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Yukos insiders say that battle sparked a big change in Khodorkovsky. From then on, he embraced corporate transparency and began advocating Western-style govern- ance and values, casting himself as Russia's Mr. Clean. "He is the first to admit that he and the others exploited the legal vacuum that existed in the early '90s," says a retired U.S. diplomat who knows Khodorkovsky personally. "But he was also the first to start speaking out for transparency in business and the need for active corporate citizenship in a democracy, and the first to put his money where his mouth is."
Putin does not appear to have had any such epiphany about business. Indeed, he's proved himself less committed to modernizing Russia's economy than to consolidating his own power. His first priority is keeping the Russian state — and his own position — strong. While Khodorkovsky was cutting his teeth in commerce in the 1980s, Putin was a KGB major stationed in East Germany. He quit the intelligence service in the early 1990s and moved back to his hometown of St. Petersburg, where he began a political career that in 1996 brought him to Moscow and ultimately to the presidency.
Khodorkovsky's current troubles began on Feb. 19. That day, he attended a meeting with Putin and top Russian business executives — and made a very sharp denunciation of official corruption, which he said was costing Russia $30 billion per year. Putin became furious, say Yukos insiders — and accused Khodorkovsky of hypocrisy, given his own dubious past and his decision to begin pumping money into the coffers of anti-Kremlin parties. The repercussions came quickly. Alexei Pichugin, Yukos' senior security executive, was charged in June with a murder. A month later, Khodorkovsky's partner Lebedev was arrested and charged with tax evasion. Soon after, Nevzlin fled Russia after being targeted for investigation. In October it was the turn of Vasily Shakhnovsky, head of the Yukos Moscow subsidiary. He too was charged with tax evasion.
After Lebedev's arrest, Khodorkovsky and Yukos top management started doing some serious contingency planning. "He said there was a good chance he would be next," recalls one company director. The company was confident of its accounts; it has been audited for the past four years by PricewaterhouseCoopers. And it put in place a succession plan that it is now executing. Taking over as chief executive is Steven Theede, 51, an American who used to work for ConocoPhillips and who crossed swords with Yukos before being recruited by Khodorkovsky to join it. Company documents show that Khodorkovsky had already arranged for the voting rights of his shares to be shifted to someone else in the event he was unable to act as a beneficiary. The Financial Times reported that the unnamed person is outside Russia. The prosecutor's office said on Friday that it had unfrozen 2% of the seized Yukos stock after discovering that the shares were held by individuals not related to its inquiry.
Khodorkovsky's first line of defense is to attack the prosecutor's methods. In Washington last month, he described how preliminary hearings for both Pichugin and Lebedev were held in closed session, with the defense lawyers forced to sign gag orders. Moreover, Lebedev's lawyer's offices were searched without a court order, in contravention of Russian law. "We are very worried that the evidence that is going to be presented in the cases will have been fabricated," Khodorkovsky said. That's an argument Yukos lawyers are now planning to take to a broader public. Three of them have already met with members of the U.S. Congress and the executive branch, and they are expected to take their case this week to European Union officials in Brussels and Rome, where Putin will be attending a summit with E.U. leaders. At the very least, says Aslund, "it's dawning on everyone that if the biggest capitalist can be arrested on totally flimsy charges, there's no rule of law."
Is Khodorkovsky's arrest simply a tactical move to confound a potent rival? Or does it signal a new chapter in an old and miserable book? To Anatoly Chubais, chief executive of the utility Unified Energy System, a leader of the Union of Right Forces and architect of Russia's economic reforms under President Yeltsin, the message is clear. The seizure of Yukos stock is "a serious sign that the political course is changing. People are now asking: 'Who's next?'" The answer may be Chubais himself. Last Thursday, agents from the FSB, Russia's security agency, searched the offices of Novosibirskenergo in Novosibirsk, a Siberian subsidiary of Chubais's Unified Energy System firm, as part of an investigation into alleged fraud by company managers. The answer to the question Khodorkovsky posed in his speech at the Carnegie meeting last month — "democracy or authoritarianism?" — may not be long in coming.