Viktor Khristenko came to Khodorkovsky

Today's visit to the Khamovniki Court by the head of the Ministry of Industry and Trade Viktor Khristenko has its own entourage: barriers have been placed at the court since early morning, journalists are crowding at the porch, the stairs leading to hall No. 7 are crowded with people already an hour before the meeting. In the hall itself, there is nowhere for an apple to fall, in the room with a video broadcast on the second floor there are no less people - everyone is standing, like in a crowded bus. "We're wasting time! Who did not fit - in the second room! - again and again the bailiffs drove out of the main hall those who were left without a place. Bailiffs “book” one shop in advance, and then put it strictly behind the witness stand. It is believed that this place was reserved for the protection of the witness Khristenko. They say that the minister's security service was also worried about the cars parked along the road on Rostovsky Lane. But the evacuators still did not reach. Khristenko's bodyguards, with professionally impenetrable faces, walk around the courthouse (they have walkie-talkies in their ears, the same suits and, it seems, even the same backs).

Delivery of the defendants was late. And again the meeting does not start - an important witness is also late. The audience is talking and listening to the noise outside the window. Some sirens are heard, the sounds of braking cars - the audience assumes that this is Khristenko's arrival. After waiting until 10.40 in the morning, Viktor Danilkin nevertheless went out into the hall and said: “Witness Khristenko is being delayed ... in a traffic jam ...”. "In a traffic jam!" the hall laughed at such a joke about the minister. But then it turned out that the cork had already ended. “They are going up to the seventh hall,” the bailiffs were told by radio. A couple of minutes later, Viktor Khristenko in a striped suit, burgundy tie, blue shirt, nodding to the judge, stood on the podium. A large man, who had come in with him, sat down behind him on a special-purpose bench. Khristenko, smiling, nodded to the defendants, who nodded in response.

The judge, smiling, began to ask the witness standard questions. Khristenko introduced himself, named his position - “Minister of Industry and Trade”, address: “Moscow ...” - the witness gave the full address (in contrast to German Gref, who kept silent about the details).

The interrogation was started by Mikhail Khodorkovsky. We clarified the previous positions and competence of Mr. Khristenko. Danilkin reminded the defendant that the questions should be within "the scope of our case." “Why has the government supported and approved the existence of vertically integrated oil companies over the years, including Yukos? Why was it necessary? Khodorkovsky asked. – “The term “supported” may not be entirely correct, but it is absolutely perfect that vertically integrated companies are part of general economic structures and are an understandable tool for managing large economic structures. In fact, there is nothing extraordinary in this, nothing that can attract attention, including now.” – “I apologize for those questions that will seem stupid to you, but our business requires such questions ... Does this mean that the government realized the economic feasibility of combining oil companies into a single technological chain of activities from the stages of field exploration to gas stations, roughly speaking?”. “You made a reservation so that the questions in this case would not seem strange to me. I also want to make a reservation right away, I am not familiar with the case materials, so it is difficult for me to judge whether the question relates to the case materials, and I am not such an experienced witness in court to start asking questions about the prosecution myself ... but, if we move on to the essence of your question , then the construction of integrated structures according to the technological principle to some extent is the most justified and meaningful practice. The end-to-end technological principle of building structures - it is, was and remains the norm for building holdings.
“Your Honor,” prosecutor Lakhtin burst into the interrogation, “the defendants have never been charged with creating a vertically integrated company, Yukos. In fact, the defendant interrogates the witness as a specialist. I guide the witness to the subtext of the questions!” Hall laughed. “A vertically integrated company was used by them for the purpose of embezzlement and money laundering!” the prosecutor didn't stop. - "About this in the debate!" interrupted the judge. - “I ask that prosecutor Lakhtin be reprimanded for trying to ORIENT the witness!” Khodorkovsky answered. The judge was silent.

“How did the government, those departments that you regulated, exercise control over VIOCs and, in particular, Yukos in 1998-2003? What did the antimonopoly authorities do in matters of prices for petroleum products? What are balance tasks? What is an inspection for large taxpayers? Khodorkovsky asked. “Talk for several hours. But speaking in a big way, what the state did in relation to vertically integrated structures - it did exactly what was prescribed by law. If we talk about my work in the White House in 1998-2004 as Deputy Prime Minister, then in fact the main attention to vertically integrated structures was mainly focused on fiscal issues - tax collection. Everything else was connected with an attempt to "transparent" activities, to prevent violation of the interests of the state. During these years, to a large extent, legislation was formed regarding the control of the activities of vertically integrated structures. First of all, from the point of view of taxation.

“Did you know that I am the head of the Yukos company, did I hide it from you, was Yukos the second largest producer of oil and oil products? What do you know? “I know that Mikhail Borisovich Khodorkovsky ran the Yukos company, this was not hidden from me, and that Yukos was one of the largest oil producers and refiners in the Russian Federation.” - “Did you know in those years that the Yukos company itself is a holding (main company), and Samaraneftegaz, Yuganskneftegaz and Tomskneft are its subsidiaries, and that, by virtue of this fact, I determine their financial and economic activity?" “I knew that these structures were dependent on Yukos and were under its operational control.” - “Did you consider this structure of the Yukos company as usual for the industry and acceptable for you as a person in the government responsible for various issues of the functioning of the fuel and energy sector? Or did you demand to change the management structure of the Yukos company?” “The Yukos management structure was not much different from other structures, so I had neither the right nor the grounds to demand a change in the structure. By and large, where the state is not a shareholder, especially the largest one, there are no grounds to demand any structural changes. To demand that the activities of any structures comply with the law is the norm and duty of state structures.” – “Did you know that vertically integrated companies, including Yukos, report under both RAS and US GAAP, and did you support this?” “Yes, I am aware of this, and, of course, this is a fairly common practice. Although I can’t say that I am a specialist in reporting forms.” – “Did you know at that time that YUKOS is a highly profitable company, that this profit is reflected in the consolidated financial statements, what the business press writes about this, and did you use this argument in the discussions that took place in the government, including with my participation , when substantiating your positions on the level of taxation of the industry?” “Yes, I knew that Yukos was a highly profitable company. Actually, there are not so many oil companies in Russia, and their financial position and level of profitability served as the basis for determining the fiscal policy of the state in relation to the oil business as a whole.”

“The following questions are related to the problem of price, since the prosecutor's office accuses me of the fact that the intra-corporate prices at which the ownership of oil was transferred from the Yukos production companies in the production regions to Yukos itself were lower than the prices of Urals oil in Rotterdam and Mediterranean ports. It is this comparison that we have been discussing in court for a year and a half,” Mikhail Khodorkovsky explained. - Please tell the court that you know why the prices for Urals oil in Rotterdam, according to the information you provided, are 3-4 times higher than the average prices for oil from producers in the regions? What were the costs incurred by a trader or, in general, a vertically integrated oil company in the area from the production region to the Mediterranean port, if oil was sold there? “There are two sub-questions in the question - about the internal prices of the company and about the pricing chain. If we talk about the pricing chain, then in general, the domestic Russian price differs from the Rotterdam price by the amount of the export duty and logistics costs, and the duty itself is introduced in order to correct the conditions for the functioning of the domestic market. As for transfer prices, from my point of view, they are not illegal in and of themselves, and they are not something exotic. But transfer pricing within a company can infringe upon the interests of the regional and federal budgets and the shareholders themselves. In this sense, the history of Russia, economic, including legislation in this area, from 1998 to 2004, in fact, accompanied precisely this issue related to domestic prices. Therefore, it is quite difficult to say exactly what the price of a mining asset should be in this sense, but what is connected with the border of the Russian Federation is the export duty and logistics.”

“In this process, no tax claims are made against me, infringement of the interests of the state is not discussed, just as infringement of the rights of minority shareholders due to their shortfall in profit is not imputed to me,” Khodorkovsky explained for the witness. Prosecutor Ibragimova, apparently having her own point of view on this matter, was saying something from the spot.

“Did quota restrictions, logistical restrictions somehow affect the difference in prices in Rotterdam and prices in Russia for oil?” “Access to the pipeline was at that time limited by the capacity of the oil companies. This is true. It was distributed according to the volumes of production by oil companies. This quota did not cost anything, so the quota itself was not some kind of special cost, but limited the physical volumes of exports to the throughput capacity of the Russian pipeline system. “In this regard, I will refer to your book “Rails, Pipes, Wires” ... here you write that the problem of the difference in domestic prices is due to the fact that limited export opportunities make exports more profitable than supplies to the domestic market. Question. Are duties and logistics the only factor that determines the difference in price? Or was the overcrowding of the domestic market without the possibility of export through the pipeline also reflected in domestic prices in the years we are talking about?

“I ask you to withdraw the question, because Khodorkovsky refers to a source that is not a document from the case file!” Lakhtin objected. “When Gerashchenko was interrogated, <prosecutors> used his book,” the lawyers recalled. "The issue is not resolved!" the judge allowed the witness to answer. Mr. Khristenko began to answer: “As for the situation on the market with an excess of supply. Of course, the supply glut has a significant effect on price pressure down. But there was also an opposite situation. When deliveries to the domestic market were more efficient than export deliveries. Therefore, in different ways,” Viktor Khristenko grinned.

“Why did the State Statistics Committee, the Ministry of Fuel and Energy, the Center for Economic Research under the Government of the Russian Federation use the term “average oil prices from producers” and not the term “market prices” in their documents? Was there a large-volume oil market in Russia at that time? We are talking about millions of tons. - "It's clear. The only answer to the first part of the question is that different indicators were used for different purposes. For production statistics, only indicators were used, to analyze the situation on the markets in the regions, indicators were no longer used for producer prices, but for wholesale or retail level ... "-" I'm talking about oil, not about oil products, "Khodorkovsky clarified. – “I don't remember the statistics about producers' selling prices for oil. I can't explain."

In order to make the conversation more meaningful, the witness was handed to the podium volume 86, where the table of the Ministry of Taxes and Duties “Average Producer Prices for Oil by Russian Regions” was located. “If the source of the table is the Ministry of Taxes and Dues, I can assume that this position was important only for fiscal purposes, and not from the point of view of some kind of statistical accounting,” Viktor Khristenko noted. “So, the market prices for oil in Russia…” Khodorkovsky continued. The witness picked up the idea: “The prices that have developed in Russia are, of course, market prices. The problem was the following. There were a minimum number of independent purchasers, oil refiners, they were under severe pressure from the VIOC, which dictated terms to them. These independent processors approached the government in order to get access to the resource at all ... Therefore, the market prices were largely formed by the VIOCs themselves. “Ultimately, these prices existed in what form?” - “Mikhail Borisovich, your honor. There were NO prices for oil and oil products set by the state at that moment. So all that existed was market prices. These market prices are one hundred percent formed under the pressure of VIOC. The state's attempt was only to use real indicators of the cost of oil for fiscal purposes, so that the budgets of all levels would not be lost. – “Did I understand you correctly that the prices applied within VIOCs constituted at that time the bulk of the applied prices?” “Let me go back to the issue of transfer prices. VIOCs essentially dictated the final oil price to the market and, using their operational control, set all internal transfer pricing. This is true. There were no other prices. Another question is how fair, legal, etc. they were. ". - "That's a different question, if it was charged to me, we would talk about it," Khodorkovsky noted.

“Did you know at least one VIOC in those years, including Surgutneftegaz, whose intracorporate prices in the regions of production would be equal to the prices of Urals oil in Rotterdam? I apologize again for the stupid questions!” Khodorkovsky asked. – “Perhaps Khodorkovsky will stop asking questions to the witness as a specialist in the field of pricing?! - Valery Lakhtin was dissatisfied. The audience laughed. The prosecutor continued: - Questions with subtext! And this is condoned by Khodorkovsky's defenders, who are well aware that such questions can only be asked to a specialist. Your honor, and guide Khodorkovsky to ask questions about the indictment! But he did not form his opinion at the expense of the witness, using his official position and testimony! Hall laughed. Finally the prosecutor got tired and sat down. "Is the question clear?" the judge asked the witness. - “The question is clear. Mining divisions of companies cannot have an output price equal to the price of oil in Rotterdam!” Viktor Khristenko replied calmly and firmly. The judge looked at his papers, playing with his jaws.

Mikhail Khodorkovsky's next question concerned Mr. Khodorkovsky's leadership of the commission that dealt with the distribution of export quotas: “What part of the oil did Yukos deliver to Rotterdam, to Mediterranean ports? Did he deliver at all? “I can’t remember such details, but given the volumes that Yukos produced and exported, I think he used all possible export directions.” – “Then, maybe you can tell the court whether the quota for oil supplies to far abroad countries, which was provided to Yukos in 1998-2003, corresponded approximately to 30 percent of the total production of Yukos?” “If my memory serves me right, the commission was formed at the end of 2000. And from that moment on, the distribution of the capacity of the pipeline system for export proceeded in accordance with the principle of equal access and with the norm of the law. Prior to that, it was the prerogative of the Department of Energy. Since the creation of the commission, probably about a third of the oil companies' output has been exported. Including, probably, Yukos. Since the principle of equal access was in effect.” - “In the certificate provided by German Gref (when he was still the Minister of Economics) for the Prosecutor General's Office, the prices for Urals oil in Rotterdam and separately the average contract prices for oil in far and near abroad were indicated, they are noticeably lower than the prices for Urals oil in Rotterdam. Will you explain to the court what this is connected with? - “I think that it is not I who should explain this, and not even German Oskarovich. This should be explained by the participants in foreign economic contracts” - “Why did it happen like that?” “Because it was probably beneficial for VIOCs to have traders outside the country, in general, this is like a movement of margin, where it is beneficial to add margin. At some point, the difference between contract prices and Urals prices was significant. That at one time was also the subject of proceedings in the government. Since we saw in this, to a certain extent, the concealment of income from taxation. And the use of traders in the late 90s was largely an attempt to divert profits outside the Russian Federation. It's my opinion. And that made a big difference. Then it acquired a more or less normal character in terms of the costs associated with the activity of a trader in the foreign market: for chartering, for insurance, etc. And it has become more or less civilized. But at times these things went off scale.” - “What is the difference between the price of a barrel of Urals oil in Rotterdam and the contract price at the border of the Russian Federation you perceived as sound, and where is the border with going off scale here?” “The premium is each time tied to the level of the price itself, which was formed on the market. If it's 1998 and $12 per barrel, that's one story, if $30 is another story, if $140 is a third story. Although the costs associated with freight, insurance, they are approximately constant. I would not answer this question now, as if right now I don’t remember this component in the price. ” “Are we talking about a few dollars, a few tens of dollars?” “No, of course, we are talking about a few dollars, which, from the point of view of reasonableness, can form the basis for the activity of a trader at double-digit oil prices. This is, of course, an insignificant fraction of the price.

Then Mikhail Khodorkovsky told the witness what they were accused of: “An organized group, me and Platon Leonidovich Lebedev (not Yukos!), seized oil free of charge at the Transneft metering station in the amount of 60 million tons annually, a total of 350 million tons of oil over the period from 1998 to 2003 Questions will be connected with this ... "-" I ask Khodorkovsky to make a remark! Quoting some sheet! The hall laughed. “Let him refer to what he reads there?” - "This is an indictment" - and Mikhail Khodorkovsky once again named the pages of the case for the prosecutor. “And let him not refer to me!” remarked Prosecutor Lakhtin, bringing down the hall into laughter with his modesty. “What I said can only be identified by reading the record of the court session prepared by the secretaries!” Lakhtin continued. "That's for sure!" the laughing hall agreed.
“From 2000 to 2008, you were a member of the board of directors, you were the chairman of the board of directors of Transneft, is that so?” - "Yes it is". - “Did Yukos, represented by its producing subsidiaries, sell oil to Transneft? Was Yukos a significant client of Transneft? We have a shipment certificate provided by Transneft, we have route instructions submitted by Transneft, where it is indicated ... "-" As the chairman of the board of directors of Transneft, it is certainly not the competence of the board of directors to distribute quotas for pumping oil. As a member of the board of directors, I just could not know this. And didn't know. As Deputy Prime Minister or later Minister of Industry and Energy, of course, I knew what was going on in Transneft, since the schedules were approved accordingly. But did YUKOS hand over... I don't like the word "handed over" - YUKOS did not hand over anything, YUKOS contracted with Transneft to pump the corresponding volume of oil to where YUKOS considered it necessary. In this sense, the term "surrendered" is reminiscent of a certain exemption - no one took anything from YUKOS, YUKOS did this purely voluntarily within the framework of the contractual relations that it had with Transneft. There is no other system in "Russia", so Yukos used this system. Of course, he was contracted. What is the size of the client? One of the big ones. I don't remember now." - "I use the term" handed over ", because in the documents from the case this procedure is called acceptance-delivery at the node," Khodorkovsky explained. Khristenko nodded in understanding. – “Did I have anything to do with the governing bodies of Transneft in those years?” — «Transneft? I don’t know this,” Khristenko was surprised.

Source: http://khodorkovsky.ru/