Case 1:14-cv-01996-BAH Document 142-1 Filed 08/04/16 Page 1 of 47
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`UNITED STATES DISTRICT COURT
`DISTRICT OF COLUMBIA
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`HULLEY ENTERPRISES LTD., (cid:9)
`YUKOS LTNIVERSAL LTD., and (cid:9)
`VETERAN PETROLEUM LTD., (cid:9)
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`Petitioners, (cid:9)
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`THE RUSSIAN FEDERATION, (cid:9)
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`Respondent. (cid:9)
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`Case No. 1:14-cv-01996-BAH
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`DECLARATION OF DMITRY GOLOLOBOV
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`I, D1VIITRY GOLOLOBOV, declare and state as follows:
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`1. I was born in 1969 in the Russian Soviet Federative Socialist Republic, which became
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`known in 1991 as the Russian Federation. I have lived in England since September 2004.
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`2. I am an advocate qualified in Russian law and a member of the Moscow Bar (admitted in
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`2002), as well as a qualified solicitor in England and Wales (admitted in 2015). I hold advanced
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`degrees in Russian and English law from Tver State University, the Academy of the Ministry of
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`Internal Affairs in St Petersburg, Queen Mary University, the London School of Economics,
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`University College London and University of Westminster. I have given lectures on
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`international financial crime (specifically money laundering and corporate fraud) at the
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`University of Westminster and on comparative law at BPP University. My full curriculum vitae
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`is attached to this statement' I currently work as the head of my own legal practice, Gololobov
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`and Co., and specialize in Financial & Corporate Crime and Corporate Conflicts in the
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`I (cid:9)
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`Curriculum Vitae of Dmitry Gololobov, Ex. R-638.
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`(cid:9)
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`Case 1:14-cv-01996-BAH Document 142-1 Filed 08/04/16 Page 2 of 47
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`Commonwealth of Independent States ("CIS"). I am also the head of the CIS practice at iLaw, a
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`commercial law firm with a focus on clients in the technology, media, and telecoms sectors.
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`3. From 1995 until 2004, I worked as an in-house legal consultant for companies associated
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`with Mr. Mikhail B. Khodorkovsky, including Bank Menatep, ZAO Rosprom ("Rosprom"), and
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`OAO Yukos Oil Company ("Yukos"). I therefore was aWare of, and was on certain occasions
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`responsible for reviewing, the means by which Mr. Khodorkovsky and his closest associates
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`(specifically, Mr. Leonid B. Nevzlin, Mr. Platon L. Lebedev, Mr. Mikhail B. Brudno, and Mr.
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`Vladimir M. Dubov) acquired ownership of more than 70% of the shares of Yukos. I also learnt
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`how they used a series of shell companies, both in the Russian Federation and in offshore
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`jurisdictions (including Cyprus, the Isle of Man, and the British Virgin Islands) to move their
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`Yukos shares in order to conceal their ownership of Yukos from the Government of the Russian
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`Federation and the Russian public. After 2000, Mr. Khodorkovsky and his above-listed
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`associates ("the Oligarchs") owned and controlled Yukos through three offshore shell companies
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`called Hulley Enterprises Limited ("HEL"), Yukos Universal Limited ("YUL"), and Veteran
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`Petroleum Limited ("VPL"), as well as these shell companies' parent entity, Group Menatep
`Limited ("GML").
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`4. Each of the Oligarchs was involved to different degrees in these organizations.
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`Mr. Khodorkovsky was the primary decision-maker for all major projects, and served as
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`Chairman of the Board for both Bank Menatep and Yukos. He also reviewed the draft budgets
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`for Yukos and for the whole corporate group. Mr. Nevzlin was also involved in decision-
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`making, but had meetings in private with Mr. Khodorkovsky and usually made decisions
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`together with him. He was First Deputy Chairman of Bank Menatep, and a Vice President at
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`Yukos, and was responsible for political matters, including both government relations and public
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`relations. Mr. Lebedev was the Deputy Chairman of Bank Menatep and responsible for the
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`Oligarchs' offshore structures, such as GML, and so was external to Yukos and had an office
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`outside of Moscow. Mr. Dubov and Mr. Brudno were both members of the Board of Directors
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`for Bank Menatep. Mr. Brudno was the Vice President in charge of "Yukos RM," which was
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`responsible for refining and marketing at Yukos, and also held other positions at various times.
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`Mr. Dubov was officially outside the group for a number of years, beginning in 1999 when he
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`became a member of the State Duma, but still had meetings with Khodorkovsky in private, still
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`2
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`Case 1:14-cv-01996-BAH Document 142-1 Filed 08/04/16 Page 3 of 47
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`had an office at Yukos, and lobbied on behalf of the group. Another of the Oligarchs, Mr. Vasily
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`Shalchnovslcy, joined the group later, after the acquisition of Yukos in 1995 and 1996, and
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`became head of 000 Yukos Moscow. He performed only administrative roles and rubber-
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`stamped decisions that had been made by Mr. Khodorkovslcy together with the others.
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`5. In this witness statement, I will address essentially the following six topics relating to the
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`years that I worked for the Oligarchs:
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`The means by which the Oligarchs acquired a majority of Yukos shares, which
`involved making what I understand to have been illegal payments to Government-
`appointed individuals, corruption, and collusive bid-rigging in connection with
`the Loans-for-Shares auctions in 1995 and 1996;
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`The means by which the Oligarchs moved their Yukos shares offshore, without
`seeking or obtaining the permission of the Ministry for Anti-Monopoly Policy, as
`was legally required;
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`The steps taken by the Oligarchs during the aftermath of Bank Menatep's
`insolvency in 1998, including their treatment of creditors and minority
`shareholders, as well as destruction of documents;
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`The extensive discussions among Yukos executives in 2002 and 2003 in
`connection with the Oligarchs' "Project Voyage" Working Group, during which
`we (successfully) advised the Oligarchs not to attempt an issuance of
`Level 3 American Depositary Receipts (ADRs), which would have substantially
`increased the Oligarchs' vulnerability to criminal prosecution in the United States;
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`The steps taken in response to the financial collapse of Yukos in 2004 and 2005
`due to the assessment of significant unpaid tax liabilities, during which the
`Oligarchs conspired with certain Yukos managers to transfer Yukos assets into
`two Dutch stichtings in order to shield them from legitimate creditors (such as
`foreign banks and the Russian tax authorities); and
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`The public statements by Mr. Khodorkovsky in 2010 and 2016, seeking to
`absolve himself of all guilt and liability, to which I responded publicly in articles
`for Vedomosti and Russian Business Consulting.
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`iv.
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`v.
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`vi.
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`I will also explain the basis for my knowledge and provide citations to specific documents,
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`which are appended to this witness statement.
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`3
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`I. (cid:9)
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`THE PRIVATIZATION OF YUKOS
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`6. I first moved to Moscow in the summer of 1995, and was hired through a recruitment
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`agency by one of Bank Menatep's executives, Mr. Viktor Prokofiev, as an in-house legal
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`consultant. I worked for Bank Menatep very briefly, before I was reassigned to work for an
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`affiliated entity, known as Rosprom. Rosprom was a management company, which supervised
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`and operated many of the companies affiliated with Bank Menatep. I was aware at this time that
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`both Bank Menatep and Rosprom were owned and controlled by Mr. Khodorkovsky, Mr.
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`Nevzlin, Mr. Lebedev, and their fellow Oligarchs. After working at Rosprom for roughly one
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`year, I was reassigned once more to work for Yukos itself, which had been acquired by the
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`Oligarchs from the Government of the Russian Federation in two separate share purchases in
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`1995 and 1996 within the framework of the Loans-for-Shares auctions, as explained below.
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`7. I worked at Yukos for many years directly under Mr. Vasily G. Aleksanyan, who was
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`General Counsel to Yukos and a close advisor to Mr. Khodorkovsky. While working at Yukos, I
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`had considerable involvement in the use of offshore entities to carry out complicated investment
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`strategies on behalf of Yukos and its ultimate owners, the Oligarchs.2 I also participated in a
`working group associated with the Oligarchs' "Project Voyage," together with the Oligarchs'
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`advisors from Akin Gump LLP, Clifford Chance LLP, PricewaterhouseCoopers (PwC), and
`Deutsche Bank.3 As I discuss below in Part IV of this witness statement, Project Voyage
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`involved the preparation of certain registration statements for the U.S. Securities and Exchange
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`Commission (SEC) in 2002 and 2003, in connection with a public listing of Level 3 American
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`Depositary Receipts (ADRs) for Yukos in the United States. It was during Project Voyage that I
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`gained a particularly detailed knowledge of the events of 1995 and 1996. Indeed, one of the key
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`questions for the Project Voyage working group was how to conceal the Oligarchs' illegal
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`2 (cid:9)
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`3 (cid:9)
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`As one example, in 2000, I drafted a memorandum to be sent to Mr. Khodorkovsky under Mr. Aleksanyan's
`signature, which related to reducing labor costs by channeling the remuneration of Yukos employees through
`subsidiary companies in Cyprus. Memorandum from V.G. Aleksanyan to M.B. Khodorkovsky, Methods for
`Remuneration of the Company's Employees (Mar. 3, 2000), attached to Email from D. Gololobov to A.
`Valentinovich, (Apr. 14, 2000), ECF No. 109-17, Ex. R-634.
`Project Voyage Updated Schedule (ADR Listing) (Aug. 7, 2002), ECF No. 109-2, Ex. R-618; UBS Warburg,
`Project "Voyage" Working Group List (Nov. 4, 2002), ECF No. 109-3, Ex. R-619.
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`4
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`Case 1:14-cv-01996-BAH Document 142-1 Filed 08/04/16 Page 5 of 47
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`activities in 1995 and 1996 (which we referred to as the "old sins" (cmapbze 2pexu)),4 while still
`providing enough detail in the registration statements to satisfy the SEC. My references to the
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`activities in 1995 and 1996 as being "illegal" is based on my knowledge of the facts and the
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`letter and spirit of the Russian law applicable at the time. Naturally, the Oligarchs were
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`committed to concealing the illegal activities committed in 1995 and 1996 from both the
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`Government of the Russian Federation and the Russian people. My fellow Yukos executives and
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`I feared that disclosure of these illegal activities would result in the "de-privatization" of Yukos,
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`as well as potential prosecution of the Oligarchs for fraud, corruption, and collusive bid-rigging.
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`The Oligarchs also feared prosecution in the United States—which they called "the American
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`hook"—as Mr. Khodorkovsky stated explicitly in early 2003.5 These fears ultimately caused
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`Mr. Khodorkovsky and the other Oligarchs to cancel the listing of Level 3 ADRs for Yukos in
`the United States.
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`8. The relevant events of 1995 and 1996 were as follows. In December 1995, shortly after I
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`was transferred from Bank Menatep to Rosprom, Mr. Khodorkovsky and the other Oligarchs
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`acquired ownership and control of Yukos—the majority of which had previously been owned by
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`the Government—in one of the "Loans-for-Shares" auctions, which had been conducted jointly
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`with an Investment Tender. The Loans-for-Shares auctions were a means of privatization
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`established on August 31, 1995, under Presidential Decree No. 889, in order to provide a source
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`of funding for the Government during a difficult financial period.6 In the specific case of Yukos,
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`45% of the total shares were subjected to a Loans-for-Shares auction governed by Presidential
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`Decree No. 889, whereas 33% of the total shares of Yukos were sold through an Investment
`Tender.
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`5 (cid:9)
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`4 Memorandum from P.N. Malyi to O.V. Sheyko, MBKh Liability, at 4 I 3, attached to E-mails from P.N. Malyi
`to O.V. Sheyko, Liability in the US (Mar. 13 and 20, 2003), ECF No. 112-5, Ex. R-663.
`Email from Mr. Khodorkovsky to Mr. Sheyko, Suspension of Voyage (Feb. 20, 2003), ECF No. 109-11, Ex. R-
`628.
`Presidential Decree of the Russian Federation on the Procedure for Putting the Federally Owned Shares in
`Pledge, Aug. 31, 1995, No. 889 ("Presidential Decree No. 889"), ECF No. 40-1, Ex. R-261.
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`6 (cid:9)
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`5
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`A. (cid:9)
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`The 45% Block of Yukos Shares
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`9. Under the terms of Decree No. 889, private bidders were invited to bid competitively for
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`an opportunity to make a loan to the Ministry of Finance, which would be secured by a pledge of
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`the shares of large, State-owned enterprises (such as Yukos) as collateral, under a pledge
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`agreement with the State Property Committee! The bidder which offered the largest loan would
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`win the Loans-for-Shares auction, and would then make the loan.8 In the event that the Ministry
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`of Finance defaulted on the loan, Decree No. 889 provided that the original bidder would be
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`obligated to sell the pledged shares in a second competitive auction and permitted to keep 30%
`of the excess proceeds (i.e., 30% of the difference between the sale price and the amount of the
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`original loan).9 The remaining 70% of the surplus proceeds had to be paid back to the
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`Govemment.10 Decree No. 889 also provided that at least two genuine bidders were required to
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`participate in each Loans-for-Shares auction, or else the results would not be valid." Exactly the
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`same requirement was set forth under Article 447 of the Civil Code of the Russian Federation,
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`which provided as follows: "An auction by bidding or a competition in which there has been
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`only one participant shall be considered as not having taken place."12
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`10. There were not two genuine bidders in any of the competitions relating to the acquisition
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`of Yukos shares—a fact which the Oligarchs actively took steps to conceal. In the Loans-for-
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`Shares auction relating to 45% of Yukos in December 1995, only two companies ultimately were
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`allowed to participate: ZAO Laguna and ZAO Reagent.13 ZAO Laguna won by bidding US$
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`159 million, which was slightly more than ZAO Reagent's bid of US$ 150.1 million, which was
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`7 (cid:9)
`8 (cid:9)
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`Presidential Decree No. 889, ECF No. 40-1, Ex. R-261.
`Presidential Decree No. 889, August 31, 1995, ECF No. 40-1, Ex. R-261.
`9 (cid:9)
`Presidential Decree No. 889, App. No. 3 §§ 8-9, ECF No. 40-1, Ex. R-261.
`to (cid:9)
`Presidential Decree No. 889, App. No. 3 IN 8-9, ECF No. 40-1, Ex. R-261.
`tt (cid:9)
`Presidential Decree No. 889, ¶ 6, App. No. 3 ¶ 7, ECF No. 40-1, Ex. R-261.
`12 (cid:9) Grazbdanskii Kodeks [GK] [Civil Code] art. 447(5) (Russ.) ("Civil Code of the Russian Federation"), ECF No.
`51-1, Ex. R-272).
`13 (cid:9) Loans for Shares Auction Commission, Minutes No. 1 (Dec. 8, 1995), ECF No. 25-4, Ex. R-4; Loans for Shares
`Auction Commission, Minutes No. 2 (Dec. 8, 1995), ECF No. 25-5, Ex. R-5.
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`6
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`Case 1:14-cv-01996-BAH Document 142-1 Filed 08/04/16 Page 7 of 47
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`slightly more than the minimum bid price of US$ 150 million.14 After the Government defaulted
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`on the loan in 1996, the 45% block of Yukos was auctioned off in December 1996. In this
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`auction, the only participants were ZAO Monblan and OA° Moscow Food Factory
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`(Moocoeocuii nuNeeoil Kom6unam), which bid US$ 160.1 million and US$ 160.05 million,
`respectively.15 All of the ultimate participants in these auctions-including ZAO Laguna, ZAO
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`Reagent, ZAO Monblan, and OA° Moscow Food Factory-were effectively owned and
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`controlled by Mr. Khodorkovslcy and the other Oligarchs. Considerable effort was taken to
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`disguise the actual ownership and control of these shell companies. For example, additional
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`shell companies, ZAO Polinep and ZAO Globus, were established to serve as the parent
`companies of ZAO Laguna.16
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`11. As was well known among high-level Yukos employees, such as myself,17 the general
`directors of these shell companies-including Mr. Andrei Vladimirovich Kraynov, Mr. Arkady
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`Vitalyevich Zalcharov, and Mr. Andrei Vasilyevich Koval-were actually employed by Russian
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`Trust and Trade ("RTT"), which was a joint venture established by Bank Menatep and Menatep
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`S.A." Those RTT employees were acting at all times under the leadership of Mr. Gitas P.
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`Anilionis, who worked in close cooperation with Mr. Vladimir Moiseyev, an old school friend
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`and confidante of Mr. Khodorkovslcy and, formally, the Head of the Methodology Department at
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`14 Loans for Shares Auction Commission, Minutes No. 2 (Dec. 8, 1995), ECF No. 25-5, Ex. R-5; Pledge
`Agreement No. 01-2/2761 (Dec. 13, 1995), ECF No. 25-8, Ex. R-8; Stock Purchase Agreement No. 1-12-1/990
`(Dec. 14, 1995), ECF No. 25-9, Ex. R-9.
`15 (cid:9) Tender Committee, Report on the Sale of Shares of Yukos Oil Company (Dec. 24, 1996), ECF No. 27-7, Ex. R-
`47.
`16 (cid:9) ZAO Laguna, Tender Investment Proposal (1995), ECF No. 116-3, Ex. R-701.
`17 I recall, for example, supervising the effort in 1998 to obtain approval from the Ministry on Antimonopoly
`Policy for certain transactions involving these shell companies, when the Oligarchs decided to move their
`Yukos shares from the RTT employees' shell companies to HEL's wholly-owned subsidiaries in Cyprus
`(including the companies called Kincaid, Barion, Temerain, Wandsworth, and Cayard). See Memorandum from
`Clifford Chance, Doc No. 1-90646-06, at 4-5 (Undated), ECF No. 109-14, Ex. R-631; see also Letters of
`Approval from the Ministry on Antimonopoly Policy (Dec. 17, 1998), Ex. R-731. Notably, it was never
`explained to the Ministry on Antimonopoly Policy that there were RTT employees on both sides of all of these
`transactions. Nor was the approval of the Ministry on Antimonopoly Policy obtained for the transactions
`between 1996 and 1998, as I explain further below.
`18 RTT, Employee List for 1995 (Sept. 1, 1995), ECF No. 25-3, Ex. R-3; WIT, Joint Venture Charter (Amended
`Dec. 8, 1997), ECF No. 25-2, Ex. R-2; Moscow Registration Chamber, RTT Certificate of Registration No.
`012.244 (Sept. 24, 1992), ECF No. 25-1, Ex. R-1; see also Information on the Privatization of Menatep
`Enterprises, ECF No. 112-7, Ex. R-665 (identifying "Moscow Food Factory" as one of the Oligarchs'
`companies within the "Food Industry").
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`Case 1:14-cv-01996-BAH Document 142-1 Filed 08/04/16 Page 8 of 47
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`Yukos. Mr. Moiseyev's office at the Yukos headquarters was located close to the office of the
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`legal department and I often heard his employees speaking about WIT and the corporate
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`structures involved in the events of 1995 and 1996.
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`12. Essentially, RTT provided secretarial services related to the registration and upkeep of
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`shell companies, which Bank Menatep, Rosprom, and Yukos used for a wide variety of purposes,
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`including bid rigging, tax avoidance, avoidance of obligations under employment and
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`environmental laws, obscuring the continued control of Yukos by the Oligarchs, circumvention
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`of antimonopoly laws, and defense against the risk of de-privatization based on the illegal
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`methods by which their Yukos shares were originally obtained. The employees of RU acted as
`the shell companies' general directors,19 but made no decisions regarding these shell companies'
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`activities without the express consent of the Oligarchs—usually communicated through either
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`Mr. Moiseyev or Mr. Anilionis. Mr. Anilionis received some of RU's instructions during
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`regular meetings (which I also attended) at Mr. Khodorkovslcy's headquarters on Kolpachny
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`Lane.
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`13. As was well understood by high-level Yukos employees, the fact that the 1995 and 1996
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`auctions were rigged (involving only one genuine bidder, Bank Menatep itself) would have
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`invalidated the auction results under Section 6 of Presidential Decree No. 889, as well as under
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`Articles 168, 169, 170, and 447 of the Civil Code—thus nullifying the Oligarchs' ownership and
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`control of Yukos. It was also well known that the State Duma had condemned collusive bidding
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`in its Resolution No. 3331-H GD in 1998, and made specific reference to the Loans-for-Shares
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`auctions in 1995 and 1996. The State Duma's Resolution urged President Yeltsin to seek to
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`annul the results of any Loans-for-Shares auctions won through collusive bidding, through the
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`19 Compare RU, Employee List for 1995 (Sept. 1, 1995), ECF No. 25-3, Ex. R-3 (identifying Mr. Koval, Mr.
`Zakharov, Mr. Kraynov, and Mr. Kobzar as RU Employees), with Stock Purchase Agreement No. LJA-1 (Jan.
`24, 1996), ECF No. 25-10, Ex. R-10 (identifying Mr. Koval as representing ZAO Astarta "on the basis of the
`Charter" and Mr. Zakharov as representing ZAO Laguna "on the basis of the Charter"), and Stock Purchase
`Agreement No. LIT-1 (Jan. 24, 1996), ECF No. 25-11, Ex. R-11 (identifying Mr. Kobzar as representing ZAO
`Tonus "on the basis of the Charter" and Mr. Zakharov as representing ZAO Laguna "on the basis of the
`Charter"), and Stock Purchase Agreement No. U-51/97 (May 5, 1997), ECF No. 25-12, Ex. R-12 (identifying
`Mr. Koval as representing ZAO Flex-Oil as the "General Director . . . on the basis of the Charter" and Mr.
`Kobzar as representing ZAO Yukos Trust as the "General Director . . . on the basis of the Charter"), and Stock
`Purchase Agreement No. Ts-703 (Dec. 24, 1996), ECF No. 25-14, Ex. R 14 (identifying Mr. Kraynov as the
`General Director of ZAO Mont Blanc "on the basis of the Charter").
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`8
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`Russian courts under Article 170 of the Civil Code.2° The State Durna's Resolution also stated
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`that some of the Loans-for-Shares auctions were sham transactions because the parties that
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`participated in them were "by turns, the same legal entities, which allowed them to adjust and co-
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`ordinate their actions in advance in order to acquire blocks of shares at a marked-down price."21
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`My fellow Yukos employees and I thus understood that the Oligarchs' unlawful acquisition of
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`Yukos shares had to be kept secret from both the Government of the Russian Federation and the
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`Russian public.
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`14. Keeping this secret was made easier by the fact that Bank Menatep had itself been
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`appointed as the administrator of the 1995 and 1996 auctions under agency contracts with the
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`State Property Committee and the Russian Fund of Federal Property.22 Although he was not the
`only employee dealing with these matters, Mr. Konstantin Kagalovslcy, a senior Bank Menatep
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`official, had primary responsibility for reviewing the bids. He was thus well-situated to conceal
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`the collusive arrangement between the Oligarchs, the RTT employees, and the shell companies.
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`Indeed, Mr. Kagalovslcy also publicly denied that there was any connection between the
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`Oligarchs and the shell companies. In one memorable example, during a press conference in
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`1996, Mr. Kagalovsky publicly stated that the Oligarchs had no relationship with ZAO Monblan
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`(spelled "Mont Blanc" in English), which was the shell company that won the 1996 auction.
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`Specifically, Mr. Kagalovslcy told reporters, "Where is no connection between Monblan and
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`Menatep. They are different organizations."23 As my colleagues and I knew, however, this
`statement was false—the general director of ZAO Monblan was Mr. Andrey V. Kraynov, an
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`employee of RTT, who took directions from the Oligarchs.24
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`22
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`20 (cid:9) Resolution of the State Duma of the Russian Federation on the Non-Admissibility of Passing Shares of Joint-
`Stock Companies of Strategic Importance for the National Security into the Ownership of Non-Residents of the
`Russian Federation, No. 3331-11 GD, Dec. 4, 1998 ("Resolution of the State Duma No. 333 Hi GD"), ECF No.
`41-4, Ex. R-284.
`21 (cid:9) Resolution of the State Duma No. 3331-11 GD, ECF No. 41-4, Ex. R-284.
`Loans for Shares Auction Commission, Minutes No. 1 (Dec. 8, 1995), ECF No. 25-4, Ex. R-4; Loans for Shares
`Auction Commission, Minutes No. 2 (Dec. 8, 1995), ECF No. 25-4, Ex. R-5; Tender Committee, Report on the
`Sale of Shares of Yukos Oil Company (Dec. 24, 1996), ECF No. 27-7, Ex. R-47.
`Sergey Lukianov, Managed' Yukos Sale Fetches $160M, Moscow Times (Dec. 24, 1996), ECF No. 109-1, Ex.
`R-617.
`24 (cid:9) RTT Employee List for 1995 (Sept. 1, 1995), ECF No. 25-3, Ex. R-3 (identifying A.V. Kraynov as an employee
`of RTT); Stock Purchase Agreement No. Ts-703 (Dec. 24, 1996), ECF No. 25-14, Ex. R-14 (referencing
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`23 (cid:9)
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`9
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`(cid:9)
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`B. (cid:9)
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`The 33% Block of Yukos Shares
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`15. As noted above, only 45% of the total shares of Yukos had been designated to be
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`pledged in a Loans-for-Shares auction on December 8, 1995. Another 33% would be sold
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`outright in a separate Investment Tender, which was conducted on the same day as the Loans-
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`for-Shares auction. Under the terms of the Investment Tender, the private entity selected as the
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`winner would also be obliged to make a series of mandatory investments pursuant to the
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`Government's Investment Program. To win the Investment Tender—while avoiding making the
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`mandatory investments required under the Investment Program—the Oligarchs entered into an
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`illegal agreement with a group of Government appointees and employees: Mr. Sergey V.
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`Muravlenko, Mr. Youry A. Golubev, Mr. Viktor A. Kazakov, and Mr. Viktor V. Ivanenko. In
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`exchange for providing secret assistance to the Oligarchs in connection with the Investment
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`Tender and Investment Program, these Government appointees and employees received
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`extraordinarily large payments funneled through offshore companies under sham agreements
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`concluded with the Oligarchs.25 This arrangement had much in common with a similar scheme
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`by which the Oligarchs also fraudulently obtained the shares of a State-owned fertilizer company
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`called OA° Apatit, without complying with the associated investment program (for which
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`several of the Oligarchs were later prosecuted and convicted in 2005).
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`16. Prior to the privatization of Yukos in 1995 and 1996, Mr. Muravlenko, Mr. Kazakov and
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`Mr. Ivanenko had been the directors of Yukos, and Mr. Golubev was the head of various
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`departments from time to time. Mr. Muravlenko had received his position under a formal
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`appointment by decree of the Government, and all four of these men had been responsible for the
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`administration of the Government's assets. These four managers had a number of official
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`powers, which they used in favor of the Oligarchs. Under the Regulation on Investment Tenders
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`for the Sale of Shares of OAO Yukos Oil Company dated December 15, 1994, Mr. Muravlenko
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`"Closed Joint Stock Company Mont Blanc, hereinafter referred to as the 'Buyer', represented by General
`Director Andrey Vladimirovich Kraynov, acting on the basis of the Charter").
`25 (cid:9) Agreement between Group Menatep Ltd. and Tempo Finance, Ltd. (Mar. 26, 2002), ECF No. 116-1, Ex. R-699
`(identifying Mr. Sergey V. Muravlenko, Mr. Youry A. Golubev, Mr. Viktor A. Kazakov, and Mr. Vilctor V.
`Ivanenko as the "Beneficiaries"); Restated Compensation Agreement between Group Menatep Ltd. and Tempo
`Finance, Ltd. (Nov. 1, 2002), ECF No. 109-5, Ex. R-621 (identifying Mr. Sergey V. Muravlenko, Mr. Youry A.
`Golubev, Mr. Viktor A. Kazakov, and Mr. Viktor V. Ivanenko as the "Beneficiaries").
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`Case 1:14-cv-01996-BAH Document 142-1 Filed 08/04/16 Page 11 of 47
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`and his colleagues (acting for "the Company") were empowered to select one of the members of
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`the Investment Tender commission, which would evaluate the tender application submitted by
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`ZAO Laguna to acquire the 33% block of Yukos shares.26 Mr. Muravlenko and his colleagues
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`also designed the Government's Investment Program, which the State Property Committee
`adopted in Order 1547-R on October 25, 1995,27 and were empowered to certify whether the
`winner of the Investment Tender actually did or did not fulfil the terms of the Investment
`Program.28
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`17. The Government-appointed managers had meetings with the Oligarchs in September and
`October of 1995,29 when Yukos was still mostly Government-owned, and agreed to help the
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`Oligarchs to obtain Yukos without complying with the Investment Program. Secretly, in
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`exchange for the Government-appointed managers' help, the Oligarchs promised to pay
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`Mr. Muravlenko and his colleagues an extraordinary amount of compensation. In an oral
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`agreement concluded in principle in 1995, the Oligarchs promised to pay 15% of the gross cash
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`proceeds from any sale of Yukos shares held by the Oligarchs-which would ultimately be
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`worth potentially several billion U.S. dollars-to these four individuals.30 The Oligarchs also
`paid millions of U.S. dollars to these four individuals through an offshore shell company called
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`Tempo Finance Ltd. based in the British Virgin Islands,3I as well as other, smaller payments
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`27 (cid:9)
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`30 (cid:9)
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`26 (cid:9) Regulation on Investment Tenders for the Sale of Shares of OA° Yukos Oil Company § 2.4 (Dec. 15, 1994),
`ECF No. 117-2, Ex. R-714.
`See State Committee of the Russian Federation for the Management of State Property, Directive No. 1547-R
`(Oct. 25, 1995), ECF No. 114-6, Ex. R-684.
`28 See Certificate of Fulfilment of the Activities of OA° Yukos Oil Company's Investment Program in
`Accordance with the Conditions of the Pledge Auction, approved by Bank Menatep (Dec. 16, 1998), ECF No.
`116-2, Ex. R-700.
`29 See Memorandum from A.D. Golubovich to M.B. Khodorkovsky, Negotiations to Acquire YUKOS at Mid-
`October Meeting (Nov. 2, 1995), ECF No. 114-7, Ex. R-685.
`See 2001 Audit Memorandum on Veteran Managers' Plan and Agreement, at 2, attached to E-mail from D.
`Miller to B. Misamore (Aug. 14, 2002), ECF No. 109-8, Ex. R-624; Agreement between Group Menatep Ltd.
`and Tempo Finance, Ltd. (Mar. 26, 2002), ECF No. 116-1, Ex. R-699; Restated Compensation Agreement
`between Group Menatep Ltd. and Tempo Finance, Ltd. (Nov. 1, 2002), ECF No. 109-5, Ex. R-621 ("The
`Beneficiaries' Fees are set at 15% (fifteen percent) of the Revenue received from the sale of Shares."); Email
`from B. Misamore to D. Gololobov (Nov. 27, 2002), ECF No. 109-6, Ex. R-622 (describing the "Veteran
`Managers - Compensation Agreement"); Email from D. Walsh to D. Miller (Sept. 19, 2002), ECF No. 109-7,
`Ex. R-623.
`31 (cid:9) Yukos Universal Ltd., Bank Account Statements (2002-2003), ECF No. 114-9, Ex. R-687; Agreement between
`Group Menatep Ltd. and Tempo Finance, Ltd. (Mar. 26, 2002), ECF No. 116-1, Ex. R-699; Restated
`Compensation Agreement between Group Menatep Ltd. and Tempo Finance, Ltd. (Nov. 1, 2002), ECF No.
`
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`through shell companies based on the Isle of Man called Tisbury Ltd., Laleham Ltd., Status
`Services Ltd., and Hinchley Ltd.32
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`18. Mr. Muravlenko also wrote a letter on September 27, 1995, proposing to Mr. Anatoly B.
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`Chubais, the First Deputy Chairman of the Government of the Russian Federation, that the
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`privatization of Yukos should be accomplished "by concentrating a block of the company's
`shares in the hands of an effective investor."33 As Mr. Muravlenko explained, "[u]nder the
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`Master Plan for the Privatization of YUKOS, 45% of the shares [were] being consolidated under
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`federal ownership for a period of three years. . . [and] pledged as collateral in an auction for the
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`right to enter into a loan agreement with the Ministry of Finance of the Russian Federation,"
`whereas "33% of the shares [were] to be sold in an investment tender."34 On behalf of the
`Oligarchs, Mr. Muravlenko used his influence to persuade the Government that a single investor
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`should acquire both the 45% block and the 33% block of shares. It was Mr. Muravlenko who
`urged the Government to change course and combine the Loans-for-Shares auction together with
`the Investment Tender, which would thus enable a single entity to acquire 78% of the company
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`in a single stroke.
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`19. As Mr. Muravlenko wrote in his letter dated September 27, 1995, to Mr. Anatoly B.
`Chubais:
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`In order to make sure that a controlling block of shares is concentrated in the
`hands of a serious investor, we feel it is essential that only bidders who have
`already confirmed their readiness to invest by participating in the investment
`tender should participate in the [Loans-for-Shares] auction. The investment
`tender for the sale of YTJKOS shares must also serve as a selection mechanism
`for bidders wishing to participate in the auction. . . . I would like to emphasize
`that the proposed arrangement of an interconnected auction for the right to enter
`
`109-5, Ex. R-621; Schedule I to the Agreement between Group Menatep Limited and Tempo Finance, Ltd.
`(Mar. 26, 2002), ECF No. 116-8, Ex. R-710 (relating to payments from GML to Tempo Finance Ltd.).
`32 Services Agreement between V.V. Valentinovich and Tisbury Ltd., Services Agreement between V. V. Ivanenk