Mikhail Khodorkovsky: the Man, the Myth, the Movie

“It seemed to me that ideologically he [Putin] was one of our people,” the former Russian oligarch says in the new Alex Gibney documentary Citizen K.

By Lucy Komisar

The Nation, Jan 22, 2020

Russian figure Mikhail Khodorkovsky, the former owner of the Yukos Oil Company, is the subject of the new Alex Gibney film Citizen K(Matt Dunham / AP Photo)

Mikhail Borisovich Khodorkovsky, MBK in his homeland, is the most famous Russian “oligarch,” the name given by their compatriots to a handful of men who, when communism fell, turned it into gangster capitalism. With an estimated $16 billion fortune, he became the richest man in Russia. When the rules changed, he didn‘t adapt and spent a decade in prison.

Alex Gibney‘s new documentary Citizen K, which opened in New York last week, tells how MBK and others took advantage of schemes promoted by President Boris Yeltsin to privatize state companies in order to raise the money he needed to win reelection. Gibney blames the chaos of the times more than the thieves‘ venality.

Avoiding damning details, Citizen K casts its subject as a reformed sinner and even a fighter for justice against an evil President Vladimir Putin. From the beginning, there‘s a significant difference between reality and MBK‘s film portrayal.

The film says Khodorkovsky got involved in the Komsomol, the communist youth organization, because the government relaxed restrictions on free enterprise for the group. The film doesn‘t explain that as the deputy head of a Komsomol cell at a local technical institute, MBK obtained and sold computers at inflated prices and laundered Soviet credits with other imported goods that he converted into hard currency. With the profits, he set up Menatep bank.

Then came the theft of Russia‘s patrimony. The film shows that the Yeltsin government, egged on by American free-market boosters, announced a program to give citizens vouchers worth $40 each. The scheme was then promoted by a US team sent to end Russian state control of enterprises and open them to the West. Vouchers could be traded, sold, or exchanged for shares in state enterprises. MBK and others bought them from citizens unaware of their value.

The film explains that Yeltsin, with a 3 percent approval rating, was going to lose the 1996 election. The government needed cash to pay salaries and pensions, so under “loans for shares,” banksters made loans the government wouldn‘t repay, and when it defaulted, they got Russia‘s state enterprises in sham auctions. The film depicts Khodorkovsky as “a man of intelligence and great vision,” but Gibney admits this was gangster capitalism.

He recounts that Khodorkovsky‘s Menatep was the only bidder for the oil giant, Yukos, valued at $5 billion. The bank ran the auction itself and paid just $310 million for a 78 percent stake in the company. Khodorkovsky declares, “I don‘t think this was a bad deal for the state.” The film cuts to shots of idle operations starting up.

Moscow Times founder Derk Sauer says in the film that Khodorkovsky was “using every trick in the book available to him.” There are no details. The film doesn‘t tell how MBK, not satisfied with getting Yukos for a steal, then, according to Russian charges, laundered multi-billions of dollars in profits that would have represented evaded taxes and dividends for minority investors.

Peter Bond, an Isle of Man shell company operator, set up a transfer-pricing and money-laundering scheme that sold Yukos oil to fake companies at below-market prices and then to real buyers at market. Stephen Curtis, managing director of Khodorkovsky‘s $30 billion holding company Menatep, ran the operation out of London. Swiss authorities would discover and freeze almost $4 billion of suspected cash in Khodorkovsky‘s shell accounts. None of this is in the film.

Bond also helped Khodorkovsky cheat Russia and minority shareholders of Avisma, a titanium company he also got at a rigged auction. Kenneth Dart, heir to the Dart disposable cup fortune, former investor in Russia William Browder, and their New York partner Francis Baker bought Avisma from MBK, on the understanding that profit-stripping would continue. When Bond showed there is no honor among thieves and didn‘t pass on the cash, they sued. An affidavit by attorney Anthony Wollenberg said they were told that “a significant part of the profits which Avisma was able to earn on the sale of its product were taken offshore through TMC,” Titanium Metals Co. He said that “was central to the entire transaction,” that “without the right to those profits, investment in Avisma was not an attractive proposition.” This, too, is not in the film.

In 1999 the ailing, drunk Yeltsin resigned and his prime minister, Vladimir Putin, took over.

The film suggests that Khodorkovsky was arrested for attacking Putin. It recounts that in 2003, Putin summoned Russia‘s top businessmen to a televised roundtable about corruption. Khodorkovsky came with slides which reported that some Russians felt that corruption existed at the highest levels of government, telling Putin that “25 per cent of the population believe that you are among those taking bribes.”

In fact, Khodorkovsky and Yukos were not singled out. Oil major Lukoil settled a claim for $200 million in taxes evaded in a similar scheme.

The details of the transfer-pricing scams matter, because MBK followed the same business model for the fertilizer company Apatit. He was initially arrested in 2003 for rigging the Apatit privatization auction and embezzling profits. This is also not in the film.

The unreported Stephen Curtis story also figures in the film‘s attack on Putin. Gibney declares that in England over 15 years there have been a growing number of mysterious deaths related to Russia. He screenshots a New York Times story that says Curtis, Khodorkovsky‘s lawyer, was killed in a helicopter crash, implying that Putin ordered his death.

Former Financial Times journalist Thomas Catan‘s version was different. He wrote that Curtis approached UK intelligence agencies weeks before the crash offering to provide information, probably about Yukos. The UK‘s National Criminal Intelligence Service had assigned Curtis to a handler just days before his new Agusta 109E helicopter crashed in March 2004. Someone close to British intelligence told Catan, “My sense…was that he was fearful of being prosecuted by the Russian authorities for being party to assisting in the capital flight and that he thought that going to the UK authorities would give him some sort of top cover.”

Khodorkovsky says in the film that in the beginning, “it seemed to me that ideologically he [Putin] was one of our people.” Putin had told the oligarchs he wouldn‘t question their rigged auction acquisitions if they kept out of politics.

In fact, MBK‘s conflict with Putin was not about charges of corruption by a man mired in corruption but over MBK‘s decision to use his ill-gotten wealth for political influence.

Moscow Times founder Sauer says in the film, “Now he has all this money, he started thinking about what‘s next.” Later on Sauer says, “Putin had a very valid point. Half of the parliament is on the payroll of Khodorkovsky, many of the top people in the oil ministry are people appointed by the oligarchs. What is this? If I want to be a real president, I need to have my own people, and I need to get these people out of politics.”

Gibney confronts MBK: “It was said at the time that you were busy courting or even buying influence in the Duma.” Khodorkovsky replies, “We only dealt with our industry-related problems…. It was exactly as it happens in the United States Congress. Will you support our campaign in the next election?” This answer is never challenged by Gibney.

However, the film does note MBK‘s other mistake: deciding to make Yukos a public company and seek a merger with ExxonMobil, giving foreigners control of Russia‘s oil.

The film says Russia got back Yukos in a bankruptcy auction won by “a mysterious, newly created company, Baikal Finance Group,” which sold it to the government-controlled Rosneft. In the film, Putin explains, “You all know perfectly well how privatization took place in the early ‘90s. Many market players at that time received state property worth many billions. Today the state, using absolutely legal market tools, establishes its interests. I think this is quite normal.”

Sauer notes, “In most countries in the world oil companies are owned by the state. Nothing wrong with this. Good news for the Russians. That‘s how 99 percent of the people saw it.” Another journalist says in the film, “The fact that the oligarchs were so reviled and resented by the Russian people was a fantastically useful tool for Putin…. And when he did bring the oligarchs to heel, it was incredibly popular.” All true. But Gibney avoids detailing why MBK was reviled.

He says, “Out of prison, Khodorkovsky is looking for a third act.” Khodorkovsky speaks in Kiev in 2014 at a rally in favor of the US-supported coup against Ukraine president Viktor Yanukovych, whom Washington considered too close to Russia.

There‘s a lot about MBK suffering in prison and thinking about his children. Gibney asks, “Do you think that being in prison gave you special insight into Putin and the people around him?”

“Yes. The way that the criminals think is exactly that way that the criminal group around Putin thinks. It‘s a criminal mentality.” That could explain his quips that “in Russia laws are an iffy question” and “the strictness of Russian laws is compensated by the lack of obligation to follow them.”

He gave Gibney an opening: “As a co-owner of Yukos I had to make enormous efforts to protect this property. I had to close my eyes and put up with many things all for the sake of my personal wealth, preserving and increasing it.” But Gibney doesn‘t take it. He never asks for details. Or how MBK can return what he stole.

# # # Komisar Scoop adds to The Nation story # # #

Here is what Derk Sauer says in the film about MBK’s investment in Sauer’s Moscow Times.

He says at 19:57 mark: I launched cosmopolitan which from day 1 was an enormous commercial success. And that attracted a lot of shady people…I thought maybe it‘s better to get one of these rising oligarchs as a shareholder. There was one guy in particular that I got interested in and that was Mikhail Khodorkovsky.

He says at 20:20 mark: The Moscow Times is a fiercely independent newspaper and if we sell 10 percent of our shares, we want to remain a fiercely independent newspaper. And he thought about it and he said yes.

But Sauer sold editorial control to MBK. After Khodorkovsky bought it, MT never investigated or criticized Khodorkovsky and his operations.

Now look at these stories by Moscow reporter John Helmer.

“Gobbled at Birth: No more regurgitation from the Moscow Times.”

And “Judas Iscariot Writes an Editorial.”

According to Helmer, Sauer and a string of his editorial appointees backed U.S. policy for Russia until Yeltsin was replaced. Helmer left the MT after he was told to reverse facts in his stories in order to support Yeltsin.

Helmer’s tweet on Citizen K and Sauer:

Mikhail Khodorkovsky on the left, Derk Sauer on the right in tweet by John Helmer.

Then, Helmer writes, Since then Sauer has favoured the Russian oligarchs who, openly or secretly, financed the publication.

“When the Home-Beautiful and US investment money ran out, Sauer arranged funding for the Moscow Times from a Swiss entity belonging to Mikhail Khodorkovsky.” Menatep Lausanne. He bought 10 percent.

Helmer writes that “Sauer‘s closest associates and partners have admitted selling their shares to Menatep for political protection in Russia… Yukos was one of the first sponsors of the new newspaper by Sauer, Vedomosti. …His renamed banks and oil companies remained generous advertisers and sponsors. Moscow Times returned the favors by never asking any difficult questions about Menatep or Khodorkovsky.

Helmer: Never once did Moscow Times notice wrongdoing at Menatep and Yukos; never once did the newspaper ask a difficult question; instead, it dispatched its reporters to brave sub-zero Siberian temperatures to do warm-up articles on how Yukos was changing Russia and Russian oil.

Helmer: All that changed a few weeks after the July 2003 arrest of Platon Lebedev. The Moscow Times suddenly discovered the evil in Yukos and Khodorkovsky.  Within days of the arrest, Moscow Times ran a front-page story accusing Lebedev of systematically intimidating reporters and curbing free speech. The reporters‘ names were never mentioned. What Moscow Times did not reveal was that in a highly secretive deal, Sauer and his ironically named Independent Media had bought back the shares from Menatep and sold them, plus the stake held by VNU of the Netherlands, to Vladimir Potanin.

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