Witness Testimony: Andrei Kraynov
Bio:
Mr. Kraynov was Messrs. Khodorkovsky and Lebedev's co-defendant in the first trial at Meschansky Court. After agreeing to co-operate with investigators, Mr. Kraynov received a suspended 5 year sentence. From 1993 to 1995 Mr. Kraynov worked at MFO Menatep. From 1995 to 1998 he worked in SP RTT. From 1998 to early 2000 he worked at Makarios and Co. In his capacity as deputy-director of SP RTT and Makarios and Co. Mr. Kraynov headed the service company which incorporated and administered companies for various clients.
Testimony dates:
September 28 and September 29, 2009
When questioned by prosecution:
Most of the questions related to a time period prior to the one covered in the indictment. Testimony came primarily in the form of the prosecution reading transcripts of Mr. Kraynov's interrogations. Mr. Lakhtin asked Mr. Kraynov questions about Mr. Kraynov's work at SP RTT. He was specifically interested in finding out what Mr. Kraynov's involvement in registering/incorporating companies for YUKOS. Answering Mr. Lakhtin's questions, Mr. Kraynov would explain how the process worked, stressing that all of his actions took place after being asked to do so by Mr. Anilionis, director of SP RTT and Mr. Kraynov's boss.
Mr. Lakhtin questioned Mr. Kraynov on his tenure as a member of VNK's Board of Directors. [Messrs. Khodorkovsky and Lebedev have been accused of leading an organized group that embezzled 3.6 billion rubles ($102 million) in shares of VNK, a holding company that owned a controlling interest in six operating companies, including Tomskneft, in November 1998. The prosecution claims that the men embezzled the shares by improperly causing VNK to enter into six agreements to swap VNK shares in its operating subsidiaries. However, the shares in VNK were transferred under swap agreements with mandatory buy-back provisions to protect against a raider-a legitimate asset protection strategy. Furthermore, Russia‘s Minister of State Property previewed and approved the deal, providing Yukos with a cooperation agreement acknowledging the need to protect the government‘s interest through the transaction. And, the VNK shares were returned via reverse swap in 2001.] Mr. Kraynov did not know anything about VNK exchanging shares and did not remember who nominated him to be a member of VNK's Board of Directors.
Mr. Lakhtin, telling the court that there were some inconsistencies and contradictions in Mr. Kraynov's testimony when compared to what he told investigators, filed a motion under Article 281 of the Criminal Procedure Code (CCP) asking that he be allowed to read the transcripts of Mr. Kraynov's interrogations into record. There were a total of 5 transcripts in the case materials. Two transcripts were from 2000, one from 2005, and two from 2006. None of the interrogations were conducted in regard to the current case. As a result, the defense could not participate in those interrogations and ask the witness any questions. Despite clear violation of the Russian law, the court granted Mr. Lakhtin's motion. Section 281 of CCP allows reading of transcripts only if discrepancies or contradictions were "material." Mr. Lakhtin never indicated where in his testimony Mr. Kraynov materially contradicted his prior testimony. Nor did Mr. Lakhtin seek to read only those parts that would expose contradictions, reading the transcripts in their entirety. This allowed the prosecution to present as evidence interrogations conducted by investigators for criminal cases other than the one in which Messrs. Khodorkovsky and Lebedev are defendants.
The transcripts contained details on Mr. Kraynov's work at SP RTT and Makarios and Co. The questioning surrounded the circumstances of registration/incorporation of various companies and managing them for YUKOS. In particular, a transcript of Mr. Kraynov's interrogation from December 23, 2006, revealed that investigator Karimov was interested in how the whole process worked and what activity the companies conducted.
One of the allegations in the indictment is that Mr. Kraynov, being under full control of Messrs. Khodorkovsky and Lebedev (specifically Mr. Lebedev), caused Yukos-Moscow to be incorporated in 1997. The prosecution alleges that the defendants used employees of Yukos-Moscow (YUKOS management company), along with Yukos-EP (YUKOS exploration and production arm) and Yukos-RM (YUKOS refining and marketing arm), to conduct criminal activity, such as embezzling of crude oil. As the audio tape of the aforementioned transcript revealed, investigator Karimov used leading questions to lead Mr. Kraynov to testify that he was involved in incorporating Yukos-Moscow in 1997.
Mr. Kraynov fully agreed with all of the transcripts that Mr. Lakhtin read, but always added that he was acting on the orders of Mr. Anilionis.
When questioned by defense:
When cross-examined by the defense, it became clear that Mr. Kraynov was not aware of the charges against the defendants. He thought the defendants were charged with embezzlement of oil and laundering, but did not know the laundering of what. Further, Mr. Kraynov told the court that he was being interrogated in connection with a different than the current case, known as case # 18/41-03, since 2003, and that was the only case number that he knew. When being questioned by investigators he never asked nor was informed about circumstances of the case he was being questioned for. [Transcripts from 2000, 2005 and 2006 were prepared for three different cases, involving different defendants.]
Mr. Kraynov admitted that many of his answers given to investigators were opinions or suppositions, something he never informed the investigators or the prosecution of. After being shown several documents related to incorporation of Yukos-Moscow, Mr. Kraynov admitted that the testimony he gave to investigator Karimov was not correct now that he saw the documents. He could not have been asked by Mr. Lebedev to register Yukos-Moscow in 1997. This was not the only testimony that ran counter to the assertions which appeared in the indictment. Answering a question on whether he was at any time controlled by Mr. Lebedev, Mr. Kraynov admitted that he never received any other orders from Mr. Lebedev when he was director of Monblan or A-Trust, either.
On the issue of the oil embezzlement, Mr. Kraynov lacked any specifics. He did not know any of the transfer points where YUKOS production subsidiaries transfer oil into Transneft pipeline system. He did not know where Transneft's sea terminals were. [We remind our readers that Mr. Khodorkovsky explained earlier that all he needed to do was to prove that the oil was being transferred from production subsidiary pipeline system straight into Transneft pipeline system in order to counter prosecution's charge that all of the oil was embezzled. Mr. Kraynov's answers showed that he had no knowledge about the sale of oil by Yukos and how this oil was delivered to the market.]