Observations from the Courtroom

May 19, 2005

The court continued to read its analysis of the crimes alleged by the prosecution in the case of NIUIF. The focus of today's analysis was the theft of NIUIF's shares by the organized criminal group led by Mikhail Khodorkovsky and Platon Lebedev. The panel of judges repeated itself at times during the proceedings.

The evidence provided by the judges in support of their position on the NIUIF charge included the chain-of-command believed to have been responsible for the issuing of instructions by Bank MENATEP employee Natalia Chernysheva to subsidiary companies. Specifically, the court read agreements concluded between Wallton and Khiminvest for the sale by Wallton of NIUIF shares followed by a series of contracts between Khiminvest and other companies, including Danaya, Galmet, and Fermet.

In a surprise development, however, Judge Irina Kolesnikova announced that the court had decided to change the article with which the defendants had been charged in relation to the privatization of NIUIF. Instead of Article 159, the court explained that it had decided to apply Article 147, a similar article only with a slightly less severe sentence. Instead of a sentence 5 to 10 years in length if found guilty, the defendants could be given 4 to 10 years. The court noted that Article 147 was the law that existed at the time the privatization occurred in explaining why it had changed the statute being applied in this instance. It is not expected that this statute will be used in any way, however, to lessen the severity of the sentence that is expected to be handed down ultimately.

The presence of only 4 lawyers left the impression that the proceedings had become so mundane and unproductive that it did not make sense to attend every day.

Judge Kolesnikova adjourned the proceedings until Friday, May 20 at 10:30 am. It is expected that the presentation of supporting analysis for the finding in the charge relating to NIUIF will continue tomorrow.