Khodorkovsky & Lebedev Communications Center

Morning Session.

The trial resumed with Judge Danilkin informing the parties that Mr. Pyatikopov, representing Rosneft, Tomskneft and Samaraneftegaz, was summoned to appear for questioning this morning, but would not be showing up. Judge Danilkin informing the parties that Mr. Pyatikopov, representing Rosneft, Tomskneft and Samaraneftegaz, and was summoned to appear for questioning this morning, did not show up. The court did not know why Mr. Pyatikopov failed to appear. [Mr. Pyatikopov was the latest in a line of those who failed to appear after being summoned by the court. The court has yet to renew any of the summonses that were issued or to issue any other kind of ruling addressing the situation. -Eds.]

Mr. Lakhtin began presenting prosecution's objections. First, addressing the motion to enter into evidence Mr. Hunter's deposition, Mr. Lakhtin told the court that defense committed a serious violation of the Criminal Procedure Code, because Mr. Hunter could only have been deposed while being in Russia. According to the prosecutor, Mr. Rivkin had no right to depose Mr. Hunter on the territory of another country.

Next, Mr. Lakhtin covered the two motions asking the court to summon for questioning government experts Messrs. Migal, Chernikov, Eloyan and Kupriyanov. Mr. Lakhtin argued that the opinion of the experts was already found in the expert reports included in the case file. The expert reports fully complied with procedural rules. Therefore, there was nothing to question the experts about.

Furthermore, the prosecutor insisted that defense was misleading the court about their right to question the experts. According to the prosecutor, all of the experts were appointed and conducted their analyses under the auspices of other criminal cases. So Messrs. Khodorkovsky and Lebedev did not have a right to know that an order authorizing an expert analysis and appointing experts was issued. Regardless, defense was free to petition investigators to allow them to conduct their own expert analysis, using whatever experts they wanted, or to petition investigators to pose additional questions to the experts. [The prosecutor seems to have forgotten that the case file had several orders denying defense exactly what he said they were free to do. -Eds.]

Then, Mr. Lakhtin told the court that the experts were listed on the government-submitted list of persons to be summoned to testify. Therefore, it was solely the prosecution's prerogative whether to summon any of those persons or not. According to Mr. Lakhtin the prosecution did not think it was necessary to summon the experts, particularly since they already concluded presenting their case.

In connection with the motion to summon Messrs. Eloyan and Kupriyanov, Mr. Lakhtin noted that defense was wrong in insisting on questioning the experts' qualifications and competence. That these experts were qualified and were competent to conduct the expert analysis was already determined by investigators.

Finally, Mr. Lakhtin told the court that all of defense's motions were intended to impermissibly delay the trial.

The court DENIED each motion, finding no legal ground for granting any of them.

Immediately, Mr. Krasnov filed objections against the actions of the presiding judge. He told the court that, based on the court's ruling, the court agreed with the prosecutor - only those persons who the prosecution wanted to summon from the list included in the case file were to be summoned. If this was the case it also meant the court recognized its mistake in granting defense's motions to summon witnesses from that same list and was now making some kind of a correction, as if some law was violated.

After listening to Mr. Krasnov, Judge Danilkin reminded the prosecutor about the five motions filed yesterday. Mr. Lakhtin told the court that prosecution thought it would be appropriate to address these in the afternoon. The court agreed and asked Mr. Krasnov to continue with presentation of evidence.

Mr. Krasnov continued to examine documents allegedly connected with the so-called "organized criminal group." While the new set of documents was about crude oil, Messrs. Khodorkovsky and Lebedev's names remained conspicuously absent from these documents, as they were in VNK documents the defense highlighter yesterday. On the other hand, the documents were full of inconsistencies - like a new assertion that crude oil was being embezzled only from YUKOS - and, even, newly invented terminologies - like "super profit."

Mr. Krasnov made certain to highlight to the court each and every time membership in the alleged organized group kept changing - even in the same case and even in documents drafted only a few days apart - and the fact that investigators and prosecutors steadfastly did not name Messrs. Khodorkovsky and Lebedev as its members or leaders. This prompted Mr. Lakhtin's outburst, demanding the case volume Mr. Krasnov just finished going over. Mr. Lakhtin was fuming that Mr. Krasnov's commentary was misrepresenting the very early stages of the investigation, when indeed the only document that was of any importance was the indictment itself. [Aside from the fact that some of the documents were dated in 2007, when the investigation was concluded, Mr. Lakhtin ignored the fact that majority of documents Mr. Krasnov read were from other criminal cases, thrown into Mr. Khodorkovsky and Lebedev's case through the procedural maneuvering of combining and separating these cases with the mother case 18/41-03. -Eds.]

Mr. Krasnov was ignoring prosecutor's laments, which resulted in Mr. Lakhtin, after the defense attorney highlighted another inconsistency, demanding to know whether defense attorneys were also members of an organized group. Mr. Krasnov continued to note that even when the investigation seemed to have settled on who the members of one of the several organized group were, they could not figure out when these persons joined this group.

Even Khamovnicheskiy Court did not escape Mr. Krasnov's commentary. In 2005, Presiding Judge Suchkov determined that Mr. Ivlev was a member of an organized group with Messrs. Malahovsky, Pereverzin, Valdes-Garcia and others. No mention of Messrs. Khodorkovsky and Lebedev.

After another outburst from Mr. Lakhtin, Judge Danilkin decided to recess for lunch.

Afternoon Session.

The hearting continued with Mr. Krasnov going over documents and highlighting to the court inconsistencies in the government's description of who belonged to an organized criminal group, if there was one.

Mr. Krasnov asked the court for Volume 45, which contained the verdict from the first trial. Judge Danilkin reminded Mr. Krasnov that the document was read into record, already. Mr. Krasnov reminded the court that the prosecution only read the first and the last page of the document, while defense wanted to highlight other portions. Mr. Lakhtin saw another chance to interrupt and accused Mr. Krasnov of arguing and attempting to mislead the court. Mr. Krasnov pointed out that the verdict contained inconsistencies about dates when organized group was formed - on one page it existed from 1994 through 2004, on another page the court wrote that an organized group was formed at the end of 1995.

After a short break Mr. Krasnov informed the court that defense was finished with documents about organized group and was going to change focus onto transactions with VNK subsidiary shares which the government considered to be criminal acts.

From the VNK accounting balance Mr. Krasnov pointed out that Tomskneft shares represented about a little over 1% of the total, not the 20% argued by the government. In one of the shares exchange contracts Mr. Krasnov pointed out that YUKOS shares and Tomskneft shares had equal values.

Finally the time came for prosecution to respond to defense's motions. Concerning motions about obtaining and adding verdicts against Messrs. Karfidov and Mikhailov, Mr. Smirnov told the court that circumstances established in those verdicts were irrelevant to the current trial.

Concerning Mr. Dyatlev's motion on sending a documents production request to Samaraneftegaz and on summoning various investigation and prosecution officials, Mr. Smirnov told the court that any procedural decisions made by the aforementioned officials have not been challenged by any court order and, therefore, there was no need to summon these officials to court. As far as Samaraneftegaz accounting statements, Mr. Smirnov said the following: "Defendants Khodorkovsky and Lebedev are accused of crude oil embezzlement, including from Samaraneftegaz resources, by conversion. In 1998-2003, using their official position at YUKOS, they illegally took possession of Samaraneftegaz's crude oil and converted it. Conversion of mineral resources, in order to conceal the conversion, was made by drafting crude oil purchase contracts with artificially lowered prices. Accounting statements of Samaraneftegaz would not show the crude oil embezzled by this method, because it would not appear on line 94 - Shortages, but on line 45 - Products shipped." According to the prosecutor, Samaraneftegaz's harm could not be determined from accounting documents, based on the explanation he just gave the court.

Mr. Dyatlev's motion to obtain Tomskneft inventory documents was met with an objection based on the same grounds as the aforementioned Samaraneftegaz motion. Finally, Mr. Smirnov addressed Mr. Lebedev's motion concerning the Hague Convention. Mr. Smirnov assured the court that Mr. Lebedev was wrong and he was right and, therefore, there was no need to add a copy of the convention to the case file. In conclusion, dismissing Mr. Lebedev's arguments as coming from a "gas-station attendant," Mr. Smirnov told the court that the convention applied to official documents only, while a specialist's report was not such document. Mr. Smirnov went so far as to tell the court that he already showed the court the convention. There were puzzled looks and questions as to when that actually happened. Finally, Mr. Smirnov told the court that prosecution would leave it for the court to decide whether to add a copy of the convention to the case file.

First, Judge Danilkin DENIED Mr. Lebedev's motion - the convention was not one of the facts subject to proof at the trial. Both of Mr. Miroshnichenko's motions were DENIED as well - court found no legal grounds for granting it. Both of Mr. Dyatlev's motions were DENIED, except for adding copies of Mr. Dyatlev's document production requests to the case file, as well - the court found no legal grounds for granting these motions in their substantive parts. As has become customary, the court, refusing to summon Messrs. Karimov, Grin and others, told defense that should any of these persons choose to come to testify, the court will listen to them.

Mr. Krasnov filed two motions. In the first one he asked the court to consider as added to the case materials a copy of Mr. Misamore's deposition and to allow defense to announce it. In his second motion a similar request was made concerning deposition taken from Eugene Michael Hunter, former head of Dart Management, who had extensive personal knowledge of events and circumstances surrounding the VNK subsidiaries shares exchanges.

Before the hearing was adjourned, Mr. Khodorkovsky told the court that he was concerned with the new track the prosecution was pursuing, as argued by Mr. Smirnov, that there was a new type of embezzlement unique only to Russia - embezzlement by conversion, where the property that was embezzled is identified in accounting statements as "sold." According to Mr. Khodorkovsky, if that was what they really believed at the Office of the General Prosecutor, than it had direct impact on the entire Russian securities market, because all of Russia companies' financial reporting was fictitious. Mr. Khodorkovsky asked the court to study very carefully that part of accounting legislation Mr. Smirnov was referring to and to prevent the prosecutor from making similar statements next time arguments on this topic materialize.

Mr. Lebedev added that, under accounting laws, what Mr. Smirnov said was nonsense - information reflected on the line Mr. Smirnov mentioned in arguments specifically refers to product which remains the property to the company. Therefore none of the three production companies could be victims - the product remained theirs. Mr. Lebedev told the court that he had no idea where Mr. Smirnov, who was not a "ranking accountant," got his information, but that Mr. Smirnov should be able to acquaint himself with the subject on which he was going to make statements in court. Second, Mr. Lebedev told the court that if Mr. Smirnov was in possession of documents showing that crude oil was "shipped," he should present those documents in court. Either there are no victims - if the crude oil is shown as "shipped," or it's not clear what's going on in the courtroom.

The trial will resume on Thursday, July 1, 10:30 Moscow Time.