Putin

Khodorkovsky was by then the richest man in all Russia; he met with heads of state and other prominent figures like Dick Cheney and Bill Gates; he could say what he thought when he wished. Foreign advisers then and later would be astounded and appalled by his overweening pride. Writing of the pipeline-to-China project, Marshall Goldman, usually one preferring graphs to exclamations, said: “What arrogance. Khodorkovsky and Yukos were acting as if they were sovereign powers.” If that is what an American professor thought, what could the heavyweights in the Russian government and oil industry have been thinking? We know the answer. Sergei Bogdanchikov, the head of the state-owned oil company Rosneft, said of Khodorkovsky and those around him: “Three days in Butyrki Prison and they’ll understand who’s the king of the forest.”

Khodorkovsky himself was not oblivious to the dangers he faced, saying: “There are worse things than going to jail.”

It took a little more than three years for the showdown with Putin to play out—from that initial meeting in the Kremlin to Khodorkovsky’s arrest in October 2003. In that time Khodorkovsky had made two moves which caused his supreme self-confidence to morph into reckless hubris. Without so much as informing Putin, he began negotiating with Chevron to merge and form the world’s largest oil company. If Khodorkovsky’s deal with Chevron went through, it could provide him with a moat of defense and security—the Kremlin might go after a Russian company, but it would think twice before going after the Chevron-Yukos merger. There was one outstanding and time-consuming detail in the negotiations—Yukos’s share in the merger. Chevron’s CEO, Dave O’Reilly, offered 37.6 percent. Khodorkovsky would not budge from his demand of 43.5 percent. That difference of 5.9 percent would cost Khodorkovsky ten years in prison.

In the meantime Khodorkovsky had also been doing precisely what Putin had expressly warned the oligarchs against—meddling in politics. Khodorkovsky backed opposition leaders, bought the votes of members of the parliament, and even hinted to the German magazine Der Spiegel in April 2003 that he himself might have ambitions to be president or prime minister. As his own mother would reportedly say later: “He forgot what country he lived in.”

Typically, the KGB gives warnings, and Putin was old-school KGB. In the best Russian tradition he quoted from the national poet Alexander Pushkin at a Kremlin press conference while discussing Khodorkovsky and the oil companies’ attempts to buy influence in the Duma. “Some are gone and some are far away,” quoted Putin, hinting that arrest, exile, even execution, could await those who defied the Kremlin.

The hints weren’t taken, the allusions went uncaught. On October 25, 2003, Khodorkovsky’s private plane, on which he was the sole passenger, made a refueling stop in Novosibirsk. Masked men armed with automatic weapons, a unit of the elite antiterrorist Alpha Brigade, stormed the plane, handcuffed Khodorkovsky, and placed a hood over his head. Two hours later he was flown to Moscow to begin his odyssey of Russian prisons. Putin had reminded Khodorkovsky what country he was living in and who was the king of the forest.

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“Give us the man and we’ll make the case” was an old KGB saying. Khodorkovsky was charged with tax evasion, fraud, embezzlement. Since the verdict was a foregone conclusion, no great care went into finessing the details of the case. Certain of them were simply absurd—in some years the taxes Khodorkovsky was accused of evading exceeded the total revenue earned. Khodorkovsky was sentenced to eight years in Prison Colony YaG-14/10, near the Chinese border, founded in 1967 to mine uranium.

The meaning of the Khodorkovsky affair was clear to all—anyone who challenged Putin’s authority in word or deed was subject to severe penalty. The era of privatization was definitively over. The state would now be the major player in oil as it already was in gas. In an auction worthy of the oligarchs themselves, Yukos ended up the property of the state oil company Rosneft.