial will resume on Thursday with prosecution's response to Mr. Lebedev's motions.

The trial will resume on Thursday, April 15, 10:30 Moscow Time.