By Sabrina Tavernise and Timothy L. O'Brien, New York Times, Nov. 10, 2003, published: "Mr. Dart's lawyers asserted in court documents that Yukos shares and assets found their way into exotic havens like Cyprus, Ireland, the Isle of Man and the South Pacific Island of Niue -- beyond the reach of everyone but Mr. Khodorkovsky".
In the new Russia, cozy ties to power have been the quickest way to riches. This was a maxim well understood by Mikhail B. Khodorkovsky, the oil and banking tycoon -- until he landed in jail.
Mr. Khodorkovsky was quick, many say ruthless, to seize on the opening of the Russian economy since the Communist days. That propelled him, at 40, to the status of a billionaire, and he became the wealthiest man in Russia.
But of late, his ambitions seem to have carried him in a decisive turn in direction, choosing not to court those in power, but to cross them. For months, associates say, he has been planning to step back from his oil company, Yukos, while his move into political prominence raised eyebrows in the Kremlin. After his arrest on Oct. 25, his politics became more public. Two people close to him hinted last week that he was considering running against President Vladimir V. Putin in the March elections, even from jail.
''It seemed as though he was indicating that this portion of his life was coming to an end and the next chapter was about to begin,'' said Ray Leonard, a vice president at Yukos, the oil company led by Mr. Khodorkovsky. ''He would say, 'You guys are going to have to learn to live without me.' ''
What brought him down is far from clear, whether political rivalries or criminal misdeeds, and his political aspirations remain unplayed. But his life as a businessman illustrates the changes and conflicts of a modern Russia that created a coterie of super rich. But of all of Russia's billionaires, Mr. Khodorkovsky, with his fastidiously deferential, even bashful manner, was perhaps the least likely to flout power.
He grew up in a communal apartment in Moscow, the only child of two engineers. He earned pocket money loading cargo for a candy company, and worked, in college, guarding payrolls on the railroad in Siberia, which he did, he said, with an ax.
As a young man, he allied himself with the Communist Party, rising to a senior post in the party's youth league, the Komsomol. Deferential and respectful of party elders, he overcame widespread anti-Semitism -- his father was Jewish -- that derailed many of his peers, and the party backed his effort to set up a business after he finished college as a chemistry major in 1986.
The timing was perfect. As the creaking Soviet bureaucracy gave way to a more liberalized economy, Mr. Khodorkovsky's enterprise, later named Menatep -- an abbreviation of the typically Soviet name of Inter-industry Scientific Technical Programs, prospered by brokering transactions among a number of government bureaucracies and industries.
Menatep soon turned into a bank, and Mr. Khodorkovsky began to sell its stock. Commercials on Russian television promised fat dividends, promises that turned out to be empty.
Cultivating Ties to Power
During Menatep's early days, Mr. Khodorkovsky and his colleagues worried about how long the government would let them stay in business. ''We would always say: 'Good morning, you're not in jail yet?' '' he recalled in an interview in 1999.
All along, Mr. Khodorkovsky cultivated relationships with the powerful. As early as 1991, he had an office in the Russian government building, where he advised officials and charmed them with his quiet displays of respect. Ivan S. Silayev, prime minister of Russia before the Soviet Union's fall, was one of his first employers.
''Khodorkovsky stood out for his special qualities, his manliness, I'd even say, his nobleness,'' Mr. Silayev said. ''I can't say anything but good things about him.''
He kept rising. In a brief but crucial period in 1993, Mr. Khodorkovsky became a deputy to the energy minister, who was reorganizing Russia's oil industry into groupings that would later become companies, setting the stage for privatization. Alfred Kokh, the official responsible for running privatization, recalled that Prime Minister Viktor S. Chernomyrdin frequently called him about the sale of Yukos.
''I felt that Khodorkovsky influenced Chernomyrdin strongly,'' Mr. Kokh said. On Sunday, Mr. Chernomyrdin's aide, Yevgeny V. Beloglazov, declined to comment.
By the time the sales began in 1995, Mr. Khodorkovsky was ready. Officials gave Menatep a green light to run the Yukos auction, and Mr. Khodorkovsky and his partners won 78 percent of the oil giant for about $310 million. Rivals howled in protest. Two years later, Yukos was listed on Moscow's stock exchange at a value of $7 billion.
Mr. Khodorkovsky set about reshaping Yukos in his image: efficient, focused on the bottom line and beholden to no one else. He laid off thousands of workers, ousted recalcitrant managers and consolidated operations. Company towns that had known the predictable regimen of Communist rule found lifestyles upended.
His management style required employees to switch jobs frequently and compete against one another on the same project. He banned smoking. At his bank, women were required to wear nylons. Employees were fined if caught drinking -- or making -- tea at their desks.
''He liked to keep a feeling of crisis, so that you were always uncomfortable,'' said Yevgeny F. Saburov, economics minister in 1991, who has worked for Yukos. ''It was a fight against Russian laxness. You couldn't argue with its effectiveness. But it wasn't so pleasant to feel on your own hide.''
Putting Things Out of Reach
Though outwardly mild-mannered, Mr. Khodorkovsky fiercely pursued his empire. When Russia's financial collapse in 1998 took his bank down, a court-appointed manager was unable to gather a complete picture of its finances, in part because a truckload of the bank's records fell in a river outside Moscow.
Foreign investors in a Yukos subsidiary missed a crucial vote in 1999 when an annual meeting was moved, suddenly and without explanation, to a city four hours' travel time away.
Mr. Khodorkovsky's most memorable foray came that year, when he muscled Kenneth Dart, a billionaire industrialist, out of big stakes he held in production subsidiaries of Yukos. Mr. Khodorkovsky announced a ''reorganization'' of Yukos, and he prepared a large issue of the new shares to water down Mr. Dart's stakes.
Mr. Dart's lawyers asserted in court documents that Yukos shares and assets found their way into exotic havens like Cyprus, Ireland, the Isle of Man and the South Pacific Island of Niue -- beyond the reach of everyone but Mr. Khodorkovsky.
For his part, Mr. Khodorkovsky has said that he never went through with that threat and that Mr. Dart was trying to pressure the company at a time when it was on the verge of bankruptcy.
''They were bullies,'' said Lee S. Wolosky, a New York lawyer who represented Mr. Dart. ''We faced the prospect of physical intimidation. New York lawyers can play rough, but it was an entirely different ballgame.''
Mr. Dart eventually sold out.
Dmitri V. Vasiliev, the former head of the Russian equivalent of America's Securities and Exchange Commission, who resigned in 1999 over Yukos maneuverings, said in an interview at the time that people who he believed represented Yukos threatened him physically. A Yukos spokesman, Hugo Erikssen, said Friday that any suggestion that Yukos had threatened Mr. Vasiliev was false.
A Move to Change an Image
Through it all, Mr. Khodorkovsky's perspective did not waver. He would consolidate his oil fields and manage them effectively.
''Five years from today, I expect that Yukos's operating efficiency should be no less than any Western company,'' he said in 1999.
He hired foreign experts, and began courting investors. The value of the company soared. Mr. Khodorkovsky had begun to change in other ways. He began to speak out on Russian foreign policy, and make frequent trips abroad, especially to the United States, more as a statesman than as a chief executive. He poured money into political parties in Parliament, pro-market as well as communist.
Public relations firms at home and abroad set about cleaning his image. He began giving generously to charity, donating tens of millions of dollars to such causes as Internet access for teachers and regional conferences for journalists. He enlisted influential foreigners for his foundations. He even upgraded his look: Soviet-style glasses were exchanged for rimless ones.
Exactly when Mr. Khodorkovsky began his drift into politics is unclear. As early as 2001, he signaled that he was set to move on from running his oil company.
''To earn some money doesn't mean anything,'' he said in an interview then. ''But to build society is meaningful.''
This spring, he was already hunting for new executives to run Yukos, said Mr. Leonard of Yukos, who worked closely with Mr. Khodorkovsky.
Several members of Parliament and businessmen said Mr. Khodorkovsky was running a barely concealed campaign to establish an independent political base in Parliament. This, they said, was a red flag for Mr. Putin, ahead of parliamentary elections next month.
In one episode last December, his lobbyists, together with Vladimir Dubov, a member of the Parliament's budget committee and an ally of Mr. Khodorkovsky, swayed a vote against an important tax law that would allow foreign oil firms to obtain set tax regimes. This spring, a natural-resource tax was struck down in a similar fashion.
Russian prosecutors increased the pressure significantly on July 2, when they arrested Platon Lebedev, Mr. Khodorkovsky's friend and partner, on charges of fraud. But instead of giving in to the government, Mr. Khodorkovsky seemed to almost delight in snubbing it.
The next day, dressed in his signature jacket and no tie, he was a guest of the American ambassador at his residence for a Fourth of July celebration. He then flew to an exclusive business retreat in Sun Valley, Idaho, attended by Bill Gates, Warren E. Buffet and other influential executives.
''Big money gave him the feeling of exclusivity,'' said one executive who has known Mr. Khodorkovsky and his partners since 1990, adding that his achievements made him think he could run the government better than others. He returned to Russia, even though many executives in Moscow expected him to stay away. In an interview upon his return, Mr. Khodorkovsky said he was sure that Russia's new democracy would help him in his struggle to protect his holdings.
Almost three months later, Mr. Khodorkovsky was arrested in an early Siberian dawn by police with machine guns.
''I thought Khodorkovsky would leave,'' another tycoon said. ''But he decided to be a dissident.''
Though Mr. Khodorkovsky's troubles sent jitters through the Moscow elite, many executives said they felt little sympathy for his increasingly vocal criticism of Russia's system, since he himself exploited its weaknesses to amass his fortune.
Still, unlike other tycoons before him -- Boris A. Berezovsky and Vladimir A. Gusinsky -- who fled Russia when the government turned against them, Mr. Khodorkovsky decided to stay and fight in a legal and political struggle with a very uncertain outcome. Life-size posters of Mr. Khodorkovsky were put up in the Yukos lobby after his arrest.
''He can't do it any other way,'' said Mr. Berezovsky, now in London, far from the Russian authorities. ''Some people can stop being themselves and become hypocrites. But others think -- my views are important. That is Khodorkovsky. He won't let them break him.''
Perhaps, Aleksei Golubovich -- whose company, Russian Investors, was cited in the prosecutor's indictment, and who has known Mr. Khodorkovsky for 15 years -- said it best.
''The expanse of Mr. Khodorkovsky's personality did not allow him to remain a businessman,'' wrote Mr. Golubovich in faxed answers to questions sent from the Indian Ocean island of Mauritius. ''A combination of strong will, strategic thinking, and administrative talents made his transition to politics inevitable.'' – notes The New York Times in the article “Russian Tycoon Moves Into Politics and Then Jail”
