Mikhail Khodorkovsky

Open full sized image

Mikhail Khodorkovsky, 2005.

© Kojoku/Shutterstock.com

Mikhail Khodorkovsky is a Russian oil tycoon and, at one time, was the richest man in Russia. He was imprisoned in 2003 on charges of fraud and tax evasion. One of Russia’s famed “oligarchs,” he was convicted of those crimes and others before being released in 2013.

Khodorkovsky, the son of a Jewish father and a Christian mother, was born to a middle-class family. Both of his parents were chemical engineers, and they instilled in their son a fascination with chemistry. He graduated from the Moscow D. Mendeleyev Institute of Chemical Technology in 1986 and was an active member of the Komsomol and the Communist Party. After he was rejected as a candidate for graduate school, he turned to business. Under the liberalized economic policies of Mikhail Gorbachev’s perestroika program, private entrepreneurship was encouraged, and Khodorkovsky enlisted the help of his Mendeleyev Institute and Komsomol colleagues on a number of enterprises.

Khodorkovsky’s first business was a café, opened in 1986, but by the following year his operations had expanded to include the import and export of computers and other goods. In 1988 he oversaw the reorganization of an assortment of businesses into a single trading company, which was then registered as a bank with roughly $8 million in operating capital. The company, named Menatep in 1990, was one of the first privately owned banks in post-Soviet Russia. After the fall of communism in 1991, Khodorkovsky made a fortune trading in foreign currency and commodities, but his biggest successes involved the acquisition of assets formerly owned by the Soviet government. Throughout the early 1990s Menatep and its spin-off holding company Rosprom purchased controlling interest in dozens of industrial concerns across Russia. In 1995 Menatep acquired Yukos, Russia’s second largest oil company, in a privatization auction for some $350 million. Although Menatep did not offer the highest bid, it nevertheless won the auction. This can be explained by the fact that Menatep also oversaw the bidding process and that the highest bid, placed by a consortium of Russian banks, was disqualified on a questionable technicality.

As head of Yukos, Khodorkovsky became, for a time, the wealthiest person in Russia, and he was one of the most visible members of a group of shoot-from-the-hip industrialists and financiers dubbed “the oligarchs.” He steered his growing business empire through the national financial crisis of 1998 at the expense of Menatep’s creditors. When the Russian government devalued the ruble, Menatep, like many of Russia’s private banks, collapsed, and Khodorkovsky diverted Menatep’s recoverable assets into one of his other banks. As his public profile grew, he became a symbol of Russia’s emerging, increasingly legitimate business elite. Khodorkovsky and the other oligarchs had invested the bulk of their political capital in the presidency of Boris Yeltsin, however, and his sudden resignation in 1999 left them without the government protection and accommodation from which they had benefited for much of the previous decade. Yeltsin’s successor, Vladimir Putin, actively sought to curb the power of the oligarchs, and in July 2000 he offered them a compromise—he would allow them free rein in their respective industries as long as they stayed out of politics. Khodorkovsky rejected that deal and spent millions shoring up opposition to Putin and promoting legislation that was beneficial to Yukos.

In 2003 Yukos announced plans to acquire the Russian oil firm Sibneft to create what would be one of the world’s largest oil producers and Russia’s largest company. Those plans were scuttled later that year when Khodorkovsky was arrested on charges of fraud and tax evasion. His trial continued until 2005, when he was found guilty of six of the seven charges filed against him, and he was sentenced to nine years in prison (this was later reduced to eight years). Just before he would have been eligible for parole in 2007, additional charges of embezzlement and money laundering were brought against Khodorkovsky. Like its predecessor, the subsequent trial was widely condemned as being politically motivated. It concluded with a guilty verdict in 2010, and Khodorkovsky’s sentence was extended for an additional seven years. In May 2011 that verdict was upheld on appeal, but Khodorkovsky’s total sentence was reduced by one year, meaning that he would be eligible for release in 2016. Although Khodorkovsky had been vilified by Putin as an embodiment of the worst excesses of the era of the oligarchs, his imprisonment made him a symbol for proponents of democratic reform in Russia.

After spending more than a decade behind bars, Khodorkovsky was released in December 2013. His pardon came as part of a larger amnesty in advance of the 2014 Winter Olympic Games in Sochi, Russia. Khodorkovsky received some measure of vindication in July 2014, when the Permanent Court of Arbitration (PCA) in The Hague ruled that Russia had improperly seized Yukos assets as part of a politically motivated campaign against Khodorkovsky. Although Khodorkovsky himself was not party to the suit, Yukos shareholders were entitled to collect over $51 billion in damages from Russia in one of the largest international arbitration rulings in history. In 2016, however, the decision was overturned by a Dutch court, which held that the PCA did not have jurisdiction.

After his release, Khodorkovsky left Russia and became a leading critic of Putin. In 2015 Russia issued an international arrest warrant for Khodorkovsky, who was accused of ordering the murder of a Siberian mayor in 1998, among other allegations. He denied the charges. Citizen K, a documentary about Khodorkovsky’s life, was released in 2019.