YUKOS impact to hit Russia for some time
(Agencies)
Updated: 2005-06-01 18:22

MOSCOW - Russia will take some time to recover the trust it has lost from the trial of oil billionaire Mikhail Khodorkovsky and the downfall of his company YUKOS, President Vladimir Putin's finance minister said on Wednesday.

The day before, a Moscow court sentenced the 41-year-old tycoon to nine years in prison for tax evasion and fraud in a case widely seen as orchestrated by Putin's Kremlin to crush a political rival.

Khodorkovsky's YUKOS oil firm was effectively destroyed in the process, dragged down by huge back tax bills that forced it to give up its main oilfields.

"YUKOS was a serious lesson for the whole country. I wouldn't want a repetition of what happened to YUKOS," Finance Minister Alexei Kudrin told reporters on the sidelines of a conference. "It caused a lowering of trust in the Russian economy. It will take some time to re-establish that trust."

Khodorkovsky's treatment has been heavily criticized in the West and has frightened away investors in Russia.

Pro-reform officials have blamed the affair for sending billions of dollars in capital fleeing from Russia and out of the reach of its opaque legal system and aggressive taxmen.

"The legacy of the ... (YUKOS) case, government indecisiveness on reforms over the past 12-18 months, increased incidence of state interference with business, and the lack of progress in facilitating investment into the energy sector is that the government is also now effectively sitting in the defendant's chair in the global court," Alfa Bank analyst Chris Weafer said.

An unrepentant Khodorkovsky, in a statement read out after Tuesday's conviction, said his sentence had been decided in the Kremlin.

The former richest man in Russia was found guilty of six of seven charges of fraud and tax evasion at the end of his 11-month trial.

He and fellow defendant, Platon Lebedev -- also jailed for nine years -- both plan to appeal.

The State Department said the case raised "serious questions" about due process and the independence of Russian courts.

"Russia has already paid a price. Russia will continue to pay the price as long as there are questions about the rule of law," State Department spokesman Richard Boucher said.

President Bush stopped short of criticising the sentence, but said he would monitor the appeals process.

Within hours of the verdict, the prosecutor general's office said it would soon file money-laundering charges against Khodorkovsky.

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