The investigators have repeated the nonsense about my stealing all the oil that Yukos produced during its six years of activities.

In the decree informing me that I am to be charged, the investigators repeat the nonsense about my stealing all the oil that Yukos produced during its six years of activities.

I believe this testifies to the complete lack of faith on the part of our law enforcement agencies that efforts to establish an independent judicial system will succeed.

To avoid the slightest risk of misunderstanding I have decided to offer my own testimony so as to eliminate any doubts as to the absence of a subject for discussion in court.

1 Any vertically integrated company, including the vertically integrated oil company Yukos which was set up by presidential decree, combines the productive and financial activities of a number of enterprises that are inter-related both technologically and in share ownership.

2 The accounting process of all vertically integrated companies, including Yukos (treated as a single unit), takes the form of consolidated accounts that enable one to see all the various sources of income and expenditure and the assets and liabilities of the company. (See, for example, accounts prepared by Gazprom, Rosneft, Gazpromneft and Yukos: Source, Federal Financial Markets Service.)

3 Prices for output and services within any Russian vertically integrated company, and within Yukos in particular (a vertically integrated company in the oil, gas, food, defence and other sectors), are established by the designated bodies of the corporation and, as a rule, these prices different considerably from world prices. (Compare the accounts recorded in the State Statistical Service’s annual summary and the consolidated accounts of Gazprom, Rosneft and Gazpromneft, and of Noyabrsknefetgaz [a Gazpromneft subsidiary], Purneftegaz [a Rosneft subsidiary] and RSBU: Source, Federal Financial Markets Service and companies).

4 The consolidated profits of Yukos as a vertically integrated company are reflected in the consolidated accounts for 1998-2003 and are higher than average for the sector. These profits were spent on capital investment, the acquisition of assets, and the payment of dividends in accordance with the decisions of the Yukos board of directors in 1999-2003. (For confirmation see the submitted drafts and approved accounts of the consolidated companies Gazpromneft, Rosneft, Lukoil, TNK, Surgutneftegaz and so on: Source, Federal Financial Markets Service and published company accounts.)

5 The acquired assets (shares, buildings, equipment, and bonds, stocks, etc) were sold off in 2004-2008 during the bankruptcy of the company and realised a sum in excess of 30 billion US dollars. From newspaper reports I know the location of the funds raised from these sales.

6 The transactions described in the charge sheet as “legalisation” are single instances of the great number of ordinary transactions for the (temporary) placement of Yukos funds on the Russian and international financial markets by the company’s finance department. The same term is applied to the rest of the company’s usual financial and economic activities, which find reflection in the accounts of the individual legal entities and in the consolidated accounts of Yukos (see relevant accounts).

7 If the investigation, contrary to my expectations, does not violate the law but gathers and adds to the case materials the documents I have indicated, then I am prepared to offer the necessary clarification concerning them.

Until then I do not wish to offer any further explanation.

Mikhail Borisovich Khodorkovsky