Mikhail Borisovich Khodorkovsky (born 26 June 1963)
The life cycle 6 3
Important years of life
The young Khodorkovsky was ambitious and received excellent grades. He became deputy head of Komsomol (the Communist Youth League) at his university, the D. Mendeleev University of Chemical Technology of Russia, from which he graduated with a degree in chemical engineering in 1986.
While in college, Khodorkovsky married a fellow student, Yelena. They had a son, Pavel. In 1986, he met an 18-year-old, Inna, “a first-year night student at the Mendeleev Institute” who was working “in the dues department of the Komsomol organization where Khodorkovsky worked.” He courted her and slept in his car until she took him in. They had a daughter and twin sons. He and his first wife remained on good terms, and she would later take an active part in the campaign for his release from prison
After his graduation in 1986, Khodorkovsky began to work full-time for the Komsomol, which was a typical way of entering upon a Soviet political career. “After several years of working mostly to collect Komsomol dues from fellow students”, notes Gessen, “he could expect to be appointed to a junior position in city management someplace far from the capital.”
But instead of following this path, he exploited “quasi-official and often extra-legal business opportunities” and began to make a business career for himself. With partners from Komsomol, and technically operating under its authority, Khodorkovsky opened his first business in 1986, a private café. The enterprise was made possible by the Soviet leader Mikhail Gorbachev’s programme of perestroika and glasnost
In 1992, Khodorkovsky was appointed chairman of the Investment Promotion Fund of the fuel and power industry. He was appointed Deputy Minister of Fuel and Energy of Russia in March 1993. In 1996, Menatep acquired a major Russian oil producer, Yukos, which had debts exceeding $3.5 billion, for $309 million
Khodorkovsky eventually acquired controlling stakes in some 30 companies. When Russia staged its greatest property giveaway ever, in 1995, Khodorkovsky was poised to take advantage of that too.” As Gessen explained, the Russian government, after the fall of Communism, “still nominally controlled Russia’s largest companies, though they had been variously re-structured, abandoned, or looted by their own executives.” A dozen men, the “new oligarchs”, including Khodorkovsky, hit upon the stratagem of lending the government money against collateral consisting of blocks of stock that amounted to controlling interests in those companies.
In April 2003, Khodorkovsky announced that Yukos would merge with Sibneft, creating an oil company with reserves equal to those of Western petroleum multinationals. Khodorkovsky had been reported to be involved in negotiations with ExxonMobil and ChevronTexaco to sell one or the other of them a large stake in Yukos. Sibneft was created in 1995, at the suggestion of Boris Berezovsky, comprising some of the most valuable assets of a state-owned oil company. In a controversial auction process, Berezovsky acquired 50% of the company at what most agree was a very low price.
When Berezovsky had a confrontation with Putin, and felt compelled to leave Russia for London (where he was granted asylum), he assigned his shares in Sibneft to Roman Abramovich. Abramovich subsequently agreed to the merger. With 19.5 billion barrels (3 km³) of oil and gas, the merged entity would have owned the second-largest oil and gas reserves in the world after ExxonMobil and would have been the fourth largest in the world in terms of production, pumping 2.3 million barrels (370,000 m³) of crude a day. However, the merger was recalled by the shareholders of Sibneft after the arrest of Khodorkovsky.
By 1998, Khodorkovsky had built an import-export business with an annual turnover of 80 million rubles (about $10 million USD). In the 1998 Russian crash, however, his bank went under and Yukos had serious problems owing to a drop in the price of oil. Realizing that “business could no longer be just a game” and that “capitalism could make people not only rich and happy but also poor and powerless”, he “swore off his absolute faith in wealth just as he had sworn off his absolute faith in Communism.” After the price of oil began to rise again, he established a foundation, Open Russia, in 2001. It was based in Somerset House in London, owned by the Rothschild’s Family Trust, with Henry Kissinger as its trustee.
Chairman & CEO of Yukos (1997–2004)
Khodorkovsky also hired McKinsey & Company to reform Yukos’s management structure, and Pricewaterhouse to establish an accounting system. Thanks partly to the rising oil prices, partly to modernized operations, and partly to its “new transparency”, Yukos thrived. “By 2003, Khodorkovsky was the richest man in Russia, and potentially on his way to becoming the richest man in the world. In 2004, Forbes placed him 16th on its list of the world’s wealthiest people, with a fortune estimated at $16 billion.
The First Trial, 2004-2005
Khodorkovsky received a support from independent third parties who believed that he was a victim of a politicized judicial system. On 29 November 2004, the Council of Europe Parliamentary Assembly (PACE) Committee on Legal Affairs and Human Rights published a report, which concluded, “the circumstances of the arrest and prosecution of leading Yukos executives suggest that the interest of the State’s action in these cases goes beyond the mere pursuit of criminal justice, to include such elements as to weaken an outspoken political opponent, to intimidate other wealthy individuals and to regain control of strategic economic assets.”
Second Trial, 2009-2010
In June 2010, Elie Wiesel, a Holocaust survivor and human rights activist, began a campaign to raise awareness of Khodorkovsky’s trial and advocate for his release.
In November 2010, Amnesty International Germany began a petition campaign demanding that President Medvedev get an independent review of all criminal charges against Khodorkovsky, to coincide with the 60th anniversary of the European Convention on Human Rights
In May 2010, Khodorkovsky went on a three-day hunger-strike to protest what he said was a violation of the recent law against imprisonment of persons accused of financial crimes.
At the end of the trial, in December 2010, both defendants were sentenced to 14 years’ imprisonment. Gessen cited leading Russian lawyers as saying that Russian laws had been “passed specifically to enable [Khodorkovsky’s] persecution, or adjusted retroactively to sustain it.” Many former Yukos employees were arrested and imprisoned and were therefore unemployable after their release, and Khodorkovsky “tried to provide financial support to those who have not found a way to make a living
On 27 December 2010, Judge Viktor Danilkin handed down a guilty verdict, convicting Khodorkovsky and Lebedev of stealing the full 350 million tons of oil, instead of the reduced 218 million tons as requested by the prosecutors. The judge sentenced them to 13.5 years in prison, later reduced to 12 years, one year less than the maximum sentence, which, when combined with time already served, will keep them in jail until 2017
After Hans-Dietrich Genscher lobbied for his release, President Vladimir Putin pardoned Khodorkovsky, releasing him from jail on 20 December 2013
Upon being pardoned by Putin and released from prison at the end of 2013, Khodorkovsky immediately left Russia and was granted residency in Switzerland.At the end of 2013, his personal estate was believed to be worth, as a rough estimate, $100–250 million