Khodorkovsky already in court

On May 28, court hearings of the Khodorkovsky case began in Russia. Mikhail Khodorkovsky, an oligarch and former Yukos CEO, is charged with fraud and tax evasion. Court hearings lasted a few hours and then broke for recession, and were postponed till June 8. Judging by many signs, court hearings will be protracted - there will be a severe fight between the prosecutors and the defence, filing numerous petitions.

In Russia, the interest in the process is limited - the population is mostly indifferent, and some have antipathy to the oligarch, while business and political circles are alarmed. Gloomy mood is prevailing among the elite. After the Court of Arbitration ruled in favour of the tax ministry's claim worth $3.5 billion of unpaid tax, few believe in a favourable outcome for Yukos and Khodorkovsky. No matter how rich the oil tycoon is, it is impossible to pay such a sum to the budget at once.

There is still a ray of hope, though even optimists admit the chances are very slim. According to Khodorkovsky's colleagues, if the Court of Arbitration's decision on the $3.5 billion takes effect, the company might arrange it with the tax ministry to repay the debt in portions, thereby saving Yukos from bankruptcy.

Is Yukos bankruptcy good for the country's economy, for the domestic political situation and for the investment climate? These are far from all the questions that are often asked in the business community. Besides, according to many estimates, the arrival of the PACE rapporteur on legal affairs who came to Moscow to study how Mr. Khodorkovsky's rights are observed can only irritate the population and the Russian authorities. And this hardly helps Yukos and the oligarch himself.

Some see the possible way out in putting former chief of the Central Bank and influential financier Viktor Gerashchenko at the head of Yukos. But he will be elected the Chairman of the Board only in late June when the situation might have already reached the point of no return.

As for the prospects of the court hearings, society differs on this score. Very few people hope for Mr. Khodorkovsky's acquittal. Public opinion is guessing: will he receive a suspended or a real sentence, or have to pay taxes with interest and fees, or be amnestied. All these options are possible.