When I first began to seriously research the collapse of Enron, a friend was telling me about a certain point of Jeff Skilling’s case. I don’t remember what the point was, but I remember that I was amazed at the overtly bad behavior of the DOJ and I said to my friend, “They’re like Nazis!”
My friend, who is quite wise, replied, “Yes, but you have to be very careful about making that charge. You have to kind of let the audience draw that conclusion for themselves.” His worry was that by saying it, the very people you hoped to attract would be turned off by the seemingly hyperbolic speech.
Flash forward a few years, and a different friend urged me to read “The Khodorkovsky Speech.” I admit my ignorance: I knew nothing about him other than he was a Russian businessman who was prosecuted for something or other.
My understanding became clearer with some cursory research. According to Wikipedia, he was the richest man in Russia, 16th on Forbes list of billionaires. Then:
On 25 October 2003, Khodorkovsky was arrested at Novosibirsk airport by the Russian prosecutor general’s office on charges of fraud. Shortly thereafter, on 31 October, the government under Vladimir Putin froze shares of Yukos because of tax charges. The Russian Government took further actions against Yukos, leading to a collapse in the share price. It purported to sell a major asset of Yukos in December 2004.
On 31 May 2005, Khodorkovsky was found guilty of fraud and sentenced to nine years in prison. The sentence was later reduced to 8 years. In 2003, prior to his arrest, Khodorkovsky funded several Russian parties, including Yabloko, the Communist Party of the Russian Federation, and even, allegedly, the pro-Kremlin United Russia.
In March 2006, Forbes magazine surmised that Khodorkovsky’s personal fortune had declined to a fraction of its former level, stating that he “still has somewhere below $500 m.
On 31 March 2009, a new trial of Khodorkovsky and Platon Lebedev began in Moscow for fresh charges on embezzlement and money laundering. On 27 December 2010, a judge found both men guilty of the charges laid against them in 2009. In October, prosecutors asked for a 14 year sentence but indicated that it should include time already served. This would mean that Khodorkovsky and his partner could remain in jail until 2017; however, Khodorkovsky’s defense have vowed to appeal the sentence. Suggesting that the legal process was only ‘gloss’, a US diplomat has described his trial as ‘lipstick on a political pig’.
On 30 December 2010, Khodorkovsky and Lebedev were sentenced to 14 years of imprisonment in the second trial. This term includes the sentence from the first trial.
I learned that during his second trial, he passionately delivered some “final words” which engaged capitalists and freedom-loving people all over the globe. The irony that they were uttered in the heart of Russia only adds to the bitterness of this man’s tale.
What shocks me is that the words could have just as easily been spoken by Jeff Skilling or Joe Hirko or Rex Shelby or any number of people, almost word for word. Reading the words, I remembered the day I bitterly compared the DOJ to the Nazis. The Nazis and Soviets were quite different in many respects but as totalitarians, they were almost identical. And my description of the DOJ was apt.
I reprint Khodorkovsky’s great speech here with my comments inserted.
Today is for me one more opportunity to look back at the past. I remember October 2003. My last day of freedom. Several weeks after my arrest, I was informed that President Putin had decided that I was going to have to “sup prison gruel” for 8 years. Back then this was hard to believe.
I can imagine several of the prosecutors saying this verbatim. John Kroger, first and foremost, and Andrew Weismann certainly would have no problems uttering this threat. John Kroger in particular got an almost sexual thrill from threatening witnesses and defendants alike. He enjoyed scaring them.
Seven years have already passed since that day. Seven years is in any case quite a long stretch of time, and especially in prison. All of us have had time to reassess and rethink many things.
Rex Shelby fought the government for eight years. Scott Yeager and Joe Hirko for seven. James A. Brown, God bless him, is still fighting.
The prosecutors’ words – “give them 14 years” and “forget about previous court decisions” – lead me to conclude that over these years they have begun to fear me more, and to respect the law even less.
Again, I hear John Kroger.
The first time round they at least made the effort to repeal the judicial acts that stood in their way first. Now they have decided that they’ll just leave things as they are. Especially now they would need to repeal not 2 court decisions like last time, but 60.
I do not want now to return to the legal side of the case. Anyone who wanted to understand anything has long since understood it all. I don’t think anyone is seriously expecting an admission of guilt from me. It is hardly likely that anybody would believe me today if I said I had stolen all the oil produced by my own company.
When I hear these words in my head as I read, they are in Jeff Skilling’s voice.
But just the same, no one believes that it’s possible for a Moscow court to make an acquittal in the YUKOS case.
Nonetheless, I want to say something about hope. Hope is the main thing in life.
I remember the end of the 1980s. I was 25 then. Our country was living with the hope of freedom, hope that we would be able to achieve happiness for ourselves and for our children.
These hopes were partly realized, partly not. Responsibility for the fact that the hopes were not realized in full, and not for everyone, probably lies with our whole generation, including myself.
I also remember the end of the last decade. At that time I was 35. We were building the best oil company in Russia. We were putting up sports complexes and cultural centres, laying roads, exploring and developing dozens of new oil fields. We began developing the reserves in East Siberia, introducing new technologies. In general, we were doing then all that Rosneft is proud of today, having taken over YUKOS.
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A significant increase in oil production, including as a result of our successes, meant that the country was able to take advantage of a favourable oil situation. We all hoped that the period of shocks and disturbance was behind us and that, in conditions of stability achieved with great effort and sacrifice, we would be able peacefully to build a new life and a great country.
Alas, this hope has not yet been fulfilled. Stability has come to resemble stagnation. Society has frozen. Although hope still lives. Lives on even here, in the Khamovniky courtroom, when I am already nearly 50 years old.
With the coming of a new President, and since that time more than two years have already passed, many of my fellow citizens once again found hope. Hope that Russia will yet become a modern country with a developed civil society. A society free from the arbitrariness of bureaucrats, free from corruption, free from injustice and lawlessness.
It is clear that this could not happen by itself and in one day. But to pretend that we are developing when we are in actual fact standing still, or slipping backwards, even if it is under a cloak of a noble conservatism, is no longer possible, and simply dangerous for the country.
It is impossible to reconcile oneself to the fact that people who call themselves patriots are so desperately resisting any change that will limit their access to the feeding trough, or their ability to get away with anything. It is enough to remember the fate of the amendments to Article 108 of the Criminal Procedure Code of the Russian Federation concerning the arrest of businessmen or the income declarations of bureaucrats. And yet it is precisely the sabotage of reforms that deprives our country of prospects. This is not patriotism. It is hypocrisy.
I am ashamed to see how people – people that in the past I respected – try to justify the arbitrariness of bureaucrats and lawlessness. They exchange their reputation for a quiet life within the framework of the current system, for privileges and sops.
Fortunately, not everyone is like that, and there are increasingly more people of the other kind.
I am proud of the fact that among thousands of employees at YUKOS, after 7 years of persecution, none have agreed to give false testimony, to sell their soul and conscience.
Oh yes, the witnesses and unindicted co-conspirators. Broadband was the only instance where unindicted co-conspirators actually testified and refused to be intimidated by the prosecutors. The fact that others testified to save themselves in other Enron trials doesn’t really speak badly of the witnesses themselves; it speaks to the evil that is the prosecutors. They wield their power like a weapon, punishing and threatening until they get the answers they want.
No, Soviet Russia did not invent prosecutorial abuse, but they’ve exported it around the world and its settled right here in our country.
Dozens of people have been personally threatened, have been cut off from family and friends, and thrown in prison. Some have been tortured. But, even though they lost their health and years of their lives, they preserved what they considered most important, their human dignity.
I’ve written extensively about the witnesses that were intimidated and threatened in Jeff Skilling’s trial, the Nigerian Barge trial, and the NatWest Three trial. The number who have withstood the harsh punishment of the DOJ are less than ten out of thousands of potential witnesses.
Those who started this shameful case – [First Deputy Prosecutor General Yuri] Biryukov, [Investigator Salavat] Karimov and others – at that time contemptuously called us “traders”, regarding us as scum, ready to do anything to protect our prosperity and escape prison.
This reminds me of the premature ejaculator Sean Berkowitz’s comment during closing arguments at the Lay/Skilling trial that “you can’t buy justice, you have to earn it.”
In the first place, justice shouldn’t be earned; it should be given to you freely and abundantly – whether positive or negative. In the second place, Berkowitz’s entire case was an effort to paint the two defendants as whores, willing to do anything for money. But Skilling cared little for money. He cared about excellence and work and Enron. I am positive that if he’d had a choice whether to lose his fortune or go to prison, he’d have quite happily written a check.
The same goes for all other defendants. For instance, on the Chron website, the comments about Rex Shelby’s sentencing are absurd, accusing him of living a lavish lifestyle, trying to protect his money by fighting at trial. Those people do not have the slightest clue about Rex Shelby – just like the Prosecution didn’t. But the prosecution apparently believes that envying those with money is a universal characteristic, and that anyone with money must be willing to whore themselves out to earn it and keep it. Such cynicism.
Years have passed. And who turned out to be the scum? Who lied, torture and took hostages for the sake of money, and because they were afraid of the bosses?
And this is what they called a “matter of state”!
I am ashamed for my country.
Your honour, I think we all perfectly understand the significance of our trial extends far beyond the fates of Platon [Lebedev] and myself. And even beyond the fates of all those who have innocently suffered in the course of the reprisals against YUKOS that have taken place on such a huge scale, those I found myself unable to protect, but about whom I have not forgotten. I remember every day.
This is exactly why I blog about Enron. It isn’t just one person or one case. The fate of every citizen is in peril if we allow the DOJ to destroy even one person. If it can happen to Jeff Skilling, it can happen to you. If you don’t have money, it doesn’t mean they won’t come after you, it just means you won’t be able to fight as long or as well as he did. And where will you go if all the rich people are locked up? Who will pay for your defense then?
Let’s ask ourselves, what does the entrepreneur, the top class organizer of production, or simply an educated, creative individual, think today looking at our trial and knowing that the result is absolutely predictable?
Ah yes, a good question. Every executive I’ve spoken to says they will never work for a public company again. That is our loss.
The obvious conclusion a thinking person would come to is chilling in its simplicity: the bureaucratic and law enforcement machine can do whatever it wants. There is no right of private property. No person who conflicts with the “system” has any rights whatsoever.
Eight years ago, hundreds of millions of dollars of assets were seized and frozen by the US government before even a trial had taken place. That money did not earn interest. And defendants could not use it. They were simply excommunicated from their own wealth because the government decided it should be so.
Even when enshrined in law, rights are not protected by the courts. Because the courts are either also afraid, or are part of the “system”. Does it come as a surprise that thinking people do not strive to realize themselves here in Russia?
I harken back to the Broadband trial when Judge Gilmore granted objections more than a 3 to 1 ratio in favor of the government. When she said, “But your client is a liar,” to Ed Tomko about Rex Shelby in the presence of the jury. Examples abound in all the Enron trials.
Who will modernize the economy? Prosecutors? Police officers? The security services?
I simply adore this line, this sentiment. Yes, who? Obama? Judge Gilmore? The Premature Ejaculator Sean Berkowitz?
We have already attempted modernization like that and it did not work. We were able to build a hydrogen bomb, and even a rocket, but we still can’t make our own first rate modern televisions, our own cheap, competitive, modern cars, our own modern mobile phones, as well as a whole lot of other modern goods.
But then we have learnt how to put on a beautiful display of obsolete models of foreign companies, produced here in Russia, while the rare creations of Russian inventors, if they do find application, find it not here in our own country but abroad
Whatever happened to last year’s presidential initiatives in the realm of industrial policy? Have they been buried? But they offered a real chance to kick the oil addiction. Why buried? Because to put them into practice the country needs not just one Korolev, and not just one Sakharov, under the protective wing of an all-powerful Beria and his million-strong host, but hundreds of thousands of Korolevs and Sakharovs, protected by just and comprehensible laws and independent courts that will give life to these laws, and not just a place on a dusty shelf, as happened in its day to the Constitution of 1937.
Where are these Korolevs and Sakharovs today? Have they left the country? Are they getting ready to leave? Or have they gone again into “internal emigration”? Or have they hidden themselves among the grey bureaucrats so as not to be crushed by the “system”?
We, citizens of Russia, patriots of our country, can and must change this.
How can Moscow become a financial centre for Eurasia if our prosecutors, in a public trial, directly and unambiguously, just like 20 or 50 years ago, demand that the striving to increase production and capitalization of a private company be classified as a criminal, mercenary objective, for which a person ought to be locked up for 14 years?
If under one court sentence a company that paid more taxes than anyone else in the country – YUKOS paid more taxes than any other Russian company with the exception of Gazprom – turns out not to have fully paid its taxes; and under a second court sentence, the one now being proposed, it is clear, there has been no object for taxation at all since it was all stolen?
A country that tolerates a situation where the bureaucratic and law enforcement machine in its own interests and not at all in the interests of the country holds tens, if not hundreds of thousands, of talented entrepreneurs, managers, and ordinary people in prison, instead of, and together with, criminals, is a sick country.
I’ve complained before that men like Jeff Skilling and Ken Rice and Joe Hirko and Kevin Howard and Dan Boyle and Bill Fuhs and Kevin Hannon and Rick Causey and David Bermingham and a slew of others do not belong in prison. They are not criminals. They’re creative people who create the jobs and products and opportunities we need to live. I rely on Jeff Skilling, Rex Shelby, Joe Hirko, Scott Yeager, Kevin Hannon, Ken Rice, Kevin Howard and Michael Krautz every day because I love my iPhone and I use google like you would not believe. They created the technology ten years ago that those companies today rely on. I love them so much for that. I just want to kiss them all.
A state that destroys its own best companies that were ready to become global champions; a state that holds its own citizens in contempt, a state that trusts only bureaucrats and the security services, is a sick state.
Hope is the main engine of major reforms and transformations, the guarantor of their success. If hope dies, if deep disappointment takes its place, then who and what will be able to lead our Russia out of a new stagnation?
I do not exaggerate when I say that millions of eyes throughout all Russia and the whole world are watching the outcome of this trial.
They are watching with hope, the hope that Russia will after all become a country of freedom and the law, a country where the law will be above the bureaucrat.
Where supporting opposition parties will cease to be a cause for repression.
Where the security services will protect the people and the law, and not the bureaucracy from the people and from the law.
Where human rights will no longer depend on the mood of the tsar, whether good or evil.
Did you know that most Enron executives were placed in solitary confinement in prison? Do you wonder why?
Where, on the contrary, government will be truly dependent on the citizens, and the courts will depend only on the law and on God. Call this conscience, if you prefer.
I believe that this is how it will be.
I am far from being an ideal person, but I am a person with an idea. For me, as for anybody, it is hard to live in prison, and I do not want to die here.
But if I have to, I will have no hesitation. What I believe in is worth dying for. I think I have shown this.
And my respected opponents? What do you believe in? That the bosses are always right? In money? In the impunity of the “system”? I don’t know. It’s for you to decide.
In your hands lies far more than just the fates of two people. Here and now the fate of every citizen of our country is being decided. People on the streets of Moscow and Chita, Petersburg and Tomsk, and other cities and settlements, who do not count on becoming victims of police lawlessness. Those who have set up their own business, built a house, achieved success and want to pass it on to their children, and not to raiders in uniform. And finally, those who want honourably to perform their duty for a fair wage, not expecting to be fired at any moment by corrupt bosses on any pretext.
This is not about Platon and me. At least, not only about us. It is about the hopes of many citizens of our country. About the hope that tomorrow the courts will be able to protect their rights, if yet again some bureaucrats or other get it into their heads brazenly and demonstratively to violate these rights.
I know there are people (I have named them during the trial) who want to keep us in prison. To keep us in prison forever! Indeed, they do not even try to hide it very much, publicly talking about the existence of a “bottomless” case file.
Why don’t they hide it? Because they want to show that they are above the law, and they will always accomplish “what they have thought up”. For the time being, it’s true, they have accomplished the opposite. They have made a symbol out of us, out of two ordinary people, a symbol of the struggle with arbitrariness. That is what they have managed to do. It is not our merit. It is theirs. But for them a conviction is essential, to avoid becoming “scapegoats”.
I want to hope that the court will withstand their psychological pressure. And pressure there will be, we all know that, just as we know through whom it will come.
I want an independent judiciary to become a reality and the norm in my country. I want the phrase born in Soviet times, about “the most just court system in the world”, to stop sounding as ironic today as it did in those days. I do not want us to leave as an inheritance for our children and grandchildren the very dangerous symbols of totalitarianism.
Your Honour, I am ready to understand that it is not easy for you, perhaps it is even terrifying, and I wish you courage.
Everyone understands that your verdict in this case, whatever it will be, will become part of the history of Russia. Moreover, it will form the development of the country for future generations. And you understand this better than many. All the names – those of the prosecutors, and of the judges – will go down in history, as did the names of those who took part in the infamous Soviet trials.
It is somewhat frightening to me that the opposite is true in the case of Enron. Nobody will remember John Kroger or Kathy Ruemmler or Judges Werlien, Gilmore and Lake. They made their marks on the good Enron executives and our culture, and they took away a little bit of light from our world, and yet nobody will ever hold them accountable. They’ll vanish in the mists of time. All that will remain is the stranglehold of their policies. I do not remember any of the guard’s names at Auschwitz. All I remember are pictures of ovens, and the obscene erasure of personhood that took place there.
They are like the Nazis. They are the heirs of a most dark legacy.