Translated material
Quotes for which Sergei Guriev was interrogated
..."My position stated below is based on my knowledge in the field of economic science and corporate governance. I am ready to confirm the position below under oath. I am confident that my point of view will be supported by every expert versed in modern economic science...
1. The process of building and functioning of the Yukos Oil Company described in the verdict does not in itself constitute evidence of illegal actions of its leaders. All major oil companies (both Russian and foreign) are vertically integrated. This is due to a number of factors analyzed in modern economic research - primarily the need to create and regulate incentives for investment at various stages of the production chain. Of course, operating in a vertical integration mode has nothing to do with breaking the law. Like Yukos, most vertically integrated companies have an extraction division (Exploration and Production) and a refining/retail division (Refinery and Marketing). The use of offshore companies for trading oil and petroleum products is also the norm rather than the exception, both in Russia and abroad.
2. Within vertically integrated companies, trade inevitably occurs at transfer prices... Moreover, if there is complete vertical integration (that is, both mining and processing units are owned by the same shareholders), transfer prices do not matter... Although Understatement of transfer prices, at first glance, causes damage to the mining division, it does not cause any harm to its shareholders - and in this sense, the difference between transfer prices and market prices, by definition, is not theft....
3. ...Although the verdict repeatedly compares transfer prices with market prices, this comparison is not entirely correct: market prices are set on the foreign market, while transfer prices are sales prices by mining divisions within the country. Moreover, market prices for oil inside Russia are not just lower than in Rotterdam or the Mediterranean - there are no domestic market prices... ...the largest Russian oil companies are vertically integrated, so Russia does not have a liquid domestic oil market. The verdict and other materials do not provide justification for assessing the level of understatement of transfer prices.
4. However, assuming that transfer prices were undervalued and that vertical integration was incomplete—that is, the upstream divisions had outside shareholders who were not represented in the downstream/retail divisions—then the understatement of transfer prices did in fact harm those shareholders. In this case, the case should be handled by the injured outside shareholders - and should be classified as improper transactions with affiliates and violation of the rights of minority shareholders, and not as "oil theft."
5. On the other hand... although, as stated in the verdict, the production divisions of the Yukos Oil Company sold oil at prices below market prices, this in itself did not cause damage to their shareholders, since they received corresponding income as shareholders of the refining and retail divisions of a vertically integrated company. This fully applies to OAO Yuganskneftegaz and OAO Samaraneftegaz, which were subsidiaries of the Yukos Oil Company.
6. It is quite possible that the use of lower transfer prices was used by the managers of the Yukos Oil Company to reduce the total tax burden of the Yukos Oil Company. However, even if such actions were unlawful, the defendants had already been convicted on these charges in 2005 and cannot be prosecuted for the same offenses a second time.
7. All the offenses mentioned in the verdict against OJSC Tomskneft VNK (see paragraph 4) took place before 2000 inclusive. Consequently, the 10-year statute of limitations has expired. It should be noted that the resolution to terminate the criminal case against M.B. Khodorkovsky and P.L. Lebedev in the part of VNK takes this fact into account and releases the defendants from liability on charges of misappropriation of VNK shares. Likewise, the defendants should be released from liability on charges of “theft” of the property of OAO Tomskneft VNK.
So, I can state the following: with the exception of the episode with the violation of the rights of minority shareholders of OAO Tomskneft VNK (see paragraph 4 above), the text of the verdict does not contain convincing evidence of the guilt of the defendants. ...the actions described in the verdict are normal business practices for a vertically integrated company in a market economy. However, even in the case of accusations of theft of property of OAO Tomskneft VNK, the defendants deserve to be exempt from liability due to the expiration of the 10-year statute of limitations. "