What is Khodorkovsky doing his time for?

Part 1

Case of Mikhail Khodorkovsky — not long ago, one of the wealthiest men in Russia — broke not just Russians but rather an entire world apart. Khodorkovsky — still being quite a young man — seemingly became the most famous prisoner in the world. Some people believe him to be a prisoner of conscience who got into jail for his political views; others treat him as thief who robbed a giant country. Russians, just like citizens of any post-communist state, don’t favor wealthy, but for part of the nation Khodorkovsky became a banner of the opposition, which pickets the court building and demands to liberate their idol. I also have an opinion on that matter and I’d like to share it with my readers. Khodorkovsky’s case is too complicated to give a short and unequivocal answer to the question: “What for?” Let’s try to look into Mikhail Khodorkovsky’s past and figure out “how a person could have become an oligarch during the time of Russian transformation?”

Misha made his first money when he was 12 — it happened right by the next-door bakery. His family wasn’t a poor one so he just wished to have his own money that he’d be able to spend on whatever he liked. Being a student of MMICT[1] Mikhail became a commander of the student construction unit (which was a student Komsomol movement in the USSR). In fact, this was also the only opportunities for indigent students to make decent money during the holidays. Just as nearly any activity of this period, “art of money-making” was also based on fraud: firstly, one had to make a deal with his bosses, fake the documents, and then “fairly” share the money that allegedly wasn’t made at all. I suppose this was the exact period of Khodorkovsky’s life, when he gained the skills that afterwards allowed him to create an empire of his own — now known all over the world as Yukos.

By the time when Gorbachev’s perestroika started, Mikhail Khodorkovsky was ready to make a really good buck. In 1987, being a second Komsomol secretary for the Frunze regional committee, Khodorkovsky along with his chief Sergey Monakhov (who was a first secretary at the time) incorporated the “Center for Scientific and Technical Creativity of the Youth”. Creativity of youth, however, had nothing to do with the activities of that center. Khodorkovsky and his friends used an utmost simple, yet very effective way to make money. In those years, financial brokerage came down to the fact that entrepreneurship was allowed only for the Komsomol members. For example, one wealthy state company was buying certain services from another one (say, sending its employees to the qualified medical checkup). Where is a loophole to make a buck for Khodorkovsky here? Here it is — state company makes a contract with the Center of Youth, which in turn, concludes an agreement with the hospital. Poor doctors were to do their job and the state company was to pay the Center of Youth. The whole point was that the money turnover was cashless at the time, but Komsomol members were allowed to cash the money. The rest is a technical matter. Money are withdrawn from the bank account and divided into three parts: 20% to bribe the director of the state company, 30% go to the doctors and 50% — to develop the creativity of the Komsomol youth. That was a money laundry where Khodorkovsky made his first big money.

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[1] Mendeleev Moscow Institute of Chemistry and Technology