What’s Spelled Out in Khodorkovsky’s Sentence

The sentencing last week of Russian oil tycoon Mikhail Khodorkovsky (NationalPost) to another six years in prison, on fraud and embezzlement charges, prompted criticism from U.S. Secretary of State Hillary Clinton on Russia’s human rights record (Reuters), but little stir among Russians themselves. In part, that could be due to Russians’ resentment of Khodorkovsky’s fortune and the feeling that he deserves a "comeuppance," says Russia economics expert Marshall Goldman. Goldman likens Khodorkovsky and other "oligarchs" to American robber barons such as Cornelius Vanderbilt and John D. Rockefeller, who were known for their strong-arm methods as well as their philanthropy. Khodorkovsky has done "good things, but he’s also done some bad things," says Goldman. But his two trials "were trials where you’re guilty before [they] begin." He adds that Khodorkovsky’s downfall in 2003 came because he mistakenly thought his money would allow him to challenge then-president Vladimir Putin, who views Khodorkovsky "as a threat" and is "not a guy who backs away from a fight."

Is Khodorkovsky a Dr. Jekyll who did good, or is he a Mr. Hyde who was as evil as the Russian government charges?

Using your analogy, Khodorkovsky had a split personality. At times he was Dr. Jekyll and other times he was a Mr. Hyde. He has done some good things, but he’s also done some bad things. If you were to try him on just the bad things, you could make a case for it. But then you have to ignore the fact that there were times when he did things that were beneficial for society and individuals. Vladimir Putin, first as president, and now as prime minister, has focused on the negative side because he views him as a threat.

How did a man like Khodorkovsky, who was not a high official in the Russian government, become so terribly rich?

He’s not the only Russian who became fabulously rich in the last two decades. He’s probably the most notorious, but he’s not the only one. You really have to go back and look at the transformation that took place when the Soviet Union took what were state assets and privatized them [first under then-president Mikhail Gorbachev and then under President Boris Yeltsin]. The assets fell into the hands of individuals, in some cases in a legitimate way, in other cases in an illegitimate way. Strong-armed tactics were often used. People came knocking on the doors and said, "I’m taking your assets. If you don’t like it, fight me, or I’m going to shoot you."

If you’re looking for an analogy in U.S. history, it was sometimes like the Wild West, when brute force determined what happened. Some analogies can also be made to our so-called "railroad barons," like Cornelius Vanderbilt, the richest man alive when he lived. We now remember him for the positive things he did, but he also used strong-arm methods when the railroads were being built. You can think of Khodorkovsky in that framework--that he just decided that he was going to be stronger than others and used strong-arm tactics to achieve that goal.

Was it legal at the time?

Yes and no. That’s part of this dual-image thing, because, at that time, they were making up laws as they went along. So you had to have the foresight to see, "How do I get to the end goal?" which is to capture all of these assets and then be left alone to enjoy them. Well, that was not easy, but, again, Khodorkovsky was not the only person who did this. There was a whole tribe of people who just went ahead and seized assets and made themselves into what we have come to call oligarchs.

Again, if you go back to American economic history, [you can see] someone like John D. Rockefeller, who dominated the oil industry. We think highly of [him] now because he set up the foundation and did some very good things, but Rockefeller himself used strong-arm methods to seize oil fields, railroads, and different things. We have that same pattern when we talk about the oligarchs in Russia. The Russians did it in a way that was more violent, in part because some of the assets that were up for grabs were more valuable when they did it. Unless you had a strong backbone and an armed force that you could call upon, you didn’t want to stand in their way.

Khodorkovsky made his fortune primarily in the oil industry?

Yes. What we didn’t fully appreciate at the time was that Russia was so rich in energy. We knew back in the beginning of the nineteenth century that Russia had oil assets--in fact some of the oil fields discovered there were discovered even before the fields in Texas. Khodorkovsky got control of some of those assets and then used them to acquire more assets and build his empire and basically threaten anyone who got in his way. He felt he could do no wrong, that nobody could challenge him, even the state could not challenge him.

Then-president Yeltsin was in cahoots with the oligarchs, correct?

One of his daughters married one of these oligarchs, and Yeltsin was amenable to them because he was fighting battles too and needed all the support he could get.

They helped get Yeltsin reelected in 1996, right?

They certainly did. Yeltsin was considered a lost cause and had lost popular support. But by mustering backing from these oligarchs, he was able to get publicity and public support, and ultimately won. Then he became obligated to them too. So, they helped him, and he in turn helped the oligarchs increase control.

Khodorkovsky had a kind of transformation a few years later when he became, "a good citizen"?

Yes, well go back into American history and you’ll find the exact same thing. All the American oligarchs have some part of their history that’s questionable, but with time we tend to forget that, particularly if their good works follow with some of the money that was generated in the beginning.

Before Khodorkovsky was arrested, was he giving money away or setting up foundations?

He set up the Open Russia Foundation with Henry Kissinger on the board. Some of the money, indeed, came to international groups, including groups in the United States.

Including the Library of Congress, right?

Right. LOC got $1 million. We were offered money at Harvard’s Davis Center [former Russian Research Center] from some oligarchs, and I was dead set against it. I just didn’t want to have to get a phone call from a reporter asking, "How do you explain the fact that you took the money?" A lot of my colleagues were very angry because we could always use the money and the assumption was that if we took the money it would be OK. But I had seen this coming, and I just didn’t want to be associated.

What led to his downfall?

He decided that with all of that money he could do anything he wanted, and he decided to challenge Putin. And Putin is not a guy who backs away from a fight, and Putin thinks of himself as a very strong person who can mobilize resources in a way that can withstand any kind of challenge. Had any other leader been there, Khodorkovsky might still be doing well today. It’s not that Putin is a great moralist. Khodorkovsky and the other oligarchs were challenging Putin’s manhood, and he was not going to accept anyone challenging him that way.

Putin called a meeting (Economist) of many of these oligarchs in which he said, "You guys can keep your money, but just don’t get into politics."?

That’s right.

And Khodorkovsky got into politics?

Yes. Once you have all that money, you think can do whatever you want, and that you’re capable and can withstand challenges. And they disregarded Putin’s warnings and decided to challenge him. He said, "OK, I’ll take you on." He resented anybody threatening him or his power, and he commanded more resources, power, and authority than his challengers and, ultimately, put them all down.

How much was it a nationalist issue--that Putin wanted to get these resources back in Russian government control?

It was partly a nationalist thing. Russia used these resources for its own national purposes. The one thing Russia had was oil, and that oil had enormous value. And when an oligarch starts siphoning it off for himself, that takes away a very powerful tool from the state. Those in the state sector said, "We want it back. These are resources that belong to the public at large, not to individuals, and we’re going to reclaim them and you have no right to them."

Most of the charges relate to tax fraud. Did these oligarchs really not pay their taxes?

They didn’t pay their full burden, and of course you can keep changing the definition of what is owed. Most of the oligarchs sat down and said, "What can we do to make sure that we continue in our position and aren’t challenged?" So some of them did pay up, but the definitions kept changing.

In Russia today, Khodorkovsky is not considered a martyr by most people. They’re happy to see him in jail?

You’re right. I don’t remember meeting anyone who feels sympathy for Khodorkovsky, because he had all that money. It’s very hard to feel sympathy for somebody who really is the equivalent of a billionaire. In this country, I don’t think we would feel much sympathy for someone even if we were convinced that the person had not done anything wrong--there’s a kind of jealousy that runs through us. People may think he deserves a comeuppance--that’s partially the response Khodorkovsky got.

Looking at Khodorkovsky’s 2003 trial and the one that just ended, do you think his penalties fit the charges?

No. These were trials where you’re guilty before the trials begin. And you’re going to be penalized before the trial begins. Putin could not run the risk of having Khodorkovsky running around as a free man. That would jeopardize his control. Putin has some things himself he has to answer for, so you’ve got to make sure that nobody unearths some of these things--and Khodorkovsky would have the means to do that. So, Putin just took him out of circulation.

Do you agree with the speculation that Putin is thinking of running for president again in 2012 and therefore wanted Khodorkovsky out of the way?

There’s a good chance.