The Kirovles Case. Court Video Recording. Hearing 14

Please, take your seats.

>> The court investigation was brought up for consideration.

of the criminal case against Navalny.

The composition of the court in the case of Ofitserov has not changed.

The parties are present in full.

In this case,

it was planned today to question

the defendants. Is the defense side ready

to testify?

>> Certainly.

Who will go first? Please proceed with the testimony.

We have a motion from the de—

>> As usual, it is in writing; I will read it out.

Yes,

>> Understood.

>> To Federal Judge Blinov of the Leninsky District

Court of the city of Kirov.

From defendant Navalny, his defense counsel Mikhailova,

and Kobzev

a challenge.

The Leninsky District Court

of the city of Kirov is hearing criminal case

No. 1-225/213

on charges against Alexei Navalny

Anatolyevich of committing an offense

provided for by Part 3 of Article

33 and Part 4

of Article 160 of the Criminal Code of the Russian

Federation, and against Pyotr Yuryevich Ofitserov for

committing an offense предусмотренного

by Part 5 of Article 33

and Part 4 of Article 160 of the Criminal

Code of the Russian Federation.

The above criminal case is being heard

on the merits under the chairmanship of

Federal Judge

Blinov.

On June 11, 2013, during the court

proceedings,

when the parties were discussing the date

of the next court hearing, Navalny

and his defense counsel submitted

summonses requiring them to appear at 12:00 on June 13

2013 before the head of the

investigative team, an investigator for

particularly important cases of the Main Investigative

Directorate of the Investigative Committee

of the Russian Federation, Nesterov, in

criminal case No. 2011/460

711-12, for the purpose of carrying out

investigative actions.

In that criminal case, Navalny

is the accused, and with respect to

him there is currently a preventive measure

in the form of a written undertaking not to leave

and to maintain proper conduct.

At the court hearing, Navalny explained

to the court that he could not appear on June 13, 2013

in court, since he had previously been summoned

to the Main Investigative Directorate

of the Investigative Committee, located in

Moscow, for June 13, 2013, in order

to take part in investigative actions. However,

the court ignored the existence of

the obligation provided for in Clause 2 of Part 1

of Article 102 of the Criminal Procedure

Code, incumbent on Navalny,

as a defendant in another

criminal case, to appear at the appointed time

when summoned by the investigator. The court

adjourned the hearing until

10:00 on June 30, 2013. That is,

the shortest possible recess until

the next first working day,

since June 12, 2013, under

Article 112 of the Labor Code,

is a non-working public holiday,

Russia Day (a national holiday in Russia).

On June 13, 2013, shortly after

the resumption of the court hearing, the court

announced a recess until 14:00 that

same day. Then, after a brief

ten-to-fifteen-minute court

session, the court announced a recess until

15:00

that same day.

Then, after the court announced the rulings it had made,

at approximately 15:20 on June 13

2013, Blinov announced a

recess until 9:00

on June 17, 2013.

That same day, June 13, 2013, at 12:00,

Navalny and his defense counsel Mikhailova and

Kobzev appeared at the Main Investigative

Directorate of the Investigative Committee

of the Russian Federation before investigator

Nesterov to take part in investigative

actions in criminal case No.

2011/460

711-12.

Immediately after the conclusion of the

investigative action in the building of the Main

Investigative Directorate of the Investigative

Committee of the Russian Federation in the city of

Moscow, investigator of the investigative team

Safargalin, and the head of the investigative

team, Nesterov, served Navalny and his

defense counsel Mikhailova and Kobzev at 13:50

with three summonses regarding

the need to appear on June 17, 2013, at

9:00 at the Leninsky District Court of the city of

Kirov before Federal Judge Blinov

for the court hearing in the present

criminal case.

At the same time, investigator Safargalin

demanded that they sign for receipt

of the said summonses, which Navalny,

Mikhailova, and Kobzev categorically

refused to do, after which at 14:00

they left the building of the Main Main

Investigative Directorate of the Investigative

Committee of Russia, as confirmed

by the marks on the reverse sides of the one-time

passes Nos. 3985, 3986, and 3987.

Thus, the investigator of the investigative

team of the Main Investigative Directorate

of the Russian Federation, Safargalin, and his

immediate superior,

investigator for especially important cases

it is stated that Nesterov, from that division, as early as two

hours before the judge adopted the guilty

decision, announcing a recess in the court

hearing until 9:00 on June 17, 2013, knew

about this decision and, acting in the interests

of Blinov, attempted to officially notify

the participants in the proceedings of this

namely Navalny and his defense lawyers Mikhailov and

Kobzya.

At the same time, the following should be especially noted.

The following circumstances. First, Judge

Blinov is fully aware that

the investigator for especially important cases of the Main

Investigative Directorate of the Investigative

Committee of Russia, Nesterov, had previously, since August 30,

2012, been a member

of the investigative team that conducted

the preliminary investigation in the criminal

case against Navalny and Ofitserov,

which is currently

before him.

In particular, the prosecution read out

the relevant order concerning

the conduct of the preliminary investigation

by the investigative team, which is contained

in Volume 1, pages 198–199 of the case file.

Second. The sending and service of summonses

in criminal cases pending before

the courts falls neither within the functions of the bodies

of the Investigative Committee of the Russian

Federation nor within the competence of an investigator,

but is instead the duty

of officials of the Federal

Bailiff Service of Russia.

That is, under these circumstances, the defense

has every reason to believe that

first, either Federal Judge Blinov,

even before agreeing on the date of the next

court hearing with the defense

and the prosecution, and before the official

announcement of a recess in the court hearing,

informed officials of the Investigative

Committee of Russia of his intentions on

this matter and, through informal

requests, unlawfully, in violation of

established jurisdiction, instructed them

to serve the participants in the proceedings

with the relevant summonses; or, second,

officials of the Investigative

Committee of the Russian Federation

interested in ending this

case with a guilty verdict, made the said

decision—that is, the decision to announce

a recess in the hearing and to serve

summonses—independently, with

Blinov being notified of this afterward,

and he later, during the court

hearing, conveyed their will by adopting

the decisions required as a consequence.

Thus, Judge Blinov’s actions

directly indicate his direct

interest in the outcome of this

criminal case and a clear violation

through disregard of the requirements of Russian

legislation and international legal

acts, as well as the legal position

of the Constitutional Court of the Russian

Federation and the European Court of Human

Rights.

Thus, Part 1 of Article 120

of the Russian Constitution guarantees that

judges are independent and subject only

to the Constitution of the Russian Federation and

federal law. A judge’s independence

also includes impartiality. Part

4 of Article 15 of the Constitution

of the Russian Federation provides that

the generally recognized principles and norms

of international law and the international

treaties of the Russian Federation are

an integral part of its legal system.

The requirements concerning judges’ application of

principles establishing standards

of ethical conduct for judges, including

the principles of independence and impartiality,

are set out in the resolution of the UN Economic and

Social Council of July 27, 2006,

No. 2006/23.

Strengthening the basic principles of judicial

conduct. These are the Bangalore Principles

of Judicial Conduct. According to this

international legal instrument, a judge must

perform his or her judicial function

independently, based exclusively on

an assessment of the facts in accordance with

a conscientious understanding of the law,

free from any extraneous

influence, inducement, pressure, threat

or interference, whether direct or

indirect, from any

quarter and for any purpose.

A judge must not only avoid any

relationships or influences

incompatible with judicial office from the

executive or legislative

branches of government, but must do so in such a way

that this is apparent even to an outside

observer.

The ruling of the Constitutional Court

of the Russian Federation of December 8, 2003,

No. 18-P, in the case concerning the review

of the constitutionality of the provisions of Articles 125,

219, 227, 229, 236, 237,

239, 246, 254, 271, 378, 405, and 408, as well as

Chapters 35 and 39 of the Criminal Procedure

Code of the Russian Federation, in connection with

requests from courts of general jurisdiction and com-

plaints from citizens, set out the following

legal position:

by virtue of Articles 46–52,

118, Parts 1 and 2, 123,

Part 3, and 126 of the Constitution

of the Russian Federation, judicial functions

for resolving a criminal case and the functions

of the prosecution must be strictly

separated.

Each of them is assigned to

the relevant parties. The court, however,

which exercises judicial power

through criminal court proceedings,

on the basis of adversarial procedure and equality of the parties,

may not, in the course of the proceedings,

take either the side of the prosecution or

the side of the defense, substitute itself for the parties,

or assume their procedural

powers,

but must remain an objective and

impartial arbiter. Imposing on

the court a duty, in one form or another,

to perform prosecutorial functions is not

consistent with the provisions of Article 123

Part 3 of the Constitution of the Russian

Federation and hinders the independent and

impartial administration of justice. This is also required by

Articles 10, 118, and 120

of the Constitution of the Russian Federation, Article

6 of the Convention for the Protection of Human Rights and

Fundamental Freedoms, and paragraph 1 of Article

14 of the International Covenant on Civil and

Political Rights.

In a number of judgments, the European Court

including Kyprianou v. Cyprus

and Padovani v. Italy, stated

the following: in a democratic society,

it is important that courts inspire confidence

among the public. When it comes to criminal

proceedings, this includes the accused. To

that end, Article 6 of the Convention

requires judicial bodies falling

within its scope to observe

impartiality. Impartiality

usually means the absence of prejudice

and interest in the outcome of the case.

In the motion to recuse Judge Blinov dated

April 24, 2013, the defense specifically

noted that, quote, the court, just like

the Investigative Committee of the Russian

Federation, which on April 12, 2013 publicly

announced the acceleration of the proceedings against

Navalny, who was provoking the authorities,

and the Prosecutor General’s Office of the Russian Federation, in less than

less than 24 hours having reviewed 31 volumes of the

criminal case and examined one

box of physical evidence,

is making every effort to

bring this

political trial, which is inconsistent with the aims of

justice, to an end as quickly as possible, end quote.

The circumstances set out above once again

clearly demonstrate the stated

assertion. In particular, the court’s announcement on

June 11, 2013 of a recess in the court

hearing until 10:30 a.m. on June 13, 2013, and

the subsequent announcement of a recess until 9:00 a.m. on

June 17, 2013, that is, for the shortest possible

period of time, taken together

with the clearly expressed and obvious

coordination of the actions of Judge Plenov

and officials of the Investigative Committee

of the Russian Federation, cannot be

interpreted otherwise than as an attempt by

the Russian authorities to

bring this political trial, which does not

serve the aims of justice,

to an end as quickly as possible, as we again submit.

At the same time, we note that on June 13, 2013

the prosecution filed

a motion to change Navalny’s

measure of restraint from a travel restriction

and an undertaking of proper conduct to detention in

custody.

Having heard the parties’ positions, the court retired to

the deliberation room to decide

the motion filed, pursuant to Articles

255, 256, and 271 of the Criminal Procedure

Code of the Russian Federation. It should be

noted that no motions other than those

previously mentioned were filed by the prosecution on June 13, 2013.

No other motions were filed by the prosecution.

After returning from the deliberation room,

the presiding judge announced

a ruling denying

the motion filed by the

prosecution to change Navalny’s

measure of restraint.

The court also announced another

ruling, issued in the deliberation

room on June 13, 2013 following consideration of

the prosecution’s motion,

namely, a ruling ordering Navalny’s compulsory appearance.

We consider it necessary

to note that the prosecution did not file

a motion for Navalny’s compulsory appearance.

We note that compulsory appearance as a measure of

procedural coercion may be

applied to a defendant,

a witness, or a victim. However, the court could have avoided

accusations of lack of objectivity and

bias only if, after considering the prosecution’s motion

and

to change Navalny’s

measure of restraint pursuant to

Articles 255 and 271 of the Code and announcing

the ruling issued as a result of considering

that motion, it had then put before the parties for discussion

the question of

the need for Navalny’s compulsory appearance at the

court hearing. In view of the above,

the defense once again

comes to the conclusion that the court

in effect substituted itself for the prosecution

and performed a function not inherent to it,

which is incompatible with its

procedural status and role as an

independent and impartial arbiter.

The defense insists that the

circumstances set out in this motion

demonstrate that

the presiding judge in this case is not

free from outside influence, is not

independent, impartial, or

objective, and is incapable, when

hearing the criminal case and issuing

judicial decisions, of being guided

exclusively by the law; consequently,

is subject to recusal. On the basis of

the foregoing, and guided by Part 2 of

Article 61, Article 62, and

Article 64 of the Criminal Procedure

Code of the Russian Federation, we move for

the recusal of the presiding judge in

this criminal case, Judge of the

Leninsky District Court of the city of

Kirov.

Attachments to this motion:

copies of various passes issued by the Investigative

Committee of the Russian Federation in the names of

Navalny, Mikhailova, and Kobzev, numbers

3985, 3986, and 3987, on six pages

signed: Navalnaya, Mikhailova, Kobzev,

Kobelev

Now, please.

Defense counsel Kobelev supports the motion

as submitted. Counsel, do you support it?

Support it.

>> Defendant, yes.

>> Your Honor, I support it. I would like

to add that these events,

which are described in the recusal

application, looked, frankly speaking,

simply disgusting and, it seems to me,

completely undermine trust in the court

altogether. Because when I and

my defense representatives have

the opportunity to follow online

what is happening in this court, and we know

that a recess in the court hearing has been announced,

and we know that a new

court hearing has not— that is, the date of the new

court hearing has not been announced.

An investigator runs off somewhere for 15 minutes,

then returns 15 minutes later and, smiling,

tries to serve us with a court summons.

And when asked who he even is,

whether he is a bailiff (court enforcement officer), and

how he could possibly have a summons at all,

even though the date of the court hearing had not

been set, he simply smirks and gives

every indication by his whole demeanor

that it is the Investigative Committee

that determines the dates of court hearings. And

that it is the Investigative Committee that decides what

happens in the courtroom,

and not the presiding judges in this court.

Therefore, I fully support the

arguments that have been set out and ask that this

application be granted.

Next. Please.

>> Yes, Your Honor, I support it as well.

>> Yes, Your Honor, I support it.

>> On behalf of the prosecution, Your Honor, we

object to the granting of this

motion. We believe that the court acted in

strict compliance with the requirements of

criminal procedure law and within

the scope of its authority.

For my part, I also ask that

this motion be denied, believing that

the requirements of Articles 61 and

63

of the Criminal Procedure Code

of the Russian Federation have not been violated. As for

the date of the court hearing

on June 17, 2013, this

date was agreed upon with all

participants in the proceedings on June 11,

2013. That is, there was no secrecy

about it. As for

the issuance of a compulsory appearance order with respect to

defendant Navalny, under

the requirements of Article 113 of the Criminal

Procedure Code, the court is entitled, in

the event of a defendant’s failure to appear without

valid reasons, to issue with respect to him

a compulsory appearance order, the execution of which

may be entrusted to court bailiffs,

which is essentially what was

done. Therefore, no violations

of the requirements of criminal procedural

law were committed. Yes, therefore

it should be denied.

The court will retire to deliberate. The ruling on

the motion submitted will be announced

today at 9:55.

>> Ruling dated June 17, 2013.

City of Kirov. Leninsky District Court

of the city of Kirov, presided over by Judge

Bunov, with the participation of state

prosecutors: head of the department of

public prosecution of the

Kirov Regional Prosecutor’s Office, Bogdanov, prosecutor

of the public prosecution department of the

Kirov Regional Prosecutor’s Office, Cheregisinov,

defendant Navalny and his defense counsel,

attorneys Mikhailova, Kobzev, and Kobelev,

defendant Ofitserov and his defense counsel,

attorney Davidov, and court secretary Koshuno,

having considered in open court

the materials of the criminal case against

Alexei Anatolyevich Navalny, charged

with committing an offense under Part

3 of Article 33 and Part

4 of Article 160 of the Criminal Code of the Russian Federation; and Pyotr

Yuryevich Ofitserov, charged with committing

an offense under Part 5

of Article 33 and Part 4

of Article 160 of the Criminal Code of the Russian Federation, established that during the course of the

court hearing, defendant Navalny

and his defense counsel filed a motion and requested

the recusal of the presiding judge on

the following grounds: first, the judge scheduled

a court hearing for June 13, 2013,

at 10:30, despite the fact that on that

day Navalny had been summoned to the Investigative Committee of Russia;

second, before the decision was made to adjourn the hearing, the investigator

before the decision to adjourn the court hearing

to 9:00 on June 17, 2013,

attempted to serve the defendant

and defense counsel with court summonses to appear in court

at that time; third, the judge issued

an order for the compulsory appearance of the defendant without

a corresponding motion from the prosecution

side. Defendant Ofitserov, defense counsel

Davydov supported the motion that had been filed.

for the recusal of the state prosecutor.

They stated that the motion was unfounded. The court,

having heard the parties' views, comes to

the following conclusion: the grounds for a judge's recusal

are governed by part one and part

two of Article 61 and Article

63 of the Criminal Procedure Code of the Russian Federation, according

to which a judge may not participate in

criminal proceedings if he or she

is a victim, a civil

claimant, civil defendant, or witness in

the given criminal case, or has participated

as a juror,

expert, specialist, interpreter,

attesting witness, court session secretary,

defense counsel, legal representative,

suspect, accused person,

representative of the victim, civil

claimant, or civil defendant, or in the capacity

of an inquiry officer, investigator,

or prosecutor in proceedings in this

criminal case; or is a close

relative or relative of any

participant in the proceedings in this

criminal case; as well as in cases where

there are other circumstances giving

grounds to believe that he or she is personally, directly

or indirectly interested in the outcome

of this criminal case. Repeated

participation of a judge in the consideration

of a criminal case is impermissible. The stated grounds

preventing the presiding judge from

hearing the criminal case

are absent. The scheduling of the date and place

of the court hearing, in accordance with

Article 231 of the Criminal Procedure Code of the Russian Federation, and the issuance

of a ruling to adjourn the court

hearing for a specified period, in

accordance with Article 253 of the Criminal Procedure Code of the Russian Federation,

fall within the court's competence. At the same time,

the Criminal Procedure Code does not

impose on the court any obligation

to take into account, when setting the date of a court

hearing, the views of the parties in the case. On May 30,

2013, the schedule of court hearings

for June 2013 was established. The parties

were notified that the court hearings

would be held, including on June 13

2013 and June 17, 2013. On June 13,

2013, after hearing

the parties' views on the possibility

of holding the court hearing in

the absence of defendant Navalny, his

defense lawyers Kobzev and Mikhailova, the court

declared a recess in the hearing in order to

send inquiries to the Main Investigative Directorate of the Investigative Committee of Russia

for the purpose of verifying the statement by the defendant and

his counsel that they intended

to appear before that body for the conduct of

investigative actions. At the same time,

in view of the position expressed by the parties regarding

the impossibility of continuing the trial

in the absence of the defendants and

defense counsel, the court asked the investigator to

serve, should they appear, on defendant

Navalny and his defense lawyers, summonses to

appear at the next court hearing on the 17th of

June 2013, the date of which had been

announced in advance on May 30, 2013. In

this connection, the applicant's arguments about any

interest on the part of the court in scheduling

the court hearings for the stated

dates are clearly contrived. The applicant's arguments

that the judge was biased when issuing the

order to compel the defendant's appearance

are likewise unfounded. In accordance

with part three of Article 247 of the Criminal Procedure Code of the Russian Federation, the court has the right

to subject a defendant who fails to appear without

valid reasons to compulsory appearance, and likewise

to impose on him, or alter, a preventive

measure. The decision on compulsory appearance was made

by the court after discussion and resolution of

the prosecution's motion to change

the preventive measure in respect of defendant

Navalny. At the same time, the defense

quite plainly, in alleging

that the court was biased on the basis of

the decision it adopted, once again fails to take into account

the legally established procedure for appealing

a judicial decision, as provided for by Chapter 45

1 of the Criminal Procedure Code of the Russian Federation. In view of the foregoing, in

granting the recusal motion filed by

defendant Navalny and his defense lawyers

must be denied. On the basis of the foregoing, and guided by

Articles 266, 256,

and 271 of the Criminal Procedure Code of the Russian Federation, the court rules: to deny

defendant Navalny and his defense lawyers

their motion to recuse the presiding judge. The court

order has been signed. Please be seated.

Who will testify first?

>> I will.

>> Please step up to the lectern and stand.

I again explain to you the provisions of Article

51 of the Constitution, as well as

Article 47 of the Criminal Procedure

Code of the Russian Federation. You have the right

to refuse to testify against

yourself, your spouse, and other

close relatives. If you agree

to testify, you are warned that

your testimony may be

used as evidence in

the case, including in the event of your

subsequent refusal to maintain that testimony.

Do you understand the provisions of these articles?

>> Yes. Do you agree to testify

in this case?

>> Please answer your lawyers' question.

>> Alexei Anatolyevich, what can you

explain regarding the substance of the charges brought against you?

>> As to the substance of the charges against me, I

can

say that they are absurd. They

contradict the factual

circumstances of the case; they contradict

the witness testimony that has already

been given. It contradicts the

documents, including the expert reports,

contained in the case file. I can

state that I arrived in Kirov Oblast

in January 2009 at the invitation

of

Nikita Belykh, who at that time had not yet

officially taken office as

governor of Kirov Oblast, but had already

been appointed, and his candidacy had already been

submitted to the Legislative Assembly. In

that connection, he came here, to

Kirov Oblast, to the city of Kirov, in order

to hold consultations with members

of the Kirov Oblast government, who

at that time, in accordance with

the law, had temporarily resigned

and were awaiting new appointments.

And

Belykh proposed that I come here and serve as

his adviser, because I am

a lawyer specializing in

analyzing the effectiveness of managing

state property, in

identifying corruption schemes,

public procurement, and so on. And as he was forming his

team, he needed people who

could analyze various

enterprises that were in

financial distress, in

a pre-bankruptcy state, and so on.

At that time, there were many

such enterprises, because the start of his

governorship coincided with the international

financial crisis.

I accepted that offer from

Nikita Belykh and agreed to be his

adviser. I can confirm his

testimony that he did not make any proposal

for me to

become a civil servant.

But I did not accept those proposals. And my

status always remained that of

an unpaid public adviser. And this

status was absolutely well known to

everyone.

At one of the meetings,

which I have already mentioned, these

informal meetings with deputy

governors responsible for one sector or

another, there was a meeting with

a deputy governor, the former deputy

governor from the previous administration, Krepostnov,

who oversaw, among other things, the forestry

sector. And when he was presenting the forestry

sector, he invited various

officials there, including the heads of the

forestry department. And at that

meeting there was also Opelev, whom I

saw for the first time then. He was representing

the enterprise Kirovles as the largest

enterprise in the forestry sector and one of

the largest, if not the largest, overall

among the enterprises that were in

state ownership in

Kirov Oblast.

At that meeting it was announced that

the enterprise Kirovles was in a severe

financial situation. It employed

4,000 people.

It had large wage

arrears. There were also serious

complaints from the prosecutor's office regarding the non-

payment of wages. Because,

as you may recall, during the crisis

the federal executive

authorities instructed the prosecutor's office

to monitor enterprises where

wages were being paid late.

At that time it was a widespread phenomenon. All of this

was reported. It was reported

that Kirovles had enormous debts.

And, as

one

possible solution

to Kirovles's problems, the same

Opelev stated

that the enterprise needed new

sales markets. It allegedly had

hundreds of millions of rubles' worth

of finished products sitting in inventory. Therefore, as

Opelev said, 'Dear Nikita Yuryevich,

and your Moscow colleagues, all

we need is help with

sales, and then everything will improve for us. And

our debts of 200 to 250 million rubles

we will repay by

selling the surplus in our warehouses.'

And in those terms

the condition of Kirovles was discussed at

many ongoing meetings

later on, because, as I have already said,

it was the largest enterprise

in state ownership with such

serious problems. Kirovles's problems

were constantly discussed at

meetings in the finance department, at

government meetings, at

weekly briefings with the

vice governor responsible for

the forestry sector. They discussed

the debts, the inventory remaining in

the warehouses, the wage

arrears, and the loan

taken from Sberbank in order

to pay wages, which they were unable

to repay, and so on.

Accordingly,

Governor Belykh instructed me

to analyze in detail what

was happening with Kirovles, since the

deputy governor who

oversaw the forestry sector had resigned.

Some time later, the head of the

forestry department also resigned.

And the governor, well,

had fairly, had rather little

people he could rely on

to provide

reliable information about what

was happening in the forestry sector, and to suggest

some possible solutions. To that end, I

studied Kirovles documents and

repeatedly, yes, requested documents from

Kirovles, as the witnesses here have testified.

To that end, I met with

Kirovles’s counterparties and spoke with

participants in the forestry sector in general in order

to compare the situation of

private companies and

Kirovles itself.

To that end, Governor Belykh and I, um,

took numerous steps

to help Kirovles find some kind of

sales market. In particular, together we

as has been said here, repeatedly

traveled to Perm Krai (a region in Russia), visited

the Solikamsk Bumprom enterprise, and Belykh

made phone calls to the Kotlas

pulp and paper mill, and in general letters were sent to the largest pulp and paper mills

and so on. In other words, there were

undertaken

a large number of actions in order

to help Kirovles with sales

at a certain point. And this was

at the beginning of 2009. I got a call from my

acquaintance Ofitserov,

uh, and suggested we meet. At the meeting he

told me that he had

responded to Governor Belykh’s call,

who had repeatedly, in

the federal media, stated

that he very much wanted

new entrepreneurs to come to Kirov Oblast (a region in Russia).

As we remember,

the appointment of Governor Belykh, such a

liberal and opposition-minded

governor, caused a great deal of

public reaction. And for

several weeks Belykh was constantly on

television screens, giving a large number of

interviews. And in practically every one of those

interviews he said that he

intended to invite entrepreneurs.

Entrepreneurs would be comfortable

working in Kirov

Oblast. In this connection, every day

calls came in from various

acquaintances or simply people, from Belykh’s acquaintances

whom he redirected to me

or to other members of the team, who

would look into various

opportunities to do business in

Kirov Oblast. Therefore, Ofitserov’s approach

to me was absolutely

an ordinary event, one that

happened several times a

day.

And Ofitserov told me that he had heard these

appeals from Belykh, came to Kirov

Oblast wanting to engage

in business

in the forestry sector, specifically in the sale of

timber products, and had already independently by that time

become acquainted with Opalev and

visited the Kirovles enterprise. And he

asked me for my opinion as to

how it would be perceived and whether it would be

appropriate if he were to

conduct business

in Kirov

Oblast and, in particular,

work with Kirovles.

Naturally, since the main

problem, the stated problem

of Kirovles was the lack of sales, I

was extremely pleased about Ofitserov, just as

I would have been pleased about any company

that was prepared to buy from Kirovles

and I said that this was absolutely

the right thing. If he opened a business here

in Kirov

Oblast and paid taxes into the budget

of Kirov Oblast and

worked with Kirovles and finally bought

some part of this

ill-fated timber and thereby improved

the financial, uh, improved the financial

condition of the enterprise. I never

introduced Opalev and Ofitserov; they

met on their own.

Opalev’s statement that I allegedly

came to Kirovles for the first time in

Ofitserov’s company is absolutely

untrue, because the first time I

came to Kirovles together with Deputy Governor

Shcherchkov, who oversaw

the forestry sector. It was, well,

a visit by the bosses to a subordinate

enterprise. Opalev showed us around

the premises, showed us how everything

was set up there, and we left. Naturally,

I never, ever

introduced any Ofitserov to Opalev.

After that,

Ofitserov and Opalev interacted

entirely independently. But since

I had the task of thoroughly

understanding things, and I was working through it step by step,

what was happening at Kirovles, I

used my acquaintance with Ofitserov

to find out what was really

going on there. I used this

acquaintance in order to clearly understand

the pricing mechanism,

whether these balances on the books were real or unreal or

simply fictitious, and

the actual existence of the timber.

And since

the regional administration regularly

received a large number of complaints from

district heads and small business owners

about corruption at Kirovles or about

the enterprise’s rigidity and the impossibility

of working with it. Naturally, I also

was interested in all these issues.

Officerov. He gave me that kind of information

.

And I can say that, among other things,

thanks to the fact that Officerov was telling me

the real state of affairs at Kirovles, I

became the person on Belykh's team

who had the best understanding of

the problems of this enterprise. And as has been said here

more than once, I gave those

recommendations regarding the financial

recovery and restructuring of Kirovles,

which were implemented, unfortunately,

almost two years later. If back then

they had listened to my recommendations,

everything would have been completely different. And

it gradually became clear that all those

multi-million-ruble inventories of finished

products were all fictitious. And that

the enterprise was incapable of shipping

any meaningfully large batches

of products in a centralized way. As was shown here

by the witnesses, they said that

the problem in working, in particular, with

VLK, was that Kirovles could not

assemble large batches

of products. That was the problem. At

every meeting, Popolev said that

we have products worth 200 million rubles, and find us

large clients so they can buy this

product. In practice, they could not supply any product

to anyone. There was no inventory

left.

All sales were carried out through 38

state forestry units through this branch

network. The product sales system itself

contradicted the applicable

law, as I repeatedly

said. And in the course of analyzing

the production activities of Kirovles

I understood that one of the most important problems

was that they completely lacked

a pricing policy and a unified

sales policy. No one understood

how much product there actually was and at what

price it was being sold. Therefore

repeatedly, at public meetings and on the record,

I demanded of Kirovles, and I was not

the only one, that they streamline their

sales operations and sell everything through

a single settlement account, through their head

office, since all these branches

were not separate legal

entities. In fact, I was not even

demanding any major changes

from them. I was demanding that they

simply act in accordance with

the Civil Code.

And gradually, because

the information that Opolev kept presenting at

meetings, and the information

that I was receiving from

Officerov and from other representatives

of the forestry sector, based on the

documents that were given to me at

Kirovles, clearly contradicted one

another. And I began to have a serious

conflict with Opolev, because at

every meeting I maintained that everything

he was saying about the financial condition

of the enterprise and ways out of the crisis was

all untrue. And an analysis of the documents and

an analysis of the pricing, which I had, among other things,

carried out on the basis of Officerov's

data, showed that at the

enterprise, the management

was effectively living off embezzling

funds through the purchase of fuel and lubricants,

which they were buying

at above-market prices, and through

manipulations with

tariffs, road transport tariffs,

rail tariffs, and in the case materials

there is a document showing that

Kirovles

was spending on transport costs amounts

several times higher than

the rates of the officially existing

largest motor transport

enterprise located here in

Kirov Region. In connection with this, I

accused Opolev and his inner

circle, which consisted of his

daughter and his chief accountant,

the economist Bastrygin, of corruption. And so

because of this, the conflict moved into

an openly confrontational stage, since they

knew perfectly well that I was receiving real

information about the state of the enterprise, including

from Officerov, and their

response to this, by Opolev's decision, in order

to counter me in this

way, was the fabrication of this very

audit report,

the point of which was that

VLK was such a terrible company, and they, they

had to terminate the contract with it. After

this audit report

was submitted to the regional government,

Governor Belykh asked me to prepare

a review of it. I worked on that review

for several weeks.

Everyone here in the hearing heard the telephone

conversations about how I requested from

Officerov the data needed to prepare this

audit report, which, by the way,

directly shows that

I did not, after all, know his

internal accounting in complete detail.

Officerov provided me with all of that data.

I requested additional data from

Kirovles and prepared a review of this

audit report, which is included in

the case materials. In that review,

I stated that the part of the audit report

concerning VLK was absolutely false and

fabricated. In that review

my direct accusations are set out that

that funds at Kirovles were being embezzled for

fuel and lubricants and for transportation rates. Uh, in

the audit report, in my written opinion, I explicitly

made a direct call never again

to use the services of this auditing

company and, in general, possibly even

to consider initiating

criminal proceedings against them, and so on.

When

my report was reviewed at a meeting

that has been discussed here repeatedly, in the

presence of

May, Belykh, Rzamastev,

Bastrygina

and, possibly, someone else—I cannot recall exactly

right now. Belykh decided

to remove Opolev from his position. He

was removed from office. I, uh,

visited Kirovles several times in order

to try

to prevent a situation in which

such subordinates of Oficerov, first of all,

sorry, subordinates of Opolev, first and

foremost Bura and Bastrygina, would simply

destroy all the documents. But, as you

heard here, including from their

testimony, they refused to provide me with any

documents. And, but then

after some time, unfortunately,

the head of the department of

property, with whom I had

a conflict, which witnesses also spoke about

here, reinstated

Opolev in his position. After that I informed

Governor Belykh that I no longer

intended to deal with Kirovles’s problems.

Opolev had been reinstated. And I no longer dealt with Kirov

les.

A few months after

I had already left Kirov Region,

all those statements, recommendations,

and briefing notes that I had submitted

were ultimately recognized by everyone as justified and correct.

Kirovles was bankrupted

but under far worse circumstances

than it would have been at the first, at the

first stage. And I would like to say

that

those meetings with the heads of

the forestry enterprises, regarding which we

examined and heard rather

contradictory information here, and Opolev’s claim

that I was allegedly at

some meetings with the heads of

the forestry enterprises and that Oficerov was present—this is

absolutely untrue. Only once

was I at Kirovles when there were

some managers, uh,

managers of lower-level enterprises. It

was a meeting with the Kirovles trade union,

a ceremonial trade-union event,

which I attended accompanied by

the then head of the Department of

Forestry, exclusively

for representational purposes. I sat there looking important

on the presidium while the trade-union

leaders congratulated one another and

boasted about what wonderful

forestry workers they were. It was an entirely

ritual event. In no way

could there, of course, have been—there was neither

Oficerov there, nor could any

Kirovles or VLK have been discussed.

As for the statements

by Opolev that allegedly at meetings with

Shcherchkov or at some meetings with the

governor there was discussion of the idea that

some products needed to be sold through

Kirovles. That is absolutely untrue. All

of these meetings were officially minuted.

A large number of people attend them.

At a minimum, those present included

the head of the Department of Forestry,

his two deputies,

the head of the aerial forest protection enterprise,

the deputy governor, and some of his

assistants. So even to suppose that

in that group, at

official meetings, someone would suddenly for some reason

raise the issue of, let’s

sell Kirovles products through VLK,

is simply ridiculous even to imagine.

And the fact that this is Opolev’s lie, uh,

this is confirmed by witness

testimony, which was given, among other places,

here by participants in those meetings.

What else have I missed? I’m ready to

answer any further questions.

>> Please tell us, what do you know

about the unlawful activities

of Opolev? Are you aware that

>> As for Opolev’s unlawful activities,

when I began analyzing

the activities of Kirovles, let us say,

with particular scrutiny, because at some

stage it became clear to me that he

was misleading the government, taking advantage

of the fact that the governor was new, no one

understood anything yet, and all the old

leaders of the forestry sector had

resigned. When I realized that Opolev

was misleading everyone, I began to study

the activities of

Kirovles more closely. I discovered, in particular, that

on Kirovles’s premises there was

a company called Kirovlesproekt.

It was a limited liability

company that had been created

by Opolev and his associates, and where

his son worked. This company was located on

Kirovles’s premises without any

lease agreement. Equipment,

furniture, and computers were purchased for it at the expense

of Kirovles, without any contractual

relationship, and it was granted,

I do not even know what to call it,

probably a subsidy, or something similarly unclear

in some incomprehensible way. And this company was transferred

45 million rubles (about 45 million Russian rubles), which they also used

to buy equipment and finance

their operations. As I understand it,

including thanks to the fact that I raised

this issue and repeatedly spoke about

it, and incidentally, the auditor’s

review of the audit report also

contains information about this. Subsequently,

a criminal case was opened over the fact

that Opolev had abused

his official powers and unlawfully

transferred 45 million rubles to his son’s company.

But then this criminal case, quite

mysteriously, ended

with a refusal to pursue criminal charges on the one hand,

and on the other hand it

ended with Opolev giving false testimony

against me.

And please tell me, did you ever propose

that Opolev sign a contract between VLK and

Kirovles, and did you make any

promises to Opolev?

>> I never gave him any such instructions and

could not have given any instructions of that kind.

As I understand it, Ofitserov entered into

that contract with him entirely on general

grounds. Here, Kirovles employees in

their testimony said that

there were so-called

centralized contracts. They concluded

the contract on their own. I was aware

of this contract. Ofitserov told me

that he intended to conclude

such a contract. Later he informed me that

he had concluded it. Naturally,

he even told me some details

of that contract. But I never

gave Opolev any instructions on that matter. I never

discussed with Opolev or with anyone else

pricing policy, possible

discounts, delivery terms, all those

freight-carriage terms and various specific

details of this trade, and in fact

the records of the telephone

conversations that were played here

clearly show that I did not know all

those details. What interested me

was the very fact that the contract had been concluded

and the possibility of purchasing timber

through that contract, because I was trying

to understand whether this product

that Opolev talked about at every meeting

actually existed, but I gave no instructions

on that matter. I would also like

to state, of course, that I never

intended, planned, or received

any funds or benefits,

material or non-material, from

the dealings between VLK and Kirovles.

I never gave any money to

Ofitserov. Ofitserov never gave or promised

me any money, never bought me

train tickets, never paid for

my apartment, and there were no other

material aspects whatsoever in this

cooperation. My task

was, if you like,

to create for Belykh (a Russian regional governor)

a kind of success story. There had been a terrible

enterprise under the previous governor,

then a new governor came in and turned a terrible

enterprise into something decent. That

was my task.

I have no further questions,

>> please continue.

>> Ah, Alexei Anatolyevich, I believe I have

just one single question. Please tell me,

did Ofitserov ever personally ask you

at any time, before the contract was concluded,

between LLC "VLK" and Kirovles, during the period

when that contract was being concluded, or after it

was concluded, for any kind of budget guarantees from you

or

ask you to use some kind of administrative

leverage against Opolev in order

to pressure him into concluding

that contract? Or ask for any other

favors at all? Did Ofitserov ask you for that?

>> He never asked me for such

favors. He repeatedly complained

that Kirovles was not selling him products,

and he was not the only one complaining; a large

number of other companies did as well. Here I

need simply to explain an important point to the court.

In Kirov Region there are 12

million cubic meters of what is known as the allowable

annual cut. That is, all the timber in Kirov Region

that can be legally harvested.

At the same time, a significant part of

those 12 million cubic meters is located

in fairly

difficult geographic conditions — in

swampland, basically. It is quite

expensive to log. And at that time Kirovles had

2 million cubic meters of allowable cut under lease.

So in effect, all of the

most commercially attractive timber

was under lease to

Kirovles. And virtually all entrepreneurs

— practically all

entrepreneurs connected with

the timber industry — had to go

to Kirovles and ask them for that

timber if they needed it. And therefore

whenever Kirovles would not give them something

or there were some difficulties, they

would all call me or Shcherchkov at the

administration. Mostly, of course,

Shcherchkov. On all our trips out to

the districts and regions, someone would constantly

come up and complain about Kirovles.

They would say, they’re not giving us timber. And Ofitserov

was one of those people who

regularly told me that they could not

get timber shipped. And when there was a

meeting at which Opolev said, "

We still have 100 to 150 million rubles’ worth

of product left," and after the meeting I would call

to Ofitserov and would say, "So, did they

end up selling you the timber after all?" And he would tell me:

"No, they didn’t." I was getting

real information, but he never

asked me for any administrative

leverage, pressure, and so on.

Please tell us, could you give

any explanation regarding whether

you had an idea about creating

a unified trading platform for the sale of

timber products, and whether the activities of

OOVLK fit into that idea?

>> Yes, in fact, at the initial stage,

since, as I said, all the problems of

Kirovles and the timber industry in general

in Kirov Region were presented from the

point of view that there was no market. There was

a large amount of product, but no

demand. The obvious, basic solution

was simply to help with sales and,

in particular, through organizing a timber

exchange—not only for Kirovles, but

for all enterprises in the forestry sector.

Since, as I already said, Kirovles

was the main enterprise, it was supposed to be

the principal participant in that exchange. This

idea was considered for maybe a month

or a month and a half. On this subject I

consulted many people, and after about

a month and a half it became obvious that this

idea was completely unworkable and

meaningless, because there was no

timber. In other words, you could create an exchange, but

there would be nothing to sell on it. So, uh, in the

case materials this is often

mentioned, but it was one of those

stillborn ideas, and no real

practical steps in that direction were

taken. And of course it could not have been

done on the basis of VLK, because an exchange is

a special kind of legal entity,

regulated by separate

legislation, which requires

licensing, which requires

guarantees, which requires special

regulation, and so on. And of course,

a small company recently established

in Kirov Region could in no

way serve as any kind of

exchange.

>> I understand. I have another

question for you. Please tell me,

did you ever, uh, tell Opolev

or express a wish, or perhaps try to persuade

him that it was necessary to prohibit

the sale of products directly

through the forestry units, branches of Kirovles, and to issue

some kind of regulation that

would ban that method of sale?

>> As I already said, my demands

to Opolev were based on the law.

There was an enterprise that had been

created out of thirty-eight forestry units. Those 38

forestry units each sold their products

independently. It was impossible to get from them,

for example, a statement showing what had been sold

and at what price. So I really did

repeatedly, including at meetings, demand

of Opolev. Opolev, Bastrygina, and all of

Kirovles: please sell it properly,

so there is a normal price. You should be able to

show how much inventory you have left,

how much you sold last week,

how much you plan to sell next

week. And please sell all of it

through your single

settlement account by bank transfer. And

that was one of the key issues

in our conflict, because

naturally, the heads of the forestry units

were interested in

selling independently for cash.

And my demand to bring this

into compliance with the law at last was something they

absolutely did not like. They had some

utterly monstrous scheme involving the fact that

they were selling under powers of attorney,

then somehow putting that money into the cash desk

or transferring it to some personal settlement account

at Sberbank. All of this

existed despite the fact that it

quite obviously contradicted the law,

simply because nobody wanted to get involved.

Everyone understood that there were timber

settlements, and in them there was this kind of

semi-criminal gray—or even

black-market—business. But that business was

the only way to make money in those

timber settlements. So nobody wanted

to deal with any of it at all, so as not

to get mixed up in it. And nevertheless,

I really did demand of them

that they conduct business according to the law. There is

a Civil Code, and I saw no reason

why they could not, like all

other enterprises operating in Russia,

trade by bank transfer through a settlement

account.

Tell me, Alexei Anatolyevich, did Ofitserov ever

take part in meetings

held in the government of

Perm Region specifically in connection with the work of

Kirovles?

>> He was present at one meeting with

Shcherkov. Various businesspeople were regularly

invited to such meetings. And

at one of those meetings, as far as I

remember, Ofitserov was there, where he simply

explained,

he had essentially been invited

to testify

that I was right in my assessment of the enterprise

Kirovles, because he was precisely the

witness who would come in and say:

"I want to buy timber from them, but they won’t

sell it to me." And Opolev would be sitting next to him

saying, "But we have plenty of timber, and nobody

is buying it." That was the kind of situation it was.

a kind of face-to-face confrontation. But he was there

only once at that meeting. And at that

meeting, once again, no one

demanded that sales be made specifically through VLK.

That issue was not even raised,

only the question of whether there were

remaining stocks or not was discussed. And once

Officerov was at, uh, that meeting,

which was specifically devoted to

reviewing the audit report. Well,

he had to be there, because

it directly concerned him.

Everything else, all of Opolev's other statements

that he was there regularly, are

absolutely false, and they are disproved by

the minutes of these meetings, witness

testimony that was given here, and so

on.

>> At this stage, there are no further questions for

the defendants.

>> Does the defense have any official questions?

>> I have no questions.

>> The prosecution may ask questions.

There will be a few questions. Alexei

Anatolyevich, please explain: in

2009, while serving as an adviser to the governor

of Kirov Oblast, did you have a personal

office?

>> No, I did not have a personal office.

But there was an office assigned to the governor's advisers

on the third floor, and on it

there was a sign that read:

"Advisers to the Governor of Kirov

Oblast." And that office was used

by me, Adviser Kozmin, Adviser

Sitnikov, and several other

advisers whom Belykh regularly invited,

and they all used the same

office."

>> Uh-huh. Please explain: as an adviser

to the governor, what fell within your

authority? Did you have the right

to take part in meetings with the right

to speak in an advisory capacity?

>> As an unpaid public adviser,

mm, I worked on assignments that

the governor gave me. In practice, that

looked like this: there was some

problem or issue that required examination.

And the governor would ask me to look into it and

give my opinion in written or oral

form. One such assignment was

to sort out what was happening at Kirovles,

to find out what was really going on there, because

Kirovles was in a major conflict

with the forestry department and with

the finance department. There was a constant

scandal over these contracts and

so on. The information was contradictory.

Naturally, all the old forestry officials,

as I already said, had

resigned,

been dismissed, or

left on their own. So Belykh

asked me to look into it in detail so that

he would have some alternative

point of view on the matter,

formalized in the form of memos and

so on. As part of those

assignments, I attended meetings

with the right to speak in an advisory capacity. Everyone

knew my status perfectly well. And I would like

to add, generally speaking, that, well,

since

I really don't know why

my presence in Kirov Oblast

was discussed quite a lot and there were articles written

about it in the newspapers. And probably

my political position and my

investigations, which I continued to conduct

from here in Kirov Oblast into Gazprom,

Rosneft, and so on, drew

attention to me.

None of the people who were in one way or another

connected with the regional government

could have been under any misapprehension

about my status. Everyone

knew me; everyone knew perfectly well that I was

an unpaid public adviser; everyone

knew perfectly well that I was not

a government official. That too was discussed many

times. And everyone knew perfectly well

that I sat in on meetings, could ask

questions, and could request documents

or, more often, within the framework of a commission on which I sat,

I would ask for documents, and the documents

would be provided to the commission, but I could not give anyone

any orders, instructions, and so on.

I had no authority to do that. Everyone understood all this

perfectly well.

>> Since you were engaged, among other things,

in studying the activities of the state-owned enterprise

Kirovles, uh, in connection with this

work, were any working groups created under

the regional government?

If so, were you a member

of such a working group?

>> After Opolev was removed from his post, there was created

a special commission

to resolve the issue;

I do not remember exactly what

it was called, but its purpose was specifically

to determine Kirovles's path of development,

because there was an obvious conflict

situation. I insisted that

Kirovles should be put into

financial rehabilitation proceedings as quickly as possible,

stabilize the situation, and finally put an end to

this agony. There was an opposing position

from the property department. It has been voiced here

already, and it was that they

wanted to create 38 small enterprises,

uh,

still under state

ownership. Possibly leaving Kirovles as

a management company, and so

on. So these positions were

diametrically opposed and caused

a constant conflict. Therefore,

a working group was created, and everyone joined it.

And

in the end, this working group was supposed to submit

some kind of final

decision to the governor.

>> As far as you remember now, Alexei

Anatolyevich, who was part of this

working group?

Arzamastsev, Shcherchukov, me,

perhaps some other

managers,

the heads of the forestry department.

I simply, as I already said in

my testimony, this commission

was created, but since at a certain point,

when Opolev was reinstated in his

position, despite the fact that I was

categorically against it and in fact I was

effectively the initiator of my own dismissal, I informed

Belykh

Belykh—and both Shcherchkov and Belykh themselves confirmed this

in their testimony—that I no longer intended

to deal with Kirovles,

since my recommendations were not being taken into account. Therefore, from

a certain point on, in this commission I

was only formally listed as participating, but I

did not take part in the work.

>> Uh-huh. So am I right in understanding you

that only people who

were directly involved with this working group

either worked directly for or had ties

to the regional government?

Outside businesspeople could not

take part in this group?

>> Well, of course they could. The commission was needed

in order to study the problems of

Kirovles. Different people saw Kirovles’s problems

in different ways. And each person, in support of

their

own ideas, tried

to bring in people to this commission

who could do something or

explain something

and give some testimony or actually

work. At the stage of forming

this commission, I insisted that Oficerov

be made a member of it, because he

was the person who knew the condition of

Kirovles. And as was heard here in the telephone

conversations, I was insisting

that someone on this commission had to

actually work. When the commission

includes an adviser who no longer

wants to deal with Kirovles,

a deputy governor who does not have

time to deal with it, and the head

of the property department, who also

does not have time, the commission

is pointless. It cannot do anything, it

cannot accomplish anything. That is why I

demanded that they include people in it

who were perhaps of a lower rank, not

necessarily officials, but people who

would actually propose something and

analyze the situation.

Understood? In examining the financial condition

of KOGUP Kirovles, uh, it was confirmed more than once

during the court proceedings as well

that the company’s debts

had accumulated mainly because of

the burdensome, so to speak, lease payments

for the designated logging areas. As far as

you know, when was the lease agreement for these

plots concluded between the KOGUP and

the relevant department?

>> We need to distinguish here. Do you mean

the lease agreement for the forest fund, or the so-called

contract? Because people often

confuse the two. They had a

forest fund lease agreement and a contract for

forestry work. The forest fund lease agreement—

those same 2 million cubic meters (about 2 million m³)—

they acquired them at auction in 2008

under the previous governor. It was

a fairly effective

auction. A huge lot was specially created—

2 million cubic meters (about 2 million m³)—which

no one could take. Not a single

businessman in the region could afford

it. And it was predetermined

in advance that this entire lot would be taken by

Kirovles. And the business plan

provided for a fairly simple

scheme: they take 2 million cubic meters (about 2 million m³) at

a price of, I think, 140 rubles per cubic meter,

or 150, and sublease it for 450

rubles per cubic meter. If you take the official

business plan that they presented

to Governor Belykh when he was reviewing all this,

it is stated there quite plainly

in black and white. And in 2008 this worked perfectly.

They were rolling in money,

doing nothing, simply subleasing the timber rights.

In 2009, the financial crisis hit,

and their whole scheme

collapsed.

The real market price for leasing forest plots fell to 80

rubles, and they had no one left to sublease it to.

Therefore,

they really were unable

to pay the lease charges. But to say

that this was some kind of unbearable

burden or an excessively high price is

completely wrong, because they benefited from

that price, and it seemed very

low to them in 2008. And so they wanted

by some completely tricky and impossible

means, for example, to have the price of

this lease lowered for them. That was

impossible, because it had already been set

through a competitive tender. In that case, it would have been necessary

to terminate their lease agreement and

hold a new tender, because

Federal Law No. 94 existed.

They tried in some way, as has been said here

more than once,

to restructure, defer the debts, or

so that the region would forgive them. But that too

was impossible to do. It was a tax

payment to the budget. No one could cancel it

at all. Neither Belykh, nor the department

of finance, nor I, for that matter. And they understood that perfectly well.

understood.

And at those endless meetings they

kept saying: "Come on, well,

find some way to make it so that our

debts are forgiven." But forgiving them

was impossible. If those debts had

been forgiven, then standing here in my place would have

been all the officials from

Kirov Region who made that

decision. And you would be asking us these

questions. It was impossible to forgive the debts,

because they were tax debts.

>> Uh-huh.

Please explain when you first became acquainted

and where you first saw the employee of

Kogukerov Les Bastrygina,

>> as far as you remember,

she came together with Opolev to those

meetings that Cherchkov was holding.

Since Opolev, as you probably

had the chance to see for yourself, was extremely

weak when it came to finance in general, and he had

serious problems with

explaining anything at all. He would bring with him

Bastrygina, who worked with

the numbers, brought certificates, spoke about

those balances. And first and foremost she

was the one conducting this endless dialogue with

the finance department and the department

of forestry regarding

the recalculation of rent and so on. Well,

because she was, after all, a finance person, and they

spoke the same language; she was at

those meetings all the time.

>> So you first became acquainted with her,

or rather first saw her, at one of those meetings.

>> Well, at one of those meetings. I don't remember

which one, but they were happening constantly.

>> All right.

At these meetings held in connection with the activities of

Kogubki Rafles. At them there were

besides the employees of Kogubki Rafles

some calls saying that it was necessary

to defer this rent payment in order

to somehow normalize

the company's operations.

>> From the Kirovles side, from Opolev's side

and even, to a lesser extent, from Bastrygina—she

because she understood—this came from Oplev's side

but no one even took it

seriously. It was impossible to defer it.

It was a tax payment. How could it

possibly be deferred? They were not paying it, and the

debt kept piling up. My decision

was: "Guys, declare your

insolvency." And, as you know, under

the bankruptcy law, at least penalties

would stop being charged to you because you

had declared your insolvency. But

they did not want that and kept

demanding that their debts be forgiven and that they be

given some kind of subsidy. That was

impossible to do. Everyone simply

waved it off.

Did you ask Bastrygina to provide

you with any financial documents regarding

Gubka Rafles? A hundred million times. I spent entire

days doing nothing but demanding from them

some documents. They could not

prepare them, because they could not

use a computer, they did not

use Excel, and they made all their tables

in Word. And they constantly had

problems—they could not select the correct

data, could not break down their balances.

So I just kept requesting them constantly.

Well, not from Bastrygina directly, of course,

since, well, the system

of subordination was such that I was, so to speak,

the superior, so of course I asked Opolev

for those documents, and with Bastrygina

I did not communicate directly.

>> So what documents were submitted, then,

>> besides those accounting tables

>> the balance sheet, the balances that

existed, the balances broken down in detail. Well, at least

that is what I was asking for. In order

to analyze the company's financial

position, you need accounts receivable,

an analysis of receivables,

which part was recoverable and which was not.

For which part of the receivables

had even basic legal

steps been taken? Because Kirovles had on staff

83 lawyers—two for each forestry enterprise.

A paradoxical situation. And yet

there was no one to handle the recovery of

receivables. And all these

documents I requested in detail

constantly. They did not bring them. I

requested them again. And in this whole

procedure we spent many months. Well,

in the end, documents were submitted,

>> well, they submitted some basic ones on

debt, on

the supposedly existing balances,

on accounts receivable and

payable. They did provide the basic documents,

because without them they would not have been able

to prepare a balance sheet.

>> Uh-huh. And for what period?

>> Well, I requested them for all periods. Current ones

and for 2009. Well, of course, first and

foremost everyone was interested in 2009.

Then, as I already said, and as you probably

remember, since you are an employee of the

prosecutor's office, back in 2009 there was

a directive from the president that all

enterprises, especially state-owned ones,

that failed to pay arrears on

rent, should have criminal cases opened against their managers.

criminal cases initiated. And in the

performance indicators for work

For governors, this was the top priority.

The absence of, or a negative,

trend in wage arrears

in wages. This was a key issue. Everyone

was very afraid of it, and it was discussed endlessly.

Therefore, in order to

analyze what was going on with wages there,

they submitted daily reports on wages,

and

these reports were passed on further

to the federal center, and so on. So

they prepared these documents not only for me, but for everyone.

They prepared these documents.

>> Uh-huh.

As for the audit conducted in

relation to KBDKE Rafles,

as far as you know, on whose initiative

was the audit carried out?

>> Under the law, an audit

may be conducted

by the owner. So the Department

of Property initiated this

audit. And, as I already

said, since I was in conflict both with

Kirovles and with the Department

of Property, they conducted it in such

a way as to refute some of my

views about how Kirovles was operating. After that, I

repeatedly insisted on carrying out

an independent audit after all. And it was

decided that such an independent

audit would be conducted by one of the firms

from the so-called Big Four.

The world's largest audit firms.

>> What

>> A decision was made to hold a tender?

That tender was held, there was

a tender commission, and in the end, in this

tender, Deloitte won.

I think they even

signed a contract or sent a contract

based on the results of this tender to

Kirovles. But Kirovles refused

to sign that contract, and the audit

review was not

carried out for an obvious reason, because

that audit opinion would have shown

that I was right about everything and they were

lying about it all. Nevertheless, later, after

several months, I no longer had anything to do with it,

and a repeat audit opinion was

issued,

a review commissioned by the Department

of Property. It is in the case materials,

and it also showed that all those,

that entire analysis of the financial

position of Kirovles that I made was correct.

>> The repeat audit

was supposed to be carried out at whose expense?

?

>> At Kirovles's expense, of course.

It is paid for either by the client or by the Department

of Property itself. And the first audit was

conducted by the Department of Property under

Federal Law No. 94. Well, you could say

they manipulated the tender process a bit there,

and accordingly, they paid for it.

The subsequent audit opinion,

as I understand it, was commissioned

by Kirovles, and Kirovles as

the client paid for it.

>> Uh-huh. Alexei Anatolyevich, in that connection,

here is a question: do you have any

acquaintances at Deloitte & Touche? At

Deloitte & Touche, I do have acquaintances.

It is a large company.

In particular, I am a member of the committee

of minority shareholders of Sberbank. In

that committee, there are people from

Deloitte & Touche. I often, one way or another,

run into them and interact with them,

work with them while analyzing various

state-owned companies. Specifically in relation to

this situation, when I wanted to order

an audit opinion from one of the firms

in the Big Three and was simply trying

to understand how much it would cost, I turned to

an acquaintance of mine—I do not even remember

his name anymore; he was an acquaintance of

someone I knew—and he gave me

the phone number of a manager, with whom I

spoke in order to understand

roughly how much it might cost and

whether it was even possible for

the Kirovles enterprise to order an audit

from a firm

from the Big Three. We heard this conversation,

and that manager told me that

this audit would cost around

one million rubles. I understood that, in

principle, the price was acceptable. And Kirovles

announced a tender. In response to this tender,

not only Deloitte Touche submitted a bid, but also

Pricewaterhouse, also from the Big

Three, and some other company—I cannot

say right now. And Deloitte simply also

offered the lowest price.

>> I see. Uh,

well, essentially, based on your

testimony now, you have agreed that

the telephone conversations that were played here,

including the phone

conversation between you and a manager of

Deloitte Touche, did in fact take place?

As I said, my conversation with the manager

of Deloitte did indeed

take place. As for those recordings that

were played,

I consider them inadmissible evidence.

We have already discussed this at length here. I am not sure

that these recordings were not edited together. I do not

know from what source they were

obtained, but the case materials contain

evidence that there was

a tender conducted by Kirovles itself,

Kirovles,

>> there was a tender commission, and

all these facts showing that there was

an attempt to conduct a truly

independent audit by a major international

company—there were such attempts. Yes.

When speaking with the manager of this

company, did she explain to you what

documents she needed in order, so to

speak, to conduct an objective audit with

respect to Kirovles?

>> She did. She explained to me that in order

to give a more accurate estimate of the

price, they would need at least

a balance sheet, and some other

basic documents.

Let us return to the audit that was conducted

with respect to KOGUP Kirovles by Akadem Audit. Uh,

as you explained, its results

were discussed at a meeting, including at

that meeting, where your response

to this audit was also discussed. Was Ofitserov present

at that meeting?

>> Yes.

>> What was his opinion, what was his

position?

He was invited to that meeting

because the conclusion of that audit report

was that the company Kirovles

was in dire financial

condition because of its dealings with

the VLK company. That conclusion was completely

ridiculous, because the total volume

of cooperation with VLK was 15 million rubles,

while Kirovles’s debt stood at 250

million rubles, and its turnover was 1 billion rubles.

Therefore, naturally, Ofitserov was

invited, because, well, no one could

even believe that Kirovles could be ready to

fabricate data so brazenly. And

that was precisely the reason, one of the

reasons, why Belykh

stated right at that meeting that Opalev

was being removed from his post, because

well, it was of course extremely brazen

to falsify an audit

report to that extent.

>> And at whose initiative did Ofitserov take part

in the meeting? Who invited him? He

was invited by Belykh’s office, which

organized that meeting,

as I recall.

>> As for the activities of the Vyatka Forestry

Company, what is generally known about this

enterprise? Who organized it?

Who was the founder, and who served as

the general director of this company?

As Ofitserov told me,

and as far as I know now, this was

an enterprise that he created—Pyotr Yuryevich

Ofitserov founded it himself, on his own

initiative. He opened it

here, in Kirov Region, and

served as its general director,

made all decisions independently, and

worked independently for as long as

he remained interested in doing so.

>> Did you provide any assistance in

setting up this company? That is,

>> No assistance was provided in setting up the company.

There is no need to ask this question again

in another form. An answer has already been

given to this question. I personally asked

Navalny, and my colleague Mikhailova also

asked this question.

>> The question was phrased differently.

>> I ask that such questions be disallowed.

Do you remember when we were questioning witness

Opalev, you prohibited asking the same

questions over and over, Your Honor.

>> Wait a second,

>> as I recall,

>> let me make a ruling. Yes,

>> please ask questions to which

answers have not yet been received.

Anatolyevich, in your opinion, perhaps

from your conversation with Ofitserov you knew

about

what role in general, what purpose

the Vyatka Forestry Company was pursuing,

what place it was supposed to occupy in the

market for timber products in Kirov Region. Well, as far as I know,

Well, as far as I know,

Ofitserov founded a commercial company.

Under the Civil Code,

companies in Russia are divided into

commercial and non-commercial ones. And the purpose

of establishing a commercial company

is to make a profit. Ofitserov

stated his desire to trade in

timber and engage in other commercial

activities in the field of forestry.

This is an entirely normal and

natural desire. He wanted to work here

and make a profit. And everyone was

very pleased that a new

enterprise had arrived that wanted to work,

make a profit, and pay taxes in

Kirov Region. And I would note

that when Ofitserov told

me about these plans, I naturally

recommended to him,

and said that Belykh

supports various businesses in

the region, and any lawful

activity would be supported and

would receive favorable treatment on

the same equal terms as everyone else.

But of course, we require that

the activity be fully, as they say,

above board. And, as far as I

know, as is now clear from the case materials, this

requirement was fully observed. He

paid everyone entirely legal wages

and so on.

>> Mm-hmm. Well then, based on your testimony,

it follows that contractual relations between

the Vyatka Forestry Company and

KOGUP Kirovles nevertheless did not arise.

>> They did arise.

>> Once again,

>> What kind of contract was concluded between them?

A contract for what? Did you even see

the draft contract at all?

Well, of course I saw the contract,

since I was analyzing this audit

report. I knew the contract existed.

As I understand it, it was a standard

either commission agreement, or agency

agreement, or sales contract.

>> Uh-huh.

>> Did you take part in drafting

that contract?

>> No. Ofitserov sent me that contract,

asking me to look it over, which happens to me very

often—as a lawyer, people send me various

documents and say, “Take a look.” But as for this, well,

as follows from the case materials, I

probably did not even reply to the letter.

Later I studied that contract

while preparing a response to the audit

report. That was because in

the materials of that inspection, in the materials

of the audit report, the contract was

described as unconscionable. Because of that

I examined the contract carefully. I found no

signs of an unconscionable agreement

at all. It was an absolutely standard contract,

which provided for the liability

of the parties, which provided for

the possibility of terminating the contract. And

there were no problems—because, as we know, when

Kirovles did not want to perform this

contract, it simply did not perform it.

>> Uh-huh. Alexei Anatolyevich,

based on the correspondence that we

examined during the court hearing, there,

the following actions were, so to speak,

taken by Ofitserov. He sent

a letter that was supposed to be

addressed to the regional governor concerning

the provision of some kind of state-backed

budget guarantees for the Vyatka Timber Company, or

the regional government acting

as guarantor in obtaining a cash

loan. Can you comment

comment on that?

>> I can comment on that. As I already

said, 2009 was a crisis year, and

a large amount of debt accumulated

at many enterprises.

And to address the problems of those enterprises

at the federal level, there were allocated, if I

remember correctly, 300 billion rubles (about 300 billion RUB) for

financing so-called budget

guarantees on loans for various

enterprises. Here in the territory of

Kirov Region, as I recall,

4 billion rubles (about 4 billion RUB) were allocated as

guarantees for various enterprises. And

Ofitserov had this idea; he wrote to me

asking whether we

could get into this guarantee program.

And I immediately replied that this

was impossible, because such a guarantee

is issued against loans. There is a special

commission that decides on

the granting of a budget guarantee.

Naturally, no one was going to give any budget guarantee

to a company that had only just been

created. And this issue

was never even seriously discussed. In the

case materials there is my reply stating that

there would be no budget guarantees.

>> Uh-huh.

At the court hearing we also listened to

telephone conversations between two

men. And there, so to speak, the following

phrase was heard,

concerning a trip to Chechnya together with

Utinov by Opolev. In particular, I will now

read the quote. “Opolev is afraid, he is looking for

a new roof (criminal/political protection).” Can you

comment on that?

I am not prepared to comment on

that specific phrase, taken,

perhaps, out of the context of those

conversations, but, uh, I assume that

what was meant here was a situation in which,

since at that moment I was demanding

—

it was being discussed that he was in Chechnya and therefore was not

present at that very, uh, meeting,

after which he was removed from

his position. What I meant was that Opolev

was closely interacting with

Votinov and Arzamasov,

with whom I was at that moment in

conflict, as Votinov himself

essentially confirmed here, being

present. And, trying, so to speak, to avoid

responsibility and keep his

position, he was promising him something and

so on. But in fact, he was

reinstated in his position after

that.

Alexei Anatolyevich, let us also

focus on your relationship with

Ofitserov. The period that interests us is

April to September 2009. Was it a

business relationship, a friendship? How

often did you meet? How often did

you speak by phone during that period?

>> It was a relationship of, well, simply two

acquaintances. I was interested in

Ofitserov providing me with

some information,

real information about the state of

Kirovles. I naturally had

a general duty, like all

staff members of the governor’s office,

to assist businesses in some way. If

some entrepreneurs came with

questions—and they did so regularly—they

had to be advised or

told where they needed to apply, and so

on. And in that sense I did not single him out

from any particular circle, since Ofitserov

also lived in Moscow.

And naturally, people and

part of Belykh’s team, who came

from Moscow, would regularly

travel back together by train, and so on.

So from time to time I was in contact with him

about things like which

train he would take and which one I

would take, but there was nothing

business-related or, all the more so,

commercial about that relationship.

>> I see. Can you clarify how many times you

spoke with him by phone or exchanged text messages?

I spoke with him many times, especially during

the period when this audit

report was being prepared and during the period, so to speak, from

the beginning of the serious conflict

between me and Olev, which ended

with this audit report and my

response to that audit report. As part of

preparing documents related to all of this

and as part of preparing my response to

the audit report, I called him

several times a day asking him

to provide various documents. Well,

since the audit report

referred to documents, I needed

to obtain those documents, to request them

under,

essentially, Belykh’s instructions, because

he had asked me to provide a response to this

report. I was in contact with him very often

in order to obtain those

documents. Yes, many times. A lot.

>> I see. Uh, Alexei Anatolyevich, according to

the findings of the psychological and linguistic

expert examination reviewed here in court,

it follows that the subject and motive of your

telephone conversations with Ofitserov, including

among other things, were your interest

and agreement with Ofitserov in obtaining

benefit from the operations and management

of KOGUP Kirovles in favor of VLK.

Do you confirm this fact? If

not, why not?

>> Your Honor, the prosecution is now

trying to force Navalny

to assess the conclusions of the

psychological and linguistic expert examination.

Alexei Anatolyevich Navalny is neither

a psychologist nor a linguist.

How can he be expected to evaluate this

report? Moreover,

>> in light of the defense’s objection.

The question is withdrawn.

>> Your Honor, that is all we have at this stage.

No further questions.

>> Any questions?

>> Will the defense have any further questions?

>> No.

Please tell us, in your answer

to the prosecution’s question about who

invited Ofitserov to the discussion of the

audit report, you said that

someone from the governor’s office—the governor’s office

does it summon people on its own initiative

or on the governor’s instructions? Uh,

the system works in such a way that if

the governor is holding a meeting,

when he schedules that meeting, he says

who should be invited. Then his

staff ask the key participants in the

meeting who else should be invited. They

find out who is available and who is not.

That is how they set a date,

coordinating schedules. After that,

the governor’s staff make the

final decision on whom to invite

and whom not to invite. They themselves

make the calls and extend the invitations. That is

how the process works.

The fact that Ofitserov was supposed to be present

at that meeting was, generally speaking,

fairly obvious to everyone, since

the audit report that was the subject

of the meeting was 60% devoted to

VLK.

So are you saying that this

was not your initiative?

>> I think that when I was asked who

needed to be invited, of course I said that

Arzamasov, Shcherchkov,

Ofitserov, Bastrygina, Opolev, and so

on. And I think that everyone they

asked who should be invited

to the meeting probably named roughly the same

list of participants. Mm-hmm.

>> Well, one more question. You said that

you spoke and communicated with Ofitserov

simply as an acquaintance, as one

of the businesspeople, and that you did not

single him out from the others.

How do you explain, uh, the recording of your

phone conversations, for example, at night?

“Did I wake you or not?” How close, then, would you say

your relationship was at that time?

Or you may choose not to answer if

>> No, I can answer that question. Uh,

“Did I wake you or not?” may not necessarily refer

to late-night hours.

And you know better than I do that, for example,

in Kirov Region, even government

institutions begin work at

8:00 a.m. In Moscow, that practice is

not all that common, so, generally speaking,

any morning call is, well, just

a normal gesture of politeness, when

someone answers in a voice like this:

“mumbling into the receiver,” quietly—maybe he is at the movies,

or maybe you have just

woken him up. So you ask him:

“Were you asleep or not? That’s normal.”

>> And who most often took the initiative

in your communication? Uh, in your communication with

Ofitserov—was it you or him? Who was

more interested? When I was reviewing and, uh,

preparing documents for the response to the

audit report, then of course it was

me, because I was interested in

about providing a favorable review, and

I needed all the documents, and I, uh,

called him and asked for those documents

to be provided during normal working hours. Well, I don’t

want to offend the officers present here,

but that’s just how it was, I mean, in

Kirov Oblast I was seen as part of the higher-ups. Everyone wants

to be on good terms with the bosses, everyone

keeps calling them and, well, sort of

tries to stay in touch.

So at some ordinary time, perhaps

Ofitserov more often wanted to talk to me

when I needed something from him

when I needed to clarify something,

I would look for him and say, "Give me these

documents, give me those documents, and

tell me what might be going on in this forestry enterprise

(leskhoz)." So I had a table

of remaining timber stocks by leskhoz so that

I could understand whether the Omutninsk

leskhoz really had 50 million rubles’ worth of stock left. I called

Ofitserov and said, "Do you know

anything about the Omutnitsky leskhoz?" He,

if he knew something, would say so.

>> I see. At the same time, you say that

Ofitserov regarded you as

one of the bosses. And at the same time you say

that everyone in Kirov Oblast

knew that you could give neither

orders nor instructions.

>> Well, what does “the bosses” mean? A governor’s adviser

is part of the higher-ups, not

your direct superior. Not a superior for,

probably, most of the people who

watch the governor drive by ceremoniously

with flashing lights, and all those

people around him are considered

the higher-ups. That’s how, uh, in

Russia people understand this whole system,

who controls what, and so on.

Naturally, people who walk around

the administration building looking important

are seen as the higher-ups. For example,

is the Presidential Administration

(the executive office of the Russian president) your boss or not? Not directly,

it isn’t.

>> Let’s have you answer my questions,

not me answer yours.

>> Sorry.

>> Then it follows from your words that

with regard to your status, one of the officers was mistaken.

>> No. No one had any doubts

about what I could do,

what decisions I could make, and which ones I could not

make. Everyone understood perfectly well that

I could not give any orders, but

everyone understood perfectly well that I

provided the governor with a certain impression

or assessment. And that is why Ofitserov,

for example, being interested

in buying timber and developing his

business, would tell me that, for example,

Kirovles was not selling anything,

and was thereby deceiving people. And naturally, it

was important for him to get that idea across to me,

because, uh, all of this was being discussed

and discussed in the context of the claim that

there was supposedly plenty of timber, but no one wanted

to buy it.

>> Why did you turn specifically to Ofitserov,

as an expert on Kirovles?

I addressed questions not only to Ofitserov,

but to a large number of other people as well. And

as for Ofitserov,

I turned to him because, well, it seemed clear to me

that he was not local, that he had

no vested interest

in deceiving me, that he was in no way

connected with any local circles, and

so on. And, uh, I assumed that he

could give me some objective

information. But I received that information

from various sources. As I already said,

it never happened that the governor

would come to some district and

Kirovles would not be discussed there. Everyone came

either to complain or not to complain. You understand,

especially in a timber district,

that’s the whole local power structure. The local police officer

and the head of the leskhoz — that’s all the authority there is in

a timber district.

>> I see. Do you know whether other

entrepreneurs worked with Kirovles

as well?

>> Well, of course. As I already said, 2 million

cubic meters. And everyone who wanted to buy

timber bought it from Kirovles.

>> I see. During the court hearing, we

questioned some of those

entrepreneurs, as well as the heads

of organizations. Did you approach them with questions

about dealings with, uh, Kirovles in the same way

you approached Ofitserov? Look, at

this hearing, the following were questioned:

heads of leskhozes were questioned,

some enterprises that

deal with Kirovles were questioned, and

for example, a representative of

Solikamsk Bumprom was questioned. As I already said, I

didn’t just contact them — we went there,

spent a lot of time with them, and then I

spent a lot more time explaining

to Belykh why, despite the fact that we

went to Solikamsk, Solikamsk was not buying anything

and he ended up looking like a fool,

so naturally I dealt with them

as well. I asked them a great many things there.

Of course,

how can one explain why it was specifically Ofitserov who was

aware of the true state

of affairs in KOGUP Kirovles (a regional state-owned enterprise), and why it was to

him that you turned for

>> Look, Ofitserov, uh,

>> could confirm or refute

a key — one of the key — factors for me.

Now, Ofitserov knew nothing

about leases or state contracts. He had

It was pointless to ask that, but he

could provide fairly clear information

about the actual inventory on hand.

If at every meeting there was talk about product inventories,

the availability of products, and the ability to

ship those products. If at every

meeting Kirovles says: "We have

150 million rubles' worth of products, and tomorrow we will

sell them, just help us with one major

buyer".

In that sense, what was the governor's task?

Not to help find one major

buyer. At the same time, Ofitserov

was giving me parallel information that

there was no inventory at all, and they were not

capable of assembling large batches of

products, because besides his own

small contracts, he had also

as stated in the case materials, entered into

some contracts with

some Egyptians or Turks and so

on, and was prepared to take large

batches. But Kirovles turned out to be unable

to ship those large batches. This

was, for me, one of several basic

indicators: accounts receivable and

the ability to recover it,

>> the ability to pay off rental debts and

the ability

to generate substantial revenue

through sales and inventory. Those were the three

key factors. Ofitserov could inform me

about one of those three

key factors. Of course,

>> did that

>> Who else would have told me that?

>> So, did I understand correctly that from Ofitserov

you knew that in fact

that

>> there were no products at all and they could not

sell them? Then how do you ex-

explain your letter, signed by you,

as established during the court

hearing, addressed to Likamprom, stating that you

that you—that is, KOGUP Kirovles—had a large amount of

products that could be

sold,

>> because when that letter was written,

it was assumed that KOGUP Kirovles had

a lot of products, and Opalev directly asked

the governor and me: "Arrange it so that

the Salykamsk pulp and paper plant increase

our quota by 50,000 cubic meters." We

reached that agreement. And here

the representative of Salikam BumProm confirmed

it. They increased the quota by

50,000 cubic meters, after which they were unable

to sell anything. And this right here

was in fact one of the

key moments from which a very serious

conflict began. It turned out that I

had set the governor up: he had gone to

his former friend, a member of the

Legislative Assembly, spent two

days asking for the quota to be increased, and in the end

nothing was sold. Everyone ended up in

a very foolish situation.

>> Thank you. You may sit down.

The court declares a recess in the hearing until

11:30. We will continue after that.

>> Are there any further questions for the defendant

from the defense?

>> No. At this stage, any questions?

>> No. I have none.

>> I have none.

you

>> We now proceed to the questioning of defendant Ofitserov

please come to the stand

I also explain to you that in accordance

with Article 51 of the Constitution

of the Russian Federation and Article 47

of the Criminal Procedure Code

of the Russian Federation, you have the right

to refuse to testify against

yourself, your spouse, and other

close relatives. If you agree

to testify, your testimony may

be used as

evidence in the case, including

in the event that you later withdraw

that testimony. Will you answer

>> Yes, Your Honor.

>> The defense may begin.

>> Thank you. Petrovich, please tell us,

when you arrived in Kirov, and how you

met Mr. Opalev, and

how you ended up at Kondutor

>> From the very beginning?

>> Yes, from the very beginning.

>> Well, I first came to Kirov in

February 2009. Which part

of the month it was, I don't remember.

And the purpose of my trip was to study

the market in order to create a new

business. 2009 was a year of

crisis, yes, and my main business

had shrunk significantly. And so, in order

to find additional sources of

income, I decided to create a new company. At

that time, on television, on every channel,

they were talking about Kirov Region, saying that

Belykh was inviting new, well,

entrepreneurs there, and in general

would be helping develop

business in the region. And I thought

Kirov was an interesting region, so I went

there. That is, I first arrived in February

on the Vyatka train. And by then, basically,

knowing several dozen companies there

that offered timber in that region,

one of them was Kirovles. I also

rode around the city in taxis,

probably changing five or six

cars. And I asked them all sorts of questions

precisely about that—about what one could

do in Kirov. So after that I

had basically formed an idea

that it would most likely be timber, and

went back home to Moscow. After that, I

came back again and

in

started setting things up, that is, I submitted

the documents to register the company. And

I also went to Kogubkerafles, to the logging site

in Perevuka in order to meet

Vyacheslav Nikolayevich Opolev, since

he was the general director of the company

KRF Les. And in order to reach an agreement

on cooperation. That is—could you

turn off the air conditioner? It's blowing right on my back.

Please tell us, did you go

to Oplev on your own, or was someone

accompanying you?

>> Of course, on my own. I'm an adult already.

>> And what did you talk to him about?

>> Well, basically, I proposed

that we cooperate by entering into

a contract for shipments of timber products

from Ggubke Rafles to my company, and,

in principle, about long-term

cooperation. In other words, I offered him,

already understanding that for the timber industry, in

general, continuity of cooperation is a problem,

especially in the off-season. I offered guarantees

that I would sell no less timber

in the off-season than during the season.

Considering that February was the

off-season. And Olev liked the idea.

Moreover, it was a crisis period, and Opolev

was prepared,

well, to make just about any concessions for the sake of

those who would buy his products during

that period. And, basically, he and I

reached a preliminary understanding that,

yes, we would cooperate. But that time we

did not discuss any specific terms

in detail. Basically, for about

two hours he told me about the problems he had,

how bad things were for him, and how

glad he was to see me. But the specific terms

were not discussed.

Please tell us, Pyotr Yuryevich, how

your

cooperation with Sopolev developed afterward, how

the contract between Kogubkerovles and

OOV VLK was concluded, and what the circumstances of its

conclusion were?

>> Whew. Well, the cooperation with Opolev

developed rather difficultly, because

when I arrived in March and had already

started hiring employees,

rented an office, and rented an apartment here,

I basically started incurring, well,

fairly large expenses. And, uh, I

continued negotiations with

Topolev about concluding this contract.

The thing was that Opolev was

completely in favor on all points. He greeted

me like a close relative, but there was one thing

that we could not agree on

between us. He wanted me to buy

everything on a prepayment basis. But I know that

prepayment may not be recoverable,

so I was negotiating for shipments on

deferred payment terms, that is, payment deferred by

3–4 days after shipment. So,

that was, in fact, the only

sticking point—whether yes or

no. That is,

our negotiations with Sopolev sometimes lasted

for several hours. They were rather

sluggish—you couldn't call them active

negotiations—but nevertheless,

on everything else we

had reached agreement. In fact, they had even started

drafting the contract, but this was the

only point on which we simply could not

come to terms. But little by little

Opolev nevertheless

by the end of

March and already at the beginning of April, his

situation worsened. That is, everything became

even worse, because there were no sales, while

their expenses were enormous. And as a result

his debts increased. And then, finally,

he agreed, yes, to work with us. But, uh,

they drafted the contract; that is, the contract

they ultimately sent me was their version. I

inserted several clauses that were