Mikhail Khodorkovsky and Platon Lebedev Defense Team Seeks Testimony
Last Friday, the Russian Prosecutors unsuccessfully attempted to interfere with Defense lawyers for former Yukos Oil Company CEO Mikhail B. Khodorkovsky and his business partner Platon Lebedev efforts to secure witness testimony in the United States pursuant to US law. On October 28, 2009, Defense counsel served a federal subpoena on former PricewaterhouseCoopers (PWC) audit partner Douglas R. Miller, requiring the accountant to provide sworn testimony about his work in Moscow on behalf of the expropriated oil giant and the various legal proceedings initiated by the Russian authorities concerning PWC's work for Yukos.
Khodorkovsky and Lebedev are now facing a second trial in a Moscow court, accused by prosecutors of embezzling 350 millions of tons of Yukos oil as well as shares in OAO Tomskneft and other OAO VNK subsidiaries, and laundering billions of U.S. dollars in proceeds. This new trial is a continuation of the politically motivated persecution of Khodorkovsky and Lebedev which started with their imprisonment in 2003 on charges of fraud and tax evasion.
By 2003, Miller was the lead partner on the Yukos account in Moscow for PWC, Yukos' longtime outside auditor and consultant. "If 350 million metric tons of oil had been embezzled over the course of six years, PWC would have noticed it," said Sanford Saunders, a defense lawyer. "PWC, and Miller in particular, would have seen such a dramatic event and, with indications of such activity, could not have audited and approved the financials as they did."
At the end of 2006, the Russian authorities started a criminal investigation, which is ongoing, targeting PWC and its employees in connection with alleged illegal operating activities and tax evasion in Russia. Parallel to the criminal investigation, the tax authorities sought to void all contracts between Yukos and PWC for conducting the audits during a seven year period. In response, PWC strongly defended its audits and in a December 25, 2006 press release stated: "PWC categorically rejects the claims of Tax Inspectorate 5. ... To the contrary, PWC conducts all of its audits, including the 2002 Yukos audit, according to the highest professional and ethical standards strictly in compliance with Russian and international law. [PWC] will vigorously defend [its] position and reputation both in court and in dialogue with government authorities which are empowered to regulate auditing profession."
The Russian authorities applied increasing pressure on PWC in a manner clearly designed to undermine the reliability of the Yukos audited financial statements and to secure incriminating testimony from the management and employees of PWC against Khodorkovsky and Lebedev. As a result of this pressure, PWC subsequently withdrew 10 years of audits of the Yukos financial statements. Miller signed one of the letters officially withdrawing PWC's audits. A criminal investigation concerning PWC and its employees remains pending during the trial, thus allowing the Russian prosecution and agencies of the Ministry of the Interior to maintain pressure upon potential trial witnesses.
Before Miller left Russia, he was interrogated no less than four times by prosecution investigators between May 2007 and January 2008 without Khodorkovsky, Lebedev or their defense lawyers being informed and without any opportunity to question Miller or to attend the interrogations. Subsequently, the prosecution unjustifiably rejected Khodorkovsky's request to confront Miller through a Russian procedure where by a defendant agrees to answer questions put to both the defendant and the witness. In September 2009, Russian prosecutors began calling their witnesses in the second trial of Khodorkovsky and Lebedev. While Miller is identified on the prosecution's witness list, his return to Moscow to testify is quite doubtful. Therefore, it is highly likely the prosecution will be permitted to use Miller's interrogation records obtained during the investigation as evidence even though Khodorkovsky and Lebedev's defense counsel have not had the opportunity to cross-examine him in court.
"Miller's work as an auditor for Yukos was proper and accurate, but it's hard to stand up to the full coercive power and threats from the unscrupulous Russian enforcement agents," Saunders said. "We need Miller to testify in the U.S. so that we can develop exculpatory evidence and challenge the reliability of evidence manufactured to incriminate Khodorkovsky and Lebedev as well as to expose the prosecution's illegal tactics."
The subpoena from the U.S. District Court for the Southern District of California orders Miller to submit to deposition by defense counsel in San Diego, where he resides. Miller has not raised a substantive objection to the deposition subpoena and has complied with the requirement he produce documents. The deposition was postponed at the Russian Prosecution's request but only subject to the Court's ordering the Prosecution pay Khodorkovsky and Lebedev's costs resulting from the delay. Moreover, on 11 December 2009, the Russian Prosecution attempted to disrupt Miller's deposition. Its representatives filed a motion with the Khamovnichesky Court in which they asked the court to issue a decision finding Miller's scheduled deposition inadmissible as evidence. The court found the motion did not comply with Russian law and denied it.
The subpoena already has provided dividends to the defense and established the Russian Prosecution's further violation of Khodorkovsky and Lebedev's rights. Miller has produced documents which reveal the prosecution selectively submitted records into the case materials and intentionally withheld documents containing exculpatory evidence.
In the Matter of the Application of MIKHAIL B. KHODORKOVSKY and PLATON L. LEBEDEV for an Order Seeking Discovery Under 28 U.S.C. ยง 1782 CASE NO. 09-CV-2185(DMS) (SDCA)
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