CEDH · CASELAW;DECISIONS;ADMISSIBILITY;ENG — 8 novembre 2011

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He is currently serving a prison sentence in a penal colony in the Karelia Region. He is represented before the Court by Mrs   Karinna Moskalenko and Mr   Anton Drel, both lawyers practising in Moscow, Mr   Nicholas Blake QC, Lord David Pannick QC, and Mr   Jonathan Glasson, lawyers practising in London, and Dr Wolfgang Peukert, a lawyer practising in Germany. The respondent Government were initially represented by Mrs   V.   Milinchuk, the former Representative of the Russian Federation at the European Court of Human Rights, and subsequently by Mr   G.   Matyushkin, the Representative of the Russian Federation at the European Court of Human Rights. The facts of the case, as submitted by the parties, may be summarised as follows. A.     The circumstances of the case The applicant is the former head and one of the shareholders of Yukos   plc (Yukos), which at the relevant time was one of the largest oil companies in Russia. Before working in Yukos, the applicant headed the Rosprom holding and the Menatep bank, and controlled a number of smaller financial and industrial companies. Yukos was created as a result of the mass privatisation of the State oil and mining industry which took place in the mid-1990s. Following privatisation, new management techniques were introduced and the company was reorganised. As a result, it became one of the most successful businesses in Russia and in the world. In 2003 the General Prosecutor’s Office (hereafter “the GPO”) started a criminal investigation into the business activities of the applicant and his partners. That investigation led to a trial and the applicant’s subsequent conviction.   In 2004 the Tax Service lodged its first demand for tax arrears allegedly owed by Yukos, which led to proceedings before the Moscow Commercial Court. Those proceedings concerned the operation of a “tax optimisation” scheme using trading companies registered in the municipalities with favourable tax regime. In the following months more claims concerning the tax situation of Yukos and its affiliates were lodged. The commercial courts granted most of the Tax Service’s claims. As a result Yukos had to declare itself insolvent and bankruptcy proceedings were started. (For further details see the statement of facts in the case of OAO Neftyanaya kompaniya YUKOS v.   Russia , no. 14902/04, admissibility decision of 29 January 2009). The applicant alleged that the criminal proceedings against him, described in section 2 below, and the tax claims against Yukos, had been politically and economically motivated. In support of that assertion he referred to a large number of events which preceded the criminal proceedings against him. Those facts, in so far as relevant, are summarised below. 1.     Events preceding the criminal prosecution of the applicant (a) Business projects of Yukos In 2002-2003 Yukos began to pursue a number of ambitious business projects which would make it one of the strongest players on the market and independent of the State. In particular, Yukos challenged the official Russian petroleum policy of tacit alignment with the OPEC policy of reducing oil production. Yukos sought instead to maximise its oil production and market share. Further, from 2003 Yukos was in the process of merging with Sibneft, another large Russian oil company. The merger was supposed to take place in two steps: firstly, completion of the deal on paper, and then unification of the new company’s management structures. The first aspect of the deal was finalised in October 2003; the second was supposed to be implemented by January 2004. Yukos was also engaged in merger talks with the US-based Exxon Mobil and Chevron Texaco companies. According to the applicant, Chevron Texaco was considering the purchase of 25 per cent of Yukos shares, while Exxon Mobil planned to buy at least 40 per cent of the future Yukos Sibneft company. Yukos was also planning to build a liquid gas pipeline to the Arctic Ocean in order to export natural gas to the western part of Europe without passing through the State-controlled pipelines. Similar plans existed in respect of China; here the applicant advocated building an oil pipeline along an alternative route to that favoured by the Presidential Administration. Finally, Yukos and the State-owned company Rosneft were involved in a public struggle for control over certain oil fields. Yukos was successfully competing with Gazprom, another State-owned company, on the natural gas market. (b)   Political activities of the applicant In 2000 Mr Putin was elected President of the Russian Federation. One of the points of his political programme was to “liquidate the oligarchs as a class”. Furthermore, President Putin advocated, according to the applicant, the renationalisation of the oil and mining industries, which had been privatised by his predecessor in the mid-90s. In 2001, in order to promote certain values in Russian society, he founded a non-profit NGO the “Open Russia Foundation”. Its annual budget in 2003 amounted to approximately 200 million United States dollars (USD). This NGO cooperated with other Russian human rights NGOs, such as Memorial, the Moscow Helsinki Group, etc. From at least 2002 the applicant openly funded opposition political parties, namely Yabloko and the SPS. He also made certain public declarations criticising anti-democratic trends in Russian internal politics. A   number of his close friends and business partners became politicians. Thus, Mr Dubov and Mr   Yermolin were members of the Duma (the lower chamber of the Russian parliament); Mr Shakhnovskiy, Mr Nevzlin, Mr   Guryev and Mr Bychkov were all at various times members of the upper chamber, the Federation Council. In April 2003 the applicant stated publicly that he intended to leave business and go into politics, and confirmed his funding of the SPS and Yabloko parties. He also said that some major Yukos shareholders supported the Communist Party. On 19 February 2003 the applicant, together with other influential businessmen, met President Putin in the Kremlin. At that meeting the applicant made critical remarks concerning the recent acquisition of a private oil company by the State-owned Rosneft. The applicant implied that that transaction had involved high-level corruption. According to the applicant, President Putin reacted by reminding the applicant that Yukos had experienced problems with the payment of taxes, which had not yet been fully resolved. On 27 April 2003 the applicant met President Putin to discuss the merger between Sibneft and Yukos. According to Mr Dubov, the applicant’s business partner, Mr Putin approved the merger but warned the applicant against political activity, namely funding the Communist Party. Mr Nevzlin allegedly received a similar warning from Mr Lesin, the Media Minister. The applicant asserted that his political and business activities had been perceived by the leadership of the country as a breach of loyalty and a threat to national economic security. As a counter-measure the authorities undertook a massive attack on the applicant, his company, colleagues and friends. 2.     Criminal investigation into the activities of Yukos managers Yukos’s business interests were mainly concentrated around the extraction, processing and export of raw materials, such as oil, assist gas, apatite concentrate, etc. Most of the Yukos produce was finally sold abroad; however, Yukos did not trade directly with foreign firms but sold its output to several Russian companies registered in the zones with favourable tax regime, in particular in Lesnoy Town (ZATO). That mode of operation persisted for several years. The authorities suspected that those trading companies were in fact fully controlled by Yukos senior management and that they existed only on paper, in the sense that the real trading activity took place not in Lesnoy Town and similar places, but in Moscow, in the Yukos headquarters. The trading companies registered in such zones had been paying some of their taxes not with money but with promissory notes from Yukos (those notes were later honoured). Those notes were, however, accepted by the local authorities as a method of payment of taxes. The trading companies also enjoyed VAT exemption in respect of the oil they were selling abroad. VAT was reimbursed from the budget to those companies. At the time the applicant was one of the major shareholders of Yukos, and its chief executive officer. His personal income consisted of the salary he received from Yukos and the dividends from the Yukos shares he owned. In addition, the applicant earned money as a self-employed contractor, by providing consulting services to foreign firms. The tax authorities suspected that those firms were affiliated with the applicant and that no services had been provided to them in reality. In 2002 the GPO opened an investigation into the activities of several trading companies, allegedly affiliated with Yukos and registered in the town of Lesnoy. Those companies enjoyed certain tax privileges and paid taxes to the budget in non-monetary form, namely by Yukos promissory notes. On 29 August 2002 the GPO decided not to proceed with the investigation. On 29 March 2002 a case was opened to investigate the acceptance by the Lesnoy ZATO of tax payment by way of promissory notes from Yukos. That case was closed on 29 August 2002. The reasons why the case was closed were summarised by the GPO in July 2003: “According to the conclusions of a legal and economic expert review of the case, there were no losses caused to the federal budget and municipal budget of ZATO Lesnoy as a result of granting tax privileges... Detected violations of the acting legislation by conducting these financial operations may be regarded as the subject matter of administrative and economic legislation”. According to the applicant, in December 2002 President Putin directed Prime Minister Kasyanov and General Prosecutor Ustinov to investigate one of the privatisation deals, and this subsequently became the starting point of the criminal prosecution of the applicant (the Apatit episode – see below). In April 2003 General Prosecutor Ustinov reported to the President that there was no basis for a criminal case. At the same time the Government insisted on the expediency of entering into an agreement with the applicant in order to settle the matter. On 19 June 2003 a Yukos security official, Mr Pichugin, was arrested and charged with murder. On 20 June 2003 the GPO initiated a criminal investigation into the privatisation of Apatit, which eventually led to charges being brought against the applicant. On 2 July 2003 Mr Lebedev, a senior manager in Yukos and the applicant’s close friend, was arrested in the context of the Apatit case while in hospital. He was charged with business fraud and on 3 July 2003 was placed in detention on remand. On 4 July 2003 the applicant was summoned to the GPO and interviewed as a witness. During the interview he was assisted by Mr Drel, one of his lawyers. On 8 July 2003 the prosecution searched the premises of the regional office of the State Property Fund, situated in Murmansk, which could have held information on the privatisation of Apatit. On 9 July 2003 the investigators searched the premises of Apatit. On 10 July 2003 the prosecution searched the premises of the bank Menatep Sankt-Petersburg, which was affiliated with Yukos. The search was authorised by the Deputy General Prosecutor, Mr Biryukov, in a decision of 8 July 2003. On 18, 21 and 30 July 2003 the prosecution re-opened several criminal investigations into the activities of Yukos which had previously been closed, namely those concerning tax payments by trading companies registered in Lesnoy. On 29 July 2003 the prosecution searched the premises of Russkiye Investory plc. On 7, 8 and 14 August 2003 new searches were carried out in the premises of Menatep Sankt-Petersburg. On 3 October 2003 the Deputy General Prosecutor, Mr Biryukov, ordered a search of the Yukos premises in the village of Zhukovka, Moscow Region. On 8 October 2003 the Deputy General Prosecutor issued a new warrant authorising a search in Zhukovka. Based on that warrant, on 3 and 9   October 2003 the investigators carried out several searches in Yukos’s premises and in the homes of its senior managers in Zhukovka, including the home of Mr Lebedev. In particular, the offices of Mr Dubov, a Duma Deputy, and the homes of Yukos vice ‑ president Mr Brudno and the applicant’s friend Mr   Moiseev were searched. On 9   October 2003 the GPO searched the premises of ALM   Feldmans, a law firm, and the offices of the applicant’s lawyer, Mr   Drel. As a result of those searches, a large number of documents were seized, as well as the hard drives of several computers. Over the following days the GPO also searched the headquarters of the political party Yabloko and an orphanage which was under the patronage of the applicant; they removed from the latter premises a computer server, said by the authorities to hold Yukos financial data. On 17 October 2003 Mr Shakhnovskiy, a major Yukos shareholder, was charged with personal tax evasion. According to the prosecution, he fraudulently reduced the amount of personal income tax due by using the “individual entrepreneur” scheme (for more details see below, the description of a similar accusation made against the applicant and Mr   Lebedev). Mr Shakhnovskiy was convicted by the Meshchanskiy District Court, presided by Judge Kolesnikova, on 4   February 2004. Execution of that sentence was conditionally suspended by the judge. On 17 October 2005 Mr Drel was summoned to the GPO for questioning in relation to the criminal cases against Mr Lebedev. Mr Drel refused, referring to his status as advocate and his position as Mr Lebedev’s representative in the criminal proceedings at issue. On 21 October 2003 the Deputy General Prosecutor, Mr Kolesnikov, said in a press conference that charges might be brought against other senior managers of Yukos and affiliated companies. On the same day the investigator again searched the premises of the Menatep Sankt-Petersburg bank. In the early morning of Saturday 25 October 2003 the applicant was arrested by a special task force at Novosibirsk airport. The formal ground for his arrest was that he had not appeared before the investigator who had summoned him for questioning. The applicant was taken to Moscow and questioned as a witness. On the same day Mr Drel was summoned to the GPO to testify as a witness. He refused to testify, referring to his professional status and his position in the case of the applicant and Mr Lebedev. On 25 October 2003 the GPO charged the applicant with business fraud and tax evasion. Further, at the request of the GPO, the Basmanniy District Court of Moscow decided to detain the applicant pending the investigation. During the following months his detention was extended several times (for more details on the applicant’s detention pending the investigation and trial, see the description of facts in the first application lodged by the applicant, no.   5829/04). On 27 October 2003 the GPO attempted to interrogate Mr Drel as a witness. He refused to testify. On 3 November 2003, following his arrest, the applicant resigned as chief executive of Yukos. 3.     Criminal charges against the applicant The charges against the applicant formulated by the GPO may be summarised as follows: (a)     Misappropriation of Apatit shares In 1994 the State privatisation authority decided to sell 20% of the stock of Apatit plc, a large mining company producing apatite concentrate. Under the conditions of the privatisation tender the buyer would be under an obligation to invest money in Apatit’s business activities. In order to participate in the privatisation tender, the applicant, together with Mr Lebedev and their subordinates and friends, created several “paper companies” (or “dummy companies”): Volna, Malakhit, Flora, and Intermedinvest. Further, Mr   Lebedev, as head of the Menatep bank, issued indemnity bonds on behalf of Menatep, guaranteeing the capacity of the first three companies to pay. The fourth company produced a fake indemnity bond from the “European Union Bank”. As a result, the four companies were admitted by the State privatisation authority for participation in the tender. The applicant delegated several people working in the Menatep bank and affiliated companies to participate in the privatisation tender on behalf of the “paper companies”. At the tender on 30 June ‑ 1 July 1994 Intermedinvest offered the best conditions (19,900,000 Russian roubles in the form of investment obligations), but then revoked its bid. Other companies participating in the tender did the same. As a result, Volna, which had submitted the lowest bid, obtained the privatisation contract. Under that contract Volna acquired 415,803   shares in Apatit (or 20   per   cent of its capital) from the State for a nominal price of 415,803,000   (pre-1998 devaluation) Russian roubles (RUB). According to the prosecution, the real price of the shares at the time was RUB   563,170,000,000 or USD   283,142,283. In addition, Volna accepted an obligation to invest RUB 79,600,000 in Apatit within one month, and RUB   394,219,000 by 1   July 1995. However, that condition was not met within the time-limits specified in the privatisation contract. On 29 November 1994 the prosecutor, acting on behalf of the State privatisation authority, brought proceedings against Volna before the Commercial Court of Moscow seeking nullification of the privatisation contract and the return of the Apatit shares. The prosecutor indicated that Volna had failed to fulfil its investment obligations under the privatisation contract. In 1995 Volna transferred the amount stipulated in the privatisation contract to Apatit’s bank account and submitted a bank transfer order confirming this to the Commercial Court. Consequently, on 16   August 1995 the Commercial Court adopted a judgment rejecting the claims against Volna on the ground that the money stipulated in the privatisation contract had been duly paid. However, on the same day the amount received by Apatit was transferred back to Volna’s bank accounts by the director of Apatit. Therefore, de facto the money due under the privatisation contract was not paid. The prosecution qualified this episode as business fraud. (b)     Failure to comply with the court decision concerning Apatit On 12 February 1998 the judgment of 16 August 1995 was quashed. The Commercial Court of Moscow, sitting as a court of appeal, declared the privatisation contract null and void and ordered that the Apatit shares be returned to the State. However, by that time Volna had already sold the Apatit shares to a number of sham legal entities controlled by the applicant and Mr Lebedev. As a result, the decision of the Commercial Court of Moscow of 1998 remained unenforced and the enforcement proceedings were discontinued. In March 2002 Mr Lebedev proposed a friendly settlement of the dispute and the State privatisation authority accepted his offer. On 19   November   2002 the friendly settlement was concluded. Under that settlement Volna paid the State USD   15,130,000 and the State withdrew its claim to the Apatit shares. The above amount was calculated by the audit firm BC-Otsenka, and was accepted by the Commercial Court of Moscow as the market price for the shares. On 22 November 2002 the Commercial Court of Moscow endorsed the friendly settlement agreement and closed the case. However, according to the prosecution, the real market price of the shares at the relevant time was USD   62,000,000. It referred to the audit report of 19   August 2003, commissioned by the investigator, and a report by the consulting firm Rusaudit, Dorhoff, Yevseyev and Partners, dated December 2002, commissioned by the Government of the Russian Federation. Thus, the decision of the Commercial Court had been based on false evidence. As a result, the decision of 12 February 1998 remained non-enforced through the applicant’s fault. The prosecution qualified this episode as intentional avoidance of execution of a court judgment. (c)     Misappropriation of Apatit’s profits and assets in 1995 – 2002 By 1995 the applicant and Mr   Lebedev owned a controlling stake of Apatit’s shares (including the 20 per cent acquired through the privatisation tender). On 1 December 1995 the applicant, as a major shareholder, appointed a group of managers and assigned to them all of Apatit’s sales operations. As a result, all sales went through a number of “paper companies” controlled by the applicant and located in “tax havens”. Thus, the apatite concentrate was bought by those companies for USD   30-40 per metric ton and then sold to foreign companies for USD   40-78. The companies controlled by the applicant thus accumulated Apatit’s profits; the difference between the “internal” and “external” prices was accumulated in foreign bank accounts controlled by Mr   Lebedev and the applicant. As a result, the minority shareholders of Apatit (including the State, which retained a block of shares in that company) suffered pecuniary losses. The prosecution qualified this episode as business fraud. (d)   Misappropriation of NIUIF shares In 1995 the State privatisation authority decided to sell at tender 44 per cent of shares in NIUIF plc, a Moscow-based research institute. To that end the authority issued an invitation to tender. One of the conditions of the privatisation tender was that the winner would have to invest a certain amount of money to support NIUIF’s on-going activities. At the time the applicant was head of the Board of Directors of the Menatep bank. In order to take part in the privatisation tender the applicant, together with Mr Lebedev, acting through his subordinates in the Menatep bank, created two “paper companies”: Polinep and Walton. Further, he issued two indemnity bonds on behalf of Menatep in the amount of USD   25,000,000, guaranteeing those companies’ capacity to pay. As a result, they were authorised by the State privatisation authority to participate in the tender. At the privatisation auction Polinep proposed that it would invest USD   50,000,000 in NIUIF; this was the highest bid, so Polinep was declared to have won. However, Polinep immediately withdrew its bid. Walton made a bid of USD   25,000,000; this was the highest investment bid, so on 12   September 1995 Walton obtained the privatisation contract. On 21 September 1995 the State sold 44 per cent of the shares in NIUIF to Walton at the nominal price of RUB 130,900,000. According to the prosecution, the market price of the shares acquired by Walton was RUB   5,236,000,000. On 28   December 1995 Walton transferred the investment money to NIUIF’s account in the Menatep bank. Mr Klassen, the then director of NIUIF, reported to the State privatisation authority that Walton had fulfilled its obligations under the privatisation contract. On the following day he transferred the money back to Walton’s account in Menatep. As a result the conditions of the privatisation contract were not met de facto . The prosecution qualified this episode as business fraud. (e)     Failure to comply with the court decision concerning NIUIF In February 1996 Walton sold the NIUIF shares to another three “paper companies” created by the applicant (Khiminvest, Metaksa, and Alton). Under the sale contract those companies received the shares but were free from any investment obligations vis-à-vis NIUIF. Mr   Klassen confirmed to those companies in writing that NIUIF would not have any pecuniary claims against the buyers of the shares. Mr Klassen also reported to the State privatisation authority that Walton had fulfilled its investment obligations under the privatisation contract. Further, in order to control the activities of NIUIF, the applicant delegated several employees from the Menatep bank to the NIUIF board of directors. As a result, the board of directors approved the sale of NIUIF’s main asset – its office buildings in Moscow – to Pender Limited, an off ‑ shore company controlled by the applicant and registered in the Isle of Man. That company acted through persons who worked in the Menatep bank or the Rosprom holding (another company affiliated with the applicant). The applicant also delegated his staff to the NIUIF management in order to oversee that company’s day-to-day activities. In 1997 the State privatisation authority learned that Walton had failed to discharge its main obligation under the privatisation contract, namely to invest in NIUIF. The privatisation authority brought proceedings against Walton, seeking the return of the shares. As a result, on 24 November 1997 the Commercial Court of Moscow quashed the privatisation contract of 1995 and ordered the seizure of the shares from Walton. However, by this time the NIUIF shares had already been sold by Walton, so that that decision could not be executed. In January 1998 the shares were re-sold to several “paper companies”, which had also been created by and were controlled by the applicant (Danaya, Galmet, Fermet, Status, Elbrus, Triumph, Leasing, Renons, Izumrud, Topaz). As a result, the decision of the Commercial Court of Moscow could not be enforced because of the applicant’s operations with the NIUIF shares. The prosecution qualified this episode as intentional avoidance of execution of a court judgment. (f)     Company income-tax evasion In the 1990s there existed a number of “tax havens” in Russia; one of them was the territory of the Lesnoy ZATO in the Sverdlovsk Region (ZATO – “closed administrative territorial entity”). The applicant, together with Mr Lebedev, registered a number of “bogus” or “paper” companies there (namely Business-Oil, Forest-Oil, Vald-Oil and Mitra). Those companies were not formally affiliated with the applicant or Yukos, but were controlled by them de facto . Those companies claimed to operate in Lesnoy, and, on that ground, they qualified for tax advantages. However, those companies did not actually have any business activities in Lesnoy but were controlled and administered from Moscow. As a result, the profits from the oil trade were concentrated in those companies, which were exempted from paying certain taxes. Part of the profits of those trading companies were later returned to Yukos bank accounts by means of a series of complex financial transactions involving the exchange of promissory notes. The industrial group’s overall fiscal burden was thus significantly lightened. The prosecution qualified this scheme as tax evasion. (g)     Payment of taxes with promissory notes In addition to obtaining tax relief, the paper companies registered in Lesnoy did not pay taxes in monetary form. Instead, they obtained promissory notes from Yukos plc and then transferred them to the Lesnoy Tax Service. The value of the promissory notes was later offset from the paper companies’ tax debt. According to the prosecution, in 1999-2000 the applicant and Mr Lebedev paid taxes in non-monetary form in the amount of (post 1998 devaluation) RUB 17,395,449,282. In the following years the promissory notes were paid off, but only in part: promissory notes amounting to RUB 1,048,391,487 have not been honoured. The prosecution qualified payment of taxes by promissory notes as another count of tax evasion. (h)     Unlawful tax refund Since the value of some promissory notes was higher than the tax debt, the paper companies obtained a tax refund from the State. In other words, in 2000-2001 the Federal Treasury paid the paper companies the difference between the tax debt and the value of the promissory notes, or deducted that difference from the amounts of taxes to be paid by those companies. In 2001, when the regional tax authority started a tax audit of the paper companies registered in Lesnoy, those companies formally discontinued their activities in Lesnoy and merged with another paper company registered in the town of Aginskiy, another “tax haven”. Later those companies were again re-registered in the Chita Region. Each new company received a part of the claims which the liquidated companies had against the State budget on account of the hypothetical overpayment of taxes. According to the prosecution, in 1999-2001 the applicant and Mr   Lebedev, through the paper companies, received RUB 407,120,540 from the budget on account of “tax overpayments”. The prosecution qualified that situation as business fraud using budget funds. (i)     Money transfers to Mr Gusinskiy’s companies In 1999 and 2000 the applicant allegedly misappropriated assets belonging to the Yukos group. Thus, important sums of money were transferred from the accounts of Yukos and two other companies affiliated with Yukos (Mitra Ltd and Greis Ltd) to the bank accounts of companies belonging to Mr   Gusinskiy, namely Media-Most, Delf, Byron, Sard, Osmet, GM-2, NTV-Mir Kino, and Most Bank. Those transfers had no business purpose and thus caused damage to Yukos shareholders. According to the prosecution, Mr Gusinskiy received RUB 2,649,906,620 from the applicant. The prosecution qualified those transfers as business fraud. (j)     Personal income tax evasion Over the period 1997-2000 the applicant registered himself as a private entrepreneur. In the registration form he indicated that he was a private consultant for several foreign firms, and that his income consisted of fees for consulting services. This status permitted the applicant to pay a fixed amount of “imputed” income tax, defined by the legislation, instead of paying personal income tax and making social-security contributions. In order to confirm his status, the applicant concluded and produced fake agreements on consulting services for the foreign companies Status Service Ltd and Hinchley Ltd, situated in the Isle of Man. The latter company was controlled by Mr Moiseyev, a close friend of the applicant and Mr   Lebedev. Under that agreement the applicant received money in the guise of payment for consulting services; however, in reality the money was a wage for his work in Yukos and other large companies. As a result, he paid much lower taxes than if he had received the same sum as his salary. The difference between taxes paid by the applicant and the taxes he would have paid had he not registered as a private entrepreneur for 1998-1999 amounted to RUB   54,532,186. The prosecution qualified this scheme as tax evasion. 4.     Statements by public officials On 12 November 2003 Mr Kolesnikov, the Deputy Prosecutor General, stated in a TV programme that the applicant faced ten years’ imprisonment. He added: “Sadly, we cannot give them a longer sentence”. On 24 March 2004 the newspaper Komsomolskaya Pravda published an interview with Mr Biryukov, the First Deputy Prosecutor General. In that interview he stated as follows: “The defendants [Mr Khodorkovskiy and Mr Lebedev] are taking their time before the trial; they know that after [their] conviction they will not have an opportunity to appeal to the public and complain about injustice, but will have to endure a well ‑ deserved punishment. ... They knew it long before we charged them. They knew it when they were committing those crimes! Yukos is like a viral infection, quickly spreading across the country and covering it with pockets of contamination. Here is the map of the epidemic: Samara, Volgograd, Mordoviya. ... They left dirty marks everywhere in the country.” On 9 November 2004 the defence submitted a petition to the court, seeking to have issued an interlocutory ruling in respect of the First Deputy General Prosecutor, Mr Biryukov, who had made the above comments. However, the court rejected the petition, saying that whilst it had a right to issue such an interlocutory ruling it did not see any grounds for issuing one. On 6 July 2004 the General Prosecutor, Mr Ustinov, stated as follows in an interview with the radio station Ekho Moskvy : “The scale of fraud, abuse and tax evasion is so large that it is impossible to fit them into one case. This is why other branches of this case were severed into separate proceedings, and they are now pending. This case has a beginning, but it is hard to see where it ends. ...”. While the court was considering its verdict, the GPO announced on the central TV channels that it intended to bring new charges against the applicant and Mr Lebedev in the near future. 5.     Preparation for the trial On 10 November 2003 the applicant was formally charged. On 11 November 2003 one of the applicant’s lawyers, Ms Artyukhova, was searched as she was leaving the applicant’s remand prison (SIZO   99/1, otherwise known as “Matrosskaya Tishina”). The documents which she was carrying were seized and a piece of paper allegedly written by the applicant was removed and sent to the prosecution. All of the seized documents were added to the case materials and later used by the prosecution before the Basmanniy District Court of Moscow in support of its requests for extensions of the applicant’s detention, as proof that he was planning to intimidate prosecution witnesses. The applicant claimed that the note was in Ms   Artyukhova’s own handwriting and that it had been compiled before her visit to prison and not during it. The content of the note, properly construed, was entirely innocuous and merely listed the State’s witnesses in relation to whom the defence team needed to work in terms of preparation for the trial. On 25 November 2003 the applicant was informed that the pre-trial investigation was completed, and 227 volumes containing approximately 55,000 pages were served on him and his legal team to study (the “period of trial preparation”). The defence prepared for the trial until 14 May 2004, when the court ordered the trial to be started. The applicant claimed that he had not had his own copy of the materials of the case. He was entitled to read the case file only in the presence of the investigator. When the applicant wished to discuss the documents in private with his lawyers the investigator removed the documents. In the applicant’s words, such limitations significantly prolonged the time needed to study the case file. Further, during visits to the applicant, the lawyers’ confidential documents were examined by employees from the prison both before entry to the investigation room and on exit from it. Thus, for example, in December 2003 attempts were made on numerous occasions to examine confidential materials in the possession of the applicant’s lawyers. On 6   January 2004 the applicant’s lead lawyer, Mr Padva, filed a formal complaint about this behaviour by the investigator. The applicant alleged that his discussions with the lawyers had been listened to by the authorities. Thus, the consultations could only take place in specific consultation rooms (even if that meant that the defence team had to wait for one of them to become free whilst other rooms were available). On 11 March 2004 documents were seized from the applicant’s lawyer Mr Shmidt as he left the detention facility after a consultation with the applicant. According to the lead investigator, Mr Karimov, the note seized from Mr Shmidt contained “an instruction on counteracting the investigation by way of influencing the investigation through the mass media”. On 20 April 2004 the prosecution filed a petition with the court, seeking to limit the period for trial preparation with the case materials granted to the applicant and his defence team. On 23 April 2004 the Basmanny District Court of Moscow gave the defence until 15 May 2004 to finalise its preparations for the trial. The defence challenged that decision, claiming that they needed more time. According to the defence, the applicant was studying the case file according to the established schedule, without lunch breaks, and was prepared to study it on Saturdays, so that it was not his fault that the preparation for the trial was taking so long. However, the District Court concluded that the time the applicant had already had, namely five months and twenty days, was enough. That ruling was upheld by the Moscow City Court on 25 May 2004. On 13 May 2004, that is, before the applicant’s appeal against the decision of 23 April 2004 was considered, the GPO withdrew the case file from the defence. On 14 May 2004 the prosecution submitted the applicant’s case to the Meshchanskiy District Court of Moscow for trial. On 20 May 2004 the Meshchanskiy District Court held a preparatory hearing. On 8 June 2004 the applicant’s case was joined with those of Mr   Lebedev (the applicant’s business partner, director of the Menatep Bank and subsequently chief financial executive of the companies affiliated with Yukos) and Mr   Kraynov (director of Volna, a firm which participated on behalf of Menatep in the privatisation of Apatit). The applicant was given access to a mass of further documents (165 volumes, which comprised the materials in Mr Lebedev’s case). On 23 June 2004 the applicant requested the court to grant him more time to study the materials in Mr Lebedev’s case. That request was supported by the applicant’s defence lawyers. The court gave the defence until 12 July 2004. In sum, the applicant had 22 working days to study 165   volumes of the materials in the case file. On 12 July 2004 Ms Moskalenko, one of the applicant’s lawyers, filed a formal request before the Meshchanskiy District Court asking for additional time to prepare for the trial. The hearing was adjourned until 16   July 2004. 6.     Trial (a)     Presentation of case by the prosecution On 16 July 2004 the trial was opened and the first hearing on the merits held. The court was composed of three judges: Ms   Kolesnikova (presiding judge), Ms Klinkova and Ms   Maksimova. The court was assisted by seven secretaries who kept the summary record of the hearing. No verbatim record was made; however, the defence made an audio recording over the course of the trial. The prosecution was represented by Mr Shokhin. The defence was represented by Mr Padva, Mr Shmidt, Mr Drel, Ms Moskalenko, Mr   Mkrtychev and several others. The court discussed the arrangements for the future trial. The court indicated that the hearings would start at 11 a.m. and that it would not sit on Wednesdays, which would thereby assist the parties in preparation for the trial. Those arrangements persisted during the first phase of the trial when the prosecution was presenting its case (July – November 2004). The hearings were public. They took place in a courtroom which held, according to the defence, up to thirty people. The defence made an application for the case to be heard in a larger courtroom, but the court did not respond. Further requests were made by the defence for the trial to be televised or audio-recorded. However, no external media transmission of the hearings was allowed. A number of journalists were present in the courtroom. The applicant and his co-defendants were held in a metal cage, guarded by armed escorts. Any contact between the applicant and his lawyers during the hearing was prohibited unless authorised by the judge. The Special Rapporteur appointed by the Parliamentary Assembly of the Council of Europe to investigate the fairness of the proceedings against the applicant attended one of the hearings, but she was not allowed to speak to the applicant. The applicant was able to communicate with the defence lawyers through the bars. However, conversations were always within the hearing of the guards and sometimes of the prosecutors. The exchange of written documents between the defence lawyers and the applicant was possible only through the presiding judge. On 23 August 2004 the applicant’s lawyers complained to the court that they were unable to show the defendant case materials in the courtroom and were unable to discuss the case confidentially with him. On 26 August 2004 the escort guards informed the court that they were willing to allow documents to be passed to and from the applicant during the court session. The court, however, refused to grant permission, requesting that all documents should first be examined by the court before being transmitted. On 27 August 2004 the defence lawyers once again complained that it was impossible to communicate effectively with the applicant during the questioning of witnesses, emphasising that if an adjournment was announced every time one or other question had to be discussed with the applicant in the court session, the trial would progress very slowly. The court responded by asserting that the discussion of any questions whatsoever with the applicant was possible only during an adjournment. On 31 August 2004 the applicant personally complained to the court about the difficulties he was facing. He explained that his lawyers had initially been permitted to stand about 50 centimetres away from his cage but that that situation had changed and they were now required to stand about one metre away, while additional guards had recently been placed between the lawyers and the cage. The applicant explained that it was now impossible to have any confidential discussions at all with his lawyers whilst in the courtroom. In response, the head of the escort guards referred to a “security plan” which necessitated these arrangements. In the following months the defence submitted several requests seeking to facilitate contact with the applicant in the courtroom, but the court refused to change the security arrangements. Thus, on three occasions (on 28 December 2004, 14 February 2005 and 15 February 2005) the applicant prepared draft written testimony, but on each occasion his lawyers were able to review the testimony only after the court had reviewed the drafts. On 28 September 2004 Ms Leutheusser-Schnarrenberger, the Special Rapporteur appointed by the Parliamentary Assembly of the Council of Europe, visited the Meshchanskiy District Court. She asked the court, through the applicant’s lawyers, to allow her to speak to the applicant. However, the court refused permission. (b)     Presentation of case by the defence In November 2004 the court moved on to examination of the evidence submitted by the defence. The applicant and his co-defendants pleaded not guilty. The defence maintained, firstly, that the whole case had been politically driven and that the GPO was acting in bad faith. Further, they challenged the admissibility of evidence relied upon by the prosecution, in particular as regards those documents which had been seized during the searches in Zhukovka, in Mr Drel’s offices and at Mr Lebedev’s home in 2003 (see below, in more detail). Finally, the defence asserted that even if some of the financial operations described in the bill of indictment and impugned to the applicant had taken place, they did not amount to a criminal offence. The law, as applied at the relevant time, regarded those financial practices as perfectly legal or at least tolerated them. In support of those claims the defence sought to adduce a large number of documents, expert opinions and witness testimonies. On 11 November 2004 the court changed its working schedule and decided that it would start the hearings at 9.30 a.m. instead of 11 a.m. As a result, the duration of the time spent by the applicant in the court increased while the time available for preparing next day’s court session decreased. At the end of 2004 the trial arrangements changed again. On 31   December 2004 the Meshchanskiy Court ruled that it would no longer observe Wednesdays as a non-court day. On 18 January 2005 the defence tried to obtain adjournments of the Wednesday hearings, but the request to that end was refused. On 5 February 2005 the Meshchanskiy Court, presided by Judge   Kolesnikova, delivered a judgment in the case of Mr   Shaknovskiy, another senior manager in the Yukos group. In that judgment the court found Mr   Shaknovskiy guilty of tax evasion. The charges against Mr   Shakhnovskiy were similar to some of the charges against the applicant and Mr Lebedev. On 9 March 2005 the defence lodged an application for the judges to withdraw on the basis that their decisions to date had been in violation of the Russian law and international treaties. They referred to the one-sided treatment of evidence, serious limitations on contact between the applicant and his lawyers, the unfair denial of adequate time to prepare the case, etc. That application was dismissed, and the court ruled that the proposal to disqualify the judges should not be granted. (c)     Closing submissions and reading out of the judgment On 25 March 2005 the defence advised the court that, following the prosecution’s closing submissions, the defence would need five days to prepare a reply. On 30 March 2005, after the prosecution had presented their closing submission, the defence confirmed that it would need five days to prepare a reply. The court ordered that the trial would continue at 9.30 a.m. on 1   April 2005. On 27 April 2005 the Meshchanskiy District Court declared that it would deliver its judgment on 16 May 2005. Between 16 May and 31 May 2005 the court read out its judgment. In all the trial lasted just under a year and the court sat for 159 days. 7.     Taking and examination of evidence by the trial court (a)     Written expert opinions produced by the prosecution Both the prosecution and the defence sought to rely on expert evidence dealing variously with an analysis of business transactions involving the applicant and the companies affiliated with him and tax payments and tax procedures at the relevant times. Thus, the prosecution relied on a number of experts. They were all appointed as experts by the investigator at the preliminary stage of the investigation, and their written reports were submitted to the Meshchanskiy District Court together with the bill of indictment. Mr Yeloyan and Mr Kuprianov prepared three reports in all: a first report dealing with the evaluation of Apatit’s net profit for 2000-2002 and January-September 2002; a second concerning the personal tax evasion charges against the applicant, and a third concerning the personal tax evasion charges against Mr Lebedev. Mr Ivanov, Mr Kuvaldin, Mr Melnikov and Mr Shkolnikov prepared an expert report on the evaluation, as on 1 July 1994 and 1   October 2002, of the 20% block of shares in Apatit. Mr Dumnov, Mr Krotov,