Making the Case Against the Kremlin

Khodorkovsky in jail.jpg

Kino Lorber

Mikhail Khodorkovsky at the Siberia court

No one expected Prime Minister Vladimir Putin’s dominant United Russia party to do as well in Sunday’s parliamentary elections as it has in the past. Indeed, the Kremlin was so nervous about United Russia losing seats in the Duma that it unleashed its prosecutors on the respected Russian independent vote-monitoring organization Golos (it was fined $1000 a few days ago for procedural violations), and Western election observers now say the vote was “neither free nor fair.” Even so, the extent of United Russia’s decline is startling: it drew slightly less than 50 percent on Sunday, down from the more than 64 percent of the vote it got in 2007.

There are many reasons for the growing disillusionment with Putinism, among them the way Putin announced earlier this fall that current president Dmitry Medvedev would step aside in the March 2012 presidential elections so that he could run largely unopposed. But there also seems to be an increasing sense among Russian voters that the Kremlin has done nothing to stop pervasive corruption and that its own behavior is often above the law. To understand the extent of the problem, observers might do well to watch German filmmaker Cyril Tuschi’s provocative new documentary about jailed Russian oligarch Mikhail Khodorkovsky, which began showing in Russia and the United States just days before the election and is now at New York’s Film Forum.

In its portrait of the protagonist and his prosecution and imprisonment in 2003, Khodorkovsky is a stark reminder of the capricious ways in which the Russian leadership has enriched itself at the expense of ordinary Russians; it is also a revealing expose of the way the Kremlin has continually bent the legal system to serve its purposes. Tuschi told me in an interview that the timing of the film’s release in Russia, on the eve of the Duma vote, was coincidental. (He had originally conceived of the film as a fictional drama about the conflict between Khodorkovsky and Putin.) But the Kremlin apparently saw things differently. Although several major cinemas in Russia initially agreed to show “Khodorkovsky,” many later backed out, reportedly because of pressure from Russian authorities.

One can easily see why the Kremlin wants to limit the screening of the film. The most interesting part deals with Khodorkovsky’s relations with Putin and the falling out that seems to have precipitated his arrest. As head of the oil giant Yukos and one of the country’s biggest taxpayers, Khodorkovsky met regularly with Putin after Putin became president in 2000. The two men reportedly got on well—until Khodorkovsky violated Putin’s golden rule for the oligarchs: stay out of politics. With elections to the Duma approaching in December 2003, Khodorkovsky apparently decided that the political system needed reinvigorating and began funding opposition political parties.

He also made the huge mistake of confronting Putin on the taboo issue of corruption. The film depicts the now famous exchange in February 2003 during a televised annual meeting with Russian oligarchs that Putin held at the Kremlin. Khodorkovsky took the bold step of telling Putin: “We [i.e. the oligarchs and the Kremlin] started the corruption process so we should end it.” He noted that corruption in state-controlled oil companies was estimated at $30 billion. This amounted to accusing the Kremlin, and by implication Putin himself, of a cover-up.

Putin kept his cool (he was on television after all), but the expression on his face was chilling as he responded by reminding Khodorkovsky that his company, Yukos, had run into problems with the tax authorities. This was the moment, it seems, that Khodorkovsky’s fate was sealed. He was arrested eight months later on bogus charges of tax evasion and has been in prison ever since, along with his former Yukos partner, Platon Lebedev.

As the film points out, Khodorkovsky had by 2003 begun making frequent trips to the United States to encourage investment in Yukos by western oil companies, which the Kremlin frowned upon. Top Kremlin officials, in particular Putin’s deputy Igor Sechin, were anxious to snap up the company. So this provided an additional incentive for Putin to have Khodorkovsky arrested in October 2003. But the fact that the Kremlin has kept him and Lebedev behind bars ever since suggests that Putin has a personal vendetta against Khodorkovsky. Last December, Khodorkovsky and Lebedev were convicted of new charges (again completely without foundation) for alleged embezzlement, and their sentences have been extended until 2016.

Of course the state-level corruption described in Khodorkovsky did not begin with Putin but was a pervasive reality of the post-Soviet governments that preceded him. As Tuschi acknowledges, Khodorkovsky’s own rise from a graduate of Moscow’s Mendelev Institute of Chemistry and Technology in 1986 to become the richest man in the world under forty by 2003 is murky. His initial success had to do with the political connections he made as a leading student activist in the Komsomol (the Communist youth league), which became a vehicle for the small entrepreneurship encouraged by Gorbachev’s policies of perestroika before the collapse of the Soviet Union at the end of 1991. He started a business importing computer technology, and managed to accumulate enough capital to establish one of Russia’s first privately-owned banks, Menatep, in 1989. The bank was highly successful, thanks to the fact that several Russian ministries and agencies deposited their funds there, until the Russian ruble collapsed in 1998, causing Menatep to fail.


With funds from Menatep, and the alliances he had cultivated in the Kremlin, Khodorkovsky acquired Yukos in 1995 at a controversial auction from which all competitors were excluded. He paid 300 million dollars for the company, which, according to a source quoted in the film, was valued at six billion just six months later. The decision to hand over Yukos to Khodorkovsky, while approved by Yeltsin, was made by Anatoly Chubais, the architect of the now infamous “loans for shares” program, which also offered hugely preferential deals to other selected financiers, such as Boris Berezovsky and Vladimir Potanin. Kremlin officials, as the film makes clear, greatly profited from these arrangements to privatize state property in the 1990s, including the Yukos deal. They received substantial kickbacks from the oligarchs’ profits, while ordinary Russians got no benefits whatsoever from the bargain-basement sales.

In taking advantage of the chaotic and lawless process of privatization for his own personal gain, Khordorkovsky was doing what all the oligarchs did. But unlike them, he never developed the habit of flaunting his wealth by jet-setting to ski resorts and the Carribbean, or buying huge vacation homes abroad. Moreover, around 2000—the year that Putin was elected Russian president—Khodorkovsky apparently decided that it was time to become a model Russian businessman and citizen. He began to engage in philanthropy, establishing the “Open Russia Foundation,” which supported cultural exchanges, summer camps, Internet training centers and other educational projects, including a boarding school. He also reformed his business practices, realizing that making Yukos a more transparent company and establishing better corporate governance would enable him to attract foreign investment.

But there was little appreciation in Putin’s Kremlin for Khodorkovsky’s brand of reform. More surprising is that, even with Khodorkovsky long behind bars, the Kremlin seems to view him as a continuing threat. Shortly after he and Lebedev lost their appeal against their new conviction in May 2011, I discussed the possibility, raised by numerous Russian observers, that President Medvedev might push for their parole. But now, with Medvedev having bowed out of a bid for a second term, that possibility no longer exists. Lebedev’s application for parole was recently considered and denied; Khodorkovsky, now an inmate at Correctional Camp No.7, a labor colony in the region of Karelia (which borders Finland), had his application sent back without being considered.

Russian political commentator Andrei Piontkovsky recently speculated that, once Putin is elected president in March (despite this week’s Duma results, a near certain outcome), he would consider offering Khodorkovsky a pardon, on the condition that he leave Russia. But the offer is unlikely, given that Putin has publicly denounced Khodorkovsky as a thief and even a murderer. In any case, it is doubtful that Khodorkovsky would accept it. He knew of his impending arrest in the autumn of 2003 but, unlike several of his fellow oligarchs when they faced pressure from the Kremlin, chose to remain in Russia rather than move abroad; he has said in recent months that he doesn’t recommend exile “for various reasons, but also because I don’t count myself among the emigrants.”

In the end, Khodorkovsky’s fate, like Lebedev’s, will depend on whether or not Putin can remain the unchallenged leader of the country for the next six, and perhaps twelve years—possibly in the face of Russia’s economic decline. Sunday’s vote perhaps makes this a more pressing question, but Putin and his supporters still have a firm hold on power. The three other parties that are represented in the Duma and which have benefited from United Russia’s poor performance usually vote along pro-Kremlin lines; the real democratic opposition, such as that of the People’s Freedom Party, led by Boris Nemtsov and other harsh critics of the Kremlin, were denied registration on the ballot.

Despite its restricted audience in Russia thus far, Khodorkovsky will have an impact on those who manage to see it. In the eyes of many ordinary Russians, Khodorkovsky was seen as a robber baron like the other oligarchs; but, as Arseny Roginsky, chairman of the human rights organization Memorial recently observed, “it quickly became clear [after his arrest] that the government failed to create an image of Khodorkovsky as a bloodsucking capitalist and an enemy of the common man.” More important, Khodorkovsky continues to make forceful arguments from his prison cell about corruption and manipulation of the political system—practices which Putin and his cronies rely on more than ever to maintain their grip on power.


After a special screening in Moscow last week for prominent cultural figures and opposition politicians (including Nemtsov), the Russian novelist Boris Akunin observed: “As long as he [Khodorkovsky] is in prison nobody in this country is free.”

Khodorkovsky is showing at Film Forum in New York City through Tuesday, December 13.

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