Khodorkovsky & Lebedev Communications Center

As is the pattern with hearings scheduled for 10:00, Mr. Lakhtin was the first from the prosecution team to enter the courtroom around 10:20. Several trips of bringing in voluminous stack of documents and prosecution was seated close to 10:30. Mr. Anilionis, who was waiting outside with the courthouse guards, ascended the witness podium.

Mr. Lakhtin immediately turned to questions about Behles Petroleum, South Petroleum and Baltic Petroleum. Mr. Anilionis repeated his testimony from Wednesday, telling the court that these companies retained profits from the operational margins, with the funds going to Arley and Wellington.

Mr. Lakhtin was either expecting the court to read his mind or was uninterested in having the court understand what he was asking the witness about, because the next sequence of questions asked whether "there were problems for those who transferred the funds." Judge Danilkin's efforts to get a clarification on the prosecutor's question were met with an explanation consisting of "those persons who had problems - did they have problems." Mr. Anilionis, who seemed to be the only one to understand what the prosecutor was asking, replied that "problems happened later."

Mr. Lakhtin decided on another track, asking if Kenneth Dart had anything to do with the way dividends were paid out by South Petroleum and Baltic Petroleum. Mr. Anilionis, in what seemed to be a clarification of the earlier ambiguity, explained that dividends started to be paid to YUKOS Brokerage, a YUKOS subsidiary.

Mr. Lakhtin tried another end run to have Mr. Anilionis explain entries from Mr. Kraynov's daily planner. Telling the court that Mr. Anilionis should look at Mr. Kraynov's daily planner "because it illustrated the events Mr. Anilionis was testifying about," Mr. Lakhtin began to approach the witness. Judge Danilkin struck Mr. Lakhtin's question, telling him that the prosecution had ample opportunity to ask Mr. Kraynov when the latter was in court. Mr. Lakhtin, clearly thrown off-track, asked for a 5 minute break.

A heated exchange between the parties and the court followed almost immediately after the hearing resumed. Mr. Lakhtin asked whether Mr. Anilionis knew anything about the repurchase of YUKOS shares from Daiwa and West Merchant Bank. Mr. Anilionis testified that he heard that South Petroleum participated in these transactions, but he did not know any details. After an extended pause, Mr. Lakhtin asked about "return of credit." Mr. Anilionis asked what credit Mr. Lakhtin was asking about. Mr. Lakhtin answered that it was credit issued to Bank MENATEP. Judge Danilkin asked the prosecutor about the time period under discussion, with Mr. Lakhtin replying that it was for years 1995 through 1998 and insisting that the question was directly connected with the indictment because the loan was paid back using funds from the sale of the embezzled crude oil. As Mr. Lebedev was telling the court that Mr. Lakhtin was "inadequate," Judge Danilkin was telling Mr. Lakhtin that he could not make these statements without citing to where in the indictment such an assertion was being made. Mr. Lakhtin told the court that he was ready to read the indictment from the beginning.

Mr. Lebedev asked the court to strike the previous question, arguing that it contained a purposefully false premise - namely that someone embezzled crude oil in 1995, 1996 or 1997. Mr. Lebedev reminded the court that "even the falsified indictment" did not contain such claims. According to Mr. Lebedev, Mr. Lakhtin was simply lying to the court, because he had nothing that he could cite to. Mr. Lakhtin was up and ready to argue some more, but was told to sit down by the court. Mr. Lebedev was told to take a seat, as well.

Mr. Anilionis, looking a bit confused, told the court that he did not understand Mr. Lakhtin's question. As he was saying that to the court, Mr. Lakhtin, with a piece of paper in hand, began to tell the court that he had an excerpt from the indictment. Judge Danilkin asked the prosecutor to clarify the question. Mr. Lakhtin asked to make a statement instead, but was denied permission by the court. Mr. Lakhtin, citing "international norms of fairness in an adversarial proceeding," assured the court that he would not be making a statement, although this resulted in his inability to explain the "substance" of the indictment. Judge Danilkin asked the prosecutor, once again, to clarify the question. Mr. Lakhtin, in a moment of honesty, told the court that he could not clarify a question "at a second's notice" and, raising his voice, demanded to know why the court was forcing him to do so. As the court told Mr. Lakhtin that he could have as long as he needed to clarify the question, Mr. Anilionis explained that he did not know anything about any credits issued to Bank MENATEP and could not answer the question as it was asked.

Mr. Lakhtin, once again, returned to South Petroleum's participation in transactions for the purchase of YUKOS shares from several foreign banks. Mr. Anilionis, after looking at some documents signed by South Petroleum and Trust and Investment Bank (DIB), did not add anything to his earlier testimony. Mr. Lakhtin began running through a gamut of questions about meetings Mr. Anilionis had with Mr. Lebedev. As Mr. Anilionis began to answer, Mr. Lakhtin interrupted with new questions, about persons who may have been present at those meetings. Judge Danilkin, telling Mr. Lakhtin that this was not the first time he interrupted a witness, issued an on-the-record censure.

Mr. Lakhtin motioned to read transcripts of Mr. Anilionis's interrogations. According to Mr. Lakhtin, there were contradictions in Mr. Anilionis's testimony because the witness gave investigators more detailed information about company names and dates. Furthermore, during interrogation, Mr. Anilionis had access to Mr. Kraynov's daily planner. Mr. Lakhtin got confused when the court asked him what transcripts Mr. Lakhtin wanted to read, specifically, and told the court that the prosecution wanted to read "all transcripts."

After a short break, hoping for some clarification, the judge made an attempt to find out if Mr. Lakhtin could be more specific in his request. Mr. Lakhtin was only able to coherently identify two of the seven transcripts found in the case file.

Mr. Klyuvgant told the court that the prosecutor was attempting an end-run around the court's earlier refusal to have Mr. Anilionis testify based on Mr. Kraynov's daily planner. Mr. Klyuvgant went on to comment about the procedural state of each of the seven transcripts, including the fact that some lacked a clear procedural history, while another one was not signed by the witness, as required by law. Another one was described as "evidence," which prevented it from being read out in court. [As the defense and the court were attempting to figure out what transcripts and what audio tapes were in the case file, the gallery was witness to another "miracle," courtesy of the investigators. Judge Danilkin found an audiotape containing Mr. Anilionis's interrogation from June 6, 2004. The case file did not contain the matching transcript. -Eds.]

Mr. Lebedev added that any contradiction was to be expected when the witness was asked to comment on documents, like Mr. Kraynov's daily planner, with which he had no connection. According to Mr. Lebedev, the prosecution could keep on bringing in transcripts of various interrogations and insist that there were material contradictions.

After another short break, telling Mr. Lakhtin that the form of the latter's motion was unacceptable and the court would not spend its time searching the case materials for "all" of Mr. Anilionis's transcripts, the judge granted Mr. Lakhtin leave to read the two transcripts that were properly identified, one from December 24, 2006, and one from January 18, 2007.

After Mr. Anilionis sat down and got a piece of paper and a pen, Mr. Lakhtin began. Both transcripts focused on Behles Petroleum, South Petroleum and Baltic Petroleum, as well as the privatization of YUKOS. Mr. Anilionis described the companies' histories and speculated on their purpose. In a longwinded passage, Mr. Anilionis discussed the prestige associated with trading with a Swiss company while discussing the necessity of keeping most of the profits in a jurisdiction with preferential tax treatment. Mr. Anilionis testified that a decision was made to stop trading with the aforementioned companies and he attended a meeting where a discussion ensued about various plans on how to accomplish that goal. Mr. Anilionis testified that when trade with all three companies was phased out, SP RTT lost about $150,000.00 USD in service fees. Mr. Anilionis spent some time deciphering Mr. Kraynov's daily planner, guessing at certain initials and letters. Towards the end of the December interrogation, Mr. Anilionis explained that one way for Bank MENATEP to obtain loans to finance the acquisition of VNK was to pledge YUKOS shares.

In January, Mr. Anilionis continued to testify about Behles Petroleum, South Petroleum and Baltic Petroleum. Unlike the December interrogation, Mr. Karimov's usual style was on full display. Mr. Anilionis faced numerous questions made in the form of the statement, with Mr. Lakhtin being forced to adjust his intonation after several questions were ended with a period and not a question mark. [Audiotape playback reveled that Mr. Karimov was, indeed, making statements. -Eds.] Picking up Mr. Karimov's style, Mr. Anilionis began using slang terms, going so far as to describe Messrs. Khodorkovsky and Lebedev as "being idiots when it came to selling crude oil," prompting a laugh from behind the glass. [On the audiotape, Mr. Anilionis accompanied this statement with a few knocks on the table. -Eds.] Mr. Anilionis, speculating about the necessity of not having Russian nationals being involved in crude oil exports, attempted to explain Russian tax laws. Another passage causing Messrs. Khodorkovsky and Lebedev's amusement was Mr. Anilionis's explanation that Mr. Moiseyev was entrusted with managing funds because "he liked to count money." According to Mr. Anilionis, South Petroleum and Baltic Petroleum's profits totaled about $130 million USD from 1997 until 2000, but Mr. Anilionis described dividend distribution as YUKOS having to always maneuver. [Notably, Mr. Anilionis mostly used "YUKOS" and not Messrs. Khodorkovsky and Lebedev's names when discussing Behles, Baltic and South. -Eds.]

Mr. Anilionis told Mr. Karimov that he held 60% shares of Laguna's parent company, with Laguna accumulating a majority of outstanding YUKOS shares through investment tenders and auctions. Mr. Karimov's incredulous reaction to the fact that Mr. Anilionis held YUKOS shares, including "I always thought Khodorkovsky owned YUKOS," caused another round of laughter from Messrs. Khodorkovsky and Lebedev. Mr. Anilionis explained that he couldn't just tell Messrs. Khodorkovsky and Lebedev that he was keeping the company, because Laguna owed about $220 million USD to Bank MENATEP. [In a curious role reversal, the last several pages of this transcript had Mr. Anilionis asking questions with Mr. Karimov using the opportunity "to feed" information to Mr. Anilionis. -Eds.]

After both transcripts, the last one being finished after lunch, the court began playing audio tapes. Both audiotapes, but particularly the first half of the January transcript, revealed several major inconsistencies and omissions. Several times Mr. Anilionis's use of "YUKOS" was substituted for "They" in the written version of the interrogation. In another omission, most of Mr. Anilionis's qualifiers like "I suppose," "maybe" and "probably," never made it into the written version.

Judge Danilkin adjourned the hearing when Mr. Lakhtin was on page 11 of the January transcript. He reminded everyone that the court will be in session tomorrow, but expected a shortened hearing.

The trial will resume on Saturday, February 27, 10:00 Moscow Time.