The Kirovles Case. Court Video Recording. Hearing 17

Please be seated.

The court session is now open.

of the Leninsky District Court of the city of Kirov.

In this open court session,

the court continues hearing the criminal case

against Navalny and Ofitserov.

The composition of the court has not changed.

The secretary and the defense are present in full.

The defendants are present.

The state prosecutor is absent,

Cheremesinov. The court is deciding the issue of

whether it is possible to continue hearing the case

in his absence. Your opinion,

please.

>> I believe we can continue. The opinion of the...

defense side.

>> We do not object.

>> We do not object.

>> We do not object.

>> We object.

>> The court has heard the parties and rules:

to continue hearing the criminal case in

the absence of the state prosecutor

Cheremesinov. Regarding the motion filed

to attach to the materials of the criminal

case for examination at the court session

the lawyer's request, a copy of the register

of payment orders, and copies of documents

concerning settlements between the Vyatka Forest Company and

KOGUP Kirovles.

The court has examined

the attached documents and has made the following

decision.

The motion to attach photocopies of documents,

which, according to defense counsel, are

presumably reconstructed

accounting records of KOGUP Kirovles,

the court does not consider it necessary to grant

this motion and denies it for the following

reasons. These documents are not

certified by the bankruptcy trustee from whom,

according to defense counsel, they were

obtained. And most of the documents do not

contain either signatures or seals, and

it is unknown by whom and on what basis these

documents were prepared.

Accordingly, the court cannot verify their

authenticity,

>> or the other circumstances set out in them.

Please return them.

To the defense.

The defense may continue

presenting evidence.

>> I will now read out a motion for

the production of evidence

in written form. On the basis of the

ruling of the Arbitration Court

of the Kirov Region dated February 9, 2011,

in case No. 28-11373/210/20,

the application to declare KOGUP Kirovles

insolvent (bankrupt) was found

to be well-founded with respect to KOGUP Kirovles,

city of Kirov, Avtotransportny Lane,

building 4; the OGRN (Primary State Registration Number) is indicated; supervision proceedings were introduced,

and as bankruptcy trustee / insolvency manager

Vladimir Anatolyevich Pereiminov was appointed.

On May 29, 2013, the defense

applied

to the bankruptcy trustee with an appropriate

request seeking

the opportunity to make copies of documents

related to deliveries of timber products by

Kirovles to VLK.

What follows is a list of

the documents requested

by counsel from the bankruptcy trustee. I will not

go over them again,

as they were set out in detail in the

previous motion. I think the court

can review the text.

The defense moved to attach the said documents

to the materials of the criminal case as

evidence and to examine them as

defense evidence in a motion filed on

July 2, 2013. The court denied

that motion.

The defense insists that the above-listed

documents have a direct and immediate

bearing on the circumstances

of the case under consideration. The defense once

again asks the presiding judge to pay attention

to the fact

that Navalny

and Ofitserov are charged with committing

an offense under Part

3 of Article 33 and Part 4

of Article 160, and respectively Part 5

of Article 33 and Part 4

of Article 160 of the Criminal Code of the Russian Federation, as amended by Federal Law

No. 26-FZ of March 7, 2011.

The defense believes that the presiding judge in

this case is aware that,

under Article 160 of the Criminal Code of the Russian Federation, criminal

liability for committing this

offense applies to persons who have committed,

in particular, embezzlement or misappropriation of another person's

property entrusted to the offender. At the same time,

the defense is also convinced

that the presiding judge is aware of

Note 1 to Article 158 of the Criminal Code of the Russian Federation,

according to which theft is understood as

the unlawful, gratuitous taking and/or conversion, committed for mercenary gain,

of another person's property

for the benefit of the offender or

other persons, causing

damage to the owner or other lawful possessor

of that property. Under Article 73

of the Criminal Procedure Code of the Russian Federation, the circumstances

to be proved include the event

of the crime, the guilt of the accused,

the nature and extent of the harm caused

by the crime, as well as circumstances

excluding the criminality or punishability

of the act, and so forth. The defense for the defendants

maintains that the basis of the charges was

a civil-law transaction between VLK and

KOGUP Kirovles, on the basis of which

the goods were delivered and paid for. That

concerns disputes related to

untimely payment for timber products, then

they were resolved in civil

proceedings in the Arbitration Court

of the Kirov Region. Furthermore, the documents listed

in this motion, whose

examination as

evidence by the defense

we insist upon, are evidence

that demonstrates the absence in

the actions of Navalny and Ofitserov

of any signs of unlawfulness, since

the provisions of Article 244 directly and unequivocally

guarantee the defense the opportunity

as well as the exercise of the right to present

evidence on an equal footing with the prosecution, and

Article 286 of the Russian Criminal Procedure Code provides for

the possibility of requesting documents

by the court on the basis of the above provisions

we ask, first, that the court request from the bankruptcy trustee

of KOGUP Kirovles, Perminov

Vladimir Anatolyevich

at the stated address, copies of the following

documents: a copy of the register of payment

orders from OOO VLK to KOGUP

Kirovles for the period from April 2009 to

February 2013; copies of documents concerning

settlements between the Vyatka Timber Company

and KOGUP Kirovles, in particular

and settlements with the following forestry enterprises

branches of KOGUP Kirovles: Vyatskiye Polyany

Yuryansky, Sanchursky, Podosinovsky,

Orichevsky, Nagorsky, Lebyazhsky.

Kumyonsky, Kirovo-Chepetsky, Luzsky,

Nemsky, Orlovsky, Tuzhinsky, Yaransky,

Uninsky, Kirovsky, Belokholunitsky,

Darovsky, Kotelnichsky, Sovetsky,

Shabalinsky, Urzhumsky, and Oparinsky. July 3

2013, signed by the attorneys. I

believe that if the court

grants the motion, then

the defense will then have

the opportunity to submit to the court as

defense evidence copies of the documents

that the court previously refused to admit.

properly certified, that is,

certified at least with the seal of the bankruptcy

trustee of KOGUP Kirovles, affixed

with a signature, in bound and numbered

folders, respectively. Please pass it along,

if you would. Please.

>> Thank you.

>> Views on the motion that has been filed.

The others, please.

>> I support it, Your Honor.

>> Please, go ahead.

>> I support it. I would like to note that

I also object to the court’s earlier actions

in refusing to admit

the bankruptcy trustee’s materials. Our entire

case is devoted exclusively

to the analysis

of the accounting records of the company

Kirovles. We are constantly talking about

Kirovles, about the accounting

documentation. We are talking about inflated

or understated prices. We are talking about

equivalent and non-equivalent

compensation. And you, Your Honor,

are refusing to admit the very

materials that are the main

subject of examination. The source

of these materials is completely

obvious. We stated that these are documents

from the bankruptcy trustee. There is no

doubt that these are documents

from the bankruptcy trustee.

As for other documents, we submitted them

exactly as they exist at Kirovles. We, unfortunately,

do not have the ability

to control Kirovles’s accounting department or

the correctness or incorrectness

of the way invoices were prepared. The fact that you

refuse to admit those materials

that should be the main subject

of examination, once again shows that

all of our motions for recusal that we

have filed were entirely

well-founded. In other words, either you want

to obtain the material that must be

examined in order to reach a fair decision,

or you refuse to do so. In

that connection, I support counsel’s motion

that the necessary materials be requested

through the court process

and obtained. Thank you.

>> Please, Ms. Mikhailova. Yes, I

support it. I wanted to note that

the documents that were submitted

to the court were submitted in the form

in which the defense received them. Since we do not have the powers

of the court, naturally we cannot properly

obtain documents with all the necessary seals

and certifications. That is, we received them

in the form in which the bankruptcy

trustee gave them to us. There is a note to that effect in

the request. Accordingly, if the court

has doubts about the quality of these

documents, then I believe it is necessary

to request them and add them to the case

file. Especially since they contain

data that we heard presented in a somewhat

different interpretation by the directors

of the forestry enterprises. These documents show that

a compilation was made and figures were calculated

showing the actual

indebtedness, or the complete absence

of indebtedness. This, incidentally, completely

refutes, in some instances,

the testimony of those forestry enterprise directors

whom we heard here. I believe

it is simply necessary to request these

documents. Please, your view,

Attorney Kobelev.

>> I support it.

>> Attorney Kobelev. The prosecution’s

position.

>> Your Honor, having reviewed the motion,

As was similarly presented yesterday at the

court hearing, we believe that

the request for these

documents should be denied. The criminal case file

contains primary documents

showing payments to VLK

both by counterparties and by VLK to the relevant party.

In addition, the primary documents served

as the basis for conducting

a forensic accounting examination, uh,

No. 79 EK, which is also included in the

criminal case file and has been

examined during the court hearings.

The court has heard the parties and, on the

motion, makes the following ruling.

So,

the court first assesses

whether these documents relate to

this criminal case, that is, to the subject

matter to be proven. And,

uh, I believe that, more precisely, the documents and

the charges brought establish that

Navalny and Ofitserov are not charged with

causing damage by failing to make payment under

Contract No. 1 01/2009

dated April 15, 2009. Accordingly,

documents showing

indebtedness or the absence of

indebtedness under this contract cannot

fall within the subject matter to be proven in

this criminal case. And on that basis

the court has ruled to deny

the motion seeking

the production of

the register of payment orders from OVLK to

Kogubkerovles

for the period from April 2009 through February

2013, and a copy of the document on settlements

between VVLK and Kogubkerov Les.

Please continue. And

further, Your Honor, uh, the defense asks

that

the person who has appeared

at the initiative of the defense and was summoned

by the defense, namely Ratova

Natalya Nikolaevna, be questioned as a

witness. Uh, as we all know, she

headed

the group and signed the auditor's report on

the audit of the Kirov Regional

State Unitary Enterprise

Kirovles. The defense independently

arranged for this witness to appear.

Witness Aratova Natalya Nikolaevna

is in the corridor, awaiting a summons

outside the courtroom. The defense

asks the court to take into account, when

deciding this motion,

the provisions of Part 4 of Article 271

of the Criminal Procedure Code of the Russian Federation, under which the court may not

deny a motion to examine

at the court hearing a person as a

witness or specialist

who has appeared in court at the initiative

of one of the parties. The defense insists on

the examination of witness Aratova Natalya

Nikolaevna.

That is all.

>> Understood.

The views of the other participants on the side. Everyone's

I support it.

>> I support it.

>> I support it.

>> Support it. Support it.

>> The prosecution's position?

>> No objection.

>> Guided by Part 4 of

Article 271

of the Criminal Procedure Code

of the Russian Federation, the court rules

to grant the defense motion. And

the person invited into the courtroom

who appeared at the initiative of the defense

is Ratova. Please identify yourself.

Hello.

>> Good afternoon. Ratova Natalya Nikolaevna.

When and where were you born?

>> Once again

>> When and where were you born?

>> I was born on July 19, 1976, in the village of

Sotkina, Uzhumsky District, Kirov

Region.

>> Ethnicity?

>> Russian.

>> Citizenship?

>> Russian.

>> Education?

>> Higher education in economics.

>> Marital status?

>> Married.

>> Where do you work, and in what capacity?

>> I work as the general director

of the auditing firm, uh, the auditing

and consulting firm "Analitik."

What is your residential address, and where are you

officially registered?

>> Kirov, Studenchesky Proezd

19, Building 2,

>> Apartment 41.

>> You have been called at the initiative of the

defense to testify as a

witness, and in this connection I explain

that, in accordance with Article 56

of the Criminal Procedure Code

it is your civic duty and obligation

to tell the court everything you know about the case.

At the same time, I explain that you have the right

to refuse to testify against

yourself, your spouse, or 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 that you later

withdraw that testimony. You also have the right

to testify in your native language or in a

language you speak, and to use

the assistance of an interpreter free of charge, and to make

to challenge the interpreter, to file motions,

to file complaints about actions or failures to act

and court decisions, to appear for questioning with

a lawyer, to petition for protective measures

if necessary. And

I am explaining to you the liability that

is предусмотрена

for a witness for an unjustified refusal to

testify and for knowingly giving false

testimony, criminal

liability may arise under Articles 308 and 307

of the Criminal Code of the Russian Federation.

Do you understand your rights and responsibilities?

>> Yes, of course.

>> Please sign an acknowledgment to that effect

for the court. Secretary,

>> please answer the defense counsel's question.

Tariya Nikolaevna, hello.

Please tell us, did you conduct

an audit

of the state enterprise Kabros?

An audit was conducted there under

a state contract. We had

entered into

for 2008–2009, along with a special

terms of reference. That is, under those

terms of reference, we conducted

the audit. Please tell us,

who prepared the technical

specification?

>> The Department of State

Property. And was this audit

carried out within the full scope of the

terms of reference? Yes. Did you answer absolutely

all the questions?

>> Yes. All the questions set out in

the terms of reference were answered.

>> Please tell us, did you have the right, at your own discretion,

not to answer certain

questions in the terms of reference?

>> We did, but I believe we answered everything.

>> Well, we tried to answer everything that

we saw; we answered everything.

>> Please tell us, do you clearly remember

the opinion you gave at the time?

>> We did not issue an opinion. We submitted a report

on the terms of reference. I brought it with

me, but I do not remember all the details.

>> Uh-huh.

Please tell us, do you remember

how long this

audit took? I'll answer now.

>> It is not stated in the report, but I think it took

about two months to conduct

the audit. The audit was

fairly lengthy, yes. And was that

because the enterprise was so

large, or because of some other specific factors?

>> No, that was specified in the contract. That

is, the time frame was set. We applied,

participated in a tender, a tender was announced,

and in accordance with that

tender, the time frame was established

by the state contract. That is, within

the framework of that contract, we performed the work.

Please tell us, do you remember the

conclusions you reached based on

this report?

>> By heart? No.

>> But generally, what were they about? Do you remember?

>> About what? What were they about?

>> What exactly were they about?

>> A specific question, or in general? That

is, there were several questions

in the terms of reference. There was one for each

question in those terms of reference.

>> I am interested in the state of affairs at the

enterprise in terms of its losses. Was it

found to be operating at a loss?

>> Yes, it was found to be loss-making and

insolvent as of December 31,

2009.

>> Do you remember the reasons that led

specifically to this enterprise's losses

and loss of solvency?

>> We identified several reasons,

which, in our opinion, were the

causes. That is, a

loan agreement was entered into, and a

state contract for leasing forest

land was concluded; that is, there were several

factors listed there.

These reasons were identified as the main ones, along with

an increase in accounts payable

as a result.

>> An increase in accounts payable.

Please tell us, could this

enterprise have somehow

you know that it is now in bankruptcy proceedings,

>> yes? I know. And

>> could it somehow have avoided

this bankruptcy?

We did not make such conclusions. That is,

as to how it could have avoided it, we gave in

the final section our recommendations on

keeping this enterprise from becoming

insolvent. That is, there was

a conclusion that it would be possible to carry out

a separation, that is, to split the enterprise into

several

>> several enterprises out of the existing

enterprise, in order to avoid this.

Please tell us, do you remember

about that, and

approximately what volume or quantity of

timber Kabros harvested?

>> No. Yes.

>> Well, we have the tables here now,

I'll say. Uh-huh.

In 2009, the permitted volume was

3,918

>> cubic meters.

>> Yes, cubic meters. The actual amount

harvested was 1,363

cubic meters.

Permitted, actually

>> permitted means what was set out in the

state contract and specified by the state. That is,

what they could have done, and what they actually did

how much did they do?

>> In fact, they did 1,363,000.

>> 1,363,000.

Yes.

Just a second.

I understood from your calculation.

>> Please tell us, Natalia Nikolaevna,

as part of this review of Kerofles,

did you examine the supply contracts that

Kerofles entered into with counterparties for

the supply of timber to Krad?

>> Yes, we reviewed individual contracts. That is,

we conducted a price analysis. One of the

questions put before

us was price analysis. In other words, we reviewed both

the contracts and the prices at which

the sales were made.

>> Uh-huh. Please tell us, do you remember

the supply contract for timber products

concluded between the VOS company and Kogor

RF? No, you do not remember. Please tell us,

if there had been anything

unusual in that contract, would you have remembered it?

I think so, yes. Please tell us, if

if—

let me put the question differently. In practice,

when a supply contract is concluded for

timber products

with some counterparty, a general

contract is signed. And the price for each specific type

of timber product supplied, and the technical

terms of supply, are then set out

later in appendices. Is that

normal practice, or is that something out of

the ordinary? A company may initially conclude a contract

and then move on to

additional agreements in which

completely different terms are set out. Well,

look, if you had noticed

that in one of the

appendices to a contract between Kogubterov

Les and some counterparty, the price for

timber products was substantially lower

than the price for similar

timber products with other counterparties,

would you have paid attention to that?

>> Yes, of course. I will bring up the table now.

We have a table of prices. What did we

notice? We pointed it out.

I was not asking about the appendix.

The children's forestry company Mashakazana

sold sawn timber. The price analysis, if

compared with other counterparties,

does not differ significantly. That is,

it is within the range of the prices at

which supplies were made to other counterparties.

Please tell us, if you had established

that even VLK was purchasing

timber products at a price lower than

with other counterparties, substantially lower,

would you have noted that separately in

the report? Would that have affected

any particular conclusion in your

report?

>> We would have noted it and stated that

it was material. That is, within a single

period, which is what we examined in this case,

only the third quarter of 2009

was analyzed. Within that period, we would have

noted it, and here we state that prices

ranged from one level to

another, from the minimum to the

maximum. Therefore, if we had seen

that the price here differed materially,

that is, if it had been, well, in that sense,

then that transaction would already have raised concerns for you,

correct? Yes, of course.

>> Please tell us, Natalia Nikolaevna,

with regard to the price of timber products, then,

a supply contract is concluded between Pkerov

Les and some counterparty. Must the price for

the timber products being supplied

necessarily be stated in

the contract, or can it be stated

later in an appendix? It can be stated

initially; an essential term

of the contract is considered to be the price. Later,

if it changes, it can be stated

in supplementary agreements.

>> All right. Please tell us, and, and

do you remember what the state of the

accounting department was?

We received two audit opinions

before proceeding. We relied on

the accounting records, in this case

the 1C Enterprise software, because all

branches and management units used it and

kept their accounting records in the software.

In effect, in our

report we confirm and state that we considered

the records reliable. Please tell us,

with regard to how

the accounting was maintained at Kagubrovles,

can you provide any explanation regarding

the quality of that record-keeping?

>> In this case, we did not examine

the quality of the bookkeeping.

>> Uh-huh.

Please tell us, can you give us

an explanation of what a market price

for timber products is?

>> A market price is the price that

has formed in the market at a given time

for these goods or services. That is, if we look at

the products that, at a given time,

were supplied to several counterparties

by a particular company, then

the average price—that market price—is

the price stated in the contract.

Different terms in different contracts may

result in different prices; that is, the terms

of supply may vary. Therefore,

the market price for a comparable supply,

under

those conditions that are identical

across several contracts, is

the market price.

Could you please say what factors

influence the market price

formation?

I believe that, in this case, the situation

in the region as a whole is affected by remoteness,

well, that is, by the demand for the product

that existed at that particular time. Here,

look, we have just looked at

the table—you, rather, were looking at the analysis

of timber product prices.

And can you say, taking this

table into account, whether the timber products that

were purchased by VLK, and their price level—whether they

were purchased at the market price or at a

lower price? That I cannot say.

>> Could you please explain how, in general,

it is possible to determine the fact

of a purchase being made below market price? What

documents are needed for this, and what

analysis would need to be carried out?

In order to carry out such an analysis,

it is necessary to review documents for

such products, for comparable products, the prices,

the contract terms, that is, the agreements

to be examined, the contracts on the basis

of which the purchases were made, and the terms under

which these products were purchased.

Accordingly, the price is made up of several

indicators,

and if it differs materially,

a material difference is considered

to be a deviation of more than 20%,

>> more than 20%. So is that written

somewhere?

>> It is written in Article 40 of the Tax

Code, with a deviation of more than 20%.

>> Please tell me, are there any, um,

agencies, perhaps statistical ones, that

have information on

average market prices for one type or another of

timber products?

>> I think there are. We have—there is

statistical monitoring, there are

certain forms of statistical

reporting in which product prices are indicated

for the products.

>> for each specific period of time.

>> Could you tell us where these

statistical

>> Well, we had such experience—we

requested them from the statistics office.

>> From the statistics office for Kirov Region

(a federal region of Russia). Kirov Region.

>> And what is its exact name?

>> Kirovstat.

I cannot say exactly.

Natalya Nikolaevna, could you please say,

based on the fact that you conducted

this inspection—if that is the correct term—

can you say, essentially,

whether VLK caused any kind of financial damage

to Rafle’s counterpart?

There was no such question in our terms of reference.

From what we

reviewed,

that sample did not make it into our report. That is,

that is,

>> it did not make it in.

>> No, that is, as for factors—the factor

that affected the solvency

of the enterprise, the losses of this

enterprise, and the factor that

subsequently led to the bankruptcy of this

enterprise, was not the activity of OOO VLK

(a Russian LLC).

>> This is not stated in our specific report.

Whether it was or was not,

I cannot explain.

>> Wonderful.

>> Well, essentially, we have no

further questions. Thank you.

You’re welcome. Are there any more questions?

>> Yes, Pyotr, you go ahead.

>> Good afternoon. Please tell me,

when they informed you of the

tender conditions, and it stated 2

months—was that a lot or a little for a project

involving such an enterprise?

>> I do not remember how much time was specified.

Two months.

>> Well, I said approximately two months.

>> Approximately, yes. Exact precision is not

necessary here. Roughly two months. Is that a lot

or a little for an enterprise project? I

believe that was sufficient, because

we were conducting the analysis, and for us

>> and for the questions that were posed,

we had enough time. In our

audit team there were several

people; it was not just two of us working.

>> Six people.

>> Six people. So, six people

for almost two months. And if you had been told

that under the assignment terms this work had to be

done by three people in six days,

what would you have said? Well, you would have refused, right?

>> Why?

>> Because it would be unrealistic to carry out the review.

>> Completely unrealistic. Is that because of

the qualifications of your staff, or is it

simply physically impossible?

>> Physically impossible, because in

Kirovles there are several enterprises—I do not remember

exactly how many. That is,

>> the volume of work is substantial,

>> so it is impossible.

>> It is impossible.

>> Thank you.

>> Thank you very much.

You’re welcome.

For what amount did Kirokles sell its

products in 2009? Mm-hmm.

What did you ask?

Please say it again right away.

Sales revenue amounted in 2008 to

982,152,000,

and in 2009 to 758,310,000.

Revenue from product sales.

>> Specifically timber products.

>> Uh-huh.

for 2008: 783,136,000

in 2009: 598,673,000

598,673,000

>> What page of your notes is that on?

>> Page twenty-eight.

>> Any further questions, please.

>> Yes. And please tell me this as well, you

explained that price is a material

term of the contract. Please tell me,

if the price is not specified in the contract, can

it be said that the contract has been concluded?

I think not.

>> So am I correct in understanding that

the contract will be concluded only when

the appendices specify the prices and

the subject matter, that is, the suppl...

>> Or the terms will be set out under which

they will be determined; that is, it will be

either an addendum stating that in

the referenced contract the price

is established by an additional agreement.

>> So, accordingly, when the parties

sign an appendix to the contract,

it turns out that each time they are concluding

a new supply contract. They

are agreeing on the terms.

>> Well, then the contract is considered concluded.

>> An additional agreement is concluded

to the contract. Within

>> the framework of the contract, an agreement is concluded.

>> Any further questions.

>> No, Your Honor. Thank you.

>> Please, the other side may ask questions.

>> Thank you. I have a few questions.

Am I correct in understanding that

the period your report actually covered

was the third quarter of 2009?

No, we reviewed 2008 and 2009. Prices

were examined. Specifically, product prices in

the third quarter of 2009

>> up to and including the third quarter.

>> No, we looked only at the third quarter specifically.

That is, the price analysis was conducted for

the third quarter of 2009. That is,

for the other months we carried out a selective

review, that is.

>> Uh-huh. I see. Did you review

the materials of the criminal case?

>> No. We are considering this

And which specific documents, um, did you

review while preparing this

report?

>> Financial statements, accounting

documents, all local internal regulations

in force at the enterprise, and

accounting registers, bookkeeping

records. In this case, we were provided with

the 1C accounting software

for the forestry enterprises, separately by branch and

separately for the central administration.

What interests me is whether you reviewed, in

particular, the conclusions of the auditor

from the Vyatka Center for Management Consulting

of the Audit Academy, Ms. Zagoskina.

>> We reviewed the opinion itself. That

is, the opinion is the report that

briefly provides the summary section, that is,

the opinion itself and the attached financial statements. That

is, we do not have the right to review

the auditor's report. It is a document

for internal company use.

>> I see.

I am interested in your qualifications,

how many years of work experience do you have?

>> Work experience as an auditor.

I received my auditor's certificate in 2006, and

as an audit assistant, and later

as an auditor, I have been working since 2002.

>> Do you have any academic publications?

>> No.

Now tell me, you refer to statistical

observation data as something that may

contain certain information about

average market prices in this particular

region, say, Kirov Region

(a federal subject of Russia).

Are these data binding,

for example, for these same business

entities, or are they merely advisory?

>> I believe they are advisory,

because each specific contract

is concluded individually, and those terms are considered market-based

which are set out in that

contract, unless proven otherwise.

>> I see.

Tell me, then, would it be correct

to say, if we summarize your, um,

testimony regarding market price, that

market price is essentially the price at which

a particular product can be sold

in a particular area?

>> Yes,

we look at it from the standpoint of the Tax

Code when we conduct an audit.

That is, we check to ensure that the price

within a given

period, limited, for example, to

a month, a day, or a quarter, does not

differ substantially from others under

identical contract terms.

Well then, tell me,

>> tell me, and

yes, in the statistical

data, are the contract terms taken into account?

>> No.

>> Then what kind of information can it contain?

It provides, for a certain, well,

as I recall, statistical forms,

that is, it lists a specific type,

for example, sawn timber, and gives its price

applicable in that month

without taking contract terms into account.

And also tell me, if you had not

been required to conduct a full review

for 2008-2009

but instead had needed to review

for a shorter period, would it also have taken you

2 months?

>> So, a specific period?

>> Well, if that period had been one

quarter.

>> Your Honor, your question does not relate to

the circumstances, the factual

circumstances of the case that fall within the scope of

proof. I ask the court not to ask this

question.

It has nothing to do with Article 73,

Your Honor.

>> You asked a similar question. I would like

to clarify.

A similar question, Your Honor,

>> please answer anyway.

>> When approaching an assignment, we look at

certain conditions. That is, we have

a questionnaire. In accordance with this questionnaire,

the company sets out its main

indicators and the period they

would like us to review. Based

on that, we estimate our labor costs,

the time we need for

reviewing this particular

company. Therefore, possibly, in that case,

if it had been a quarter, the time required would have been

shorter.

>> Thank you. No further questions from me either.

>> May I ask one more?

>> Yes, please.

>> And if it had been three people, and it

had been a quarter, two quarters,

yes, say the first half of the year, then

roughly speaking, about how long would that take?

>> I can say,

>> but it would have been more than 5 days.

I need those same conditions,

>> everything else the same, only the first

half of the year and three people.

>> So the same as what we

reviewed,

>> right? Everything the same, only for the first

half of the year.

>> The first half of which year?

>> 2009.

>> Unfortunately, I no longer remember what

was in that half of 2009, but

I think it would have taken less

time.

>> Well, would 5 days have been enough?

>> No.

>> And how long would it take?

>> Well, I think about three weeks. Weeks

>> three,

>> right?

>> Uh-huh.

>> So, three people after all.

>> Uh-huh. All right. There it was two people

and 5 days.

What on earth were they eating?

>> Well, this isn't a comedy contest, please

continue.

>> And

>> we are not taking part in a comedy contest.

>> I'm not taking part; I simply said thank you,

Your Honor.

>> All right. Any questions?

>> I would also like to draw attention to the fact that we

were conducting an analysis. We were not conducting

an audit. An audit

is something different.

>> No, I'll just clarify. We also had

testimony from auditor Zaguskin from

the wonderful company Vyatka Akademaudit.

And in just 4 days they reviewed

the activities of KOGUP Kirovles and said that

it was enough for them—they neither ate nor slept.

>> The two of them, for the first half of the year.

>> That is precisely why these questions

arise. But an audit there

is selective. We conducted an analysis, that is,

they cannot simply be compared. How—

>> Any further questions?

>> No questions.

>> No.

>> May we excuse her?

>> Yes.

>> Yes.

Thank you very much, everyone.

>> All the best to everyone. Thank you very much.

>> Let's sign.

No, I

right now.

No, I still have one more

third issue to raise

Your Honor, a motion to examine and admit

evidence

in writing. The defendants Navalny and

Ofitserov are accused of committing

the crime предусмотренного

respectively under Part 3 of Article

33 and Part 4 of Article 160

of the Criminal Code of the Russian Federation, and respectively under Part 5 of

Article 33 and Part 4 of

Article 160 of the Criminal Code of the Russian Federation. In particular, one of the

components of the accusation is the

assertion that the limited liability company

Vyatka Timber Company

purchased timber products from KOGUP Kirovles

under contract management favorable to

Kirovles, contract No. 01/2010 dated

April 15, 2009, at a deliberately

undervalued price that was

non-equivalent, that is, below market price.

At the evidence presentation stage, during

the judicial investigation, the defense

presented, as

evidence, the minimum prices for

timber products for 2009-2008

approved

by the general director of KOGUP Kirovles

Oplium, and by the directors of the Belokholunitsky forestry enterprise

branch of KOGUP Kirovles and the Orlovsky

forestry enterprise, a branch of KOGUP Kirovles. Volume 12, page 24

case file 118–119, case file 33–34. The

prosecution insists that the price in

Contract No. 01/2009 dated April 15

for 2009, and the related agreement was

deliberately understated by all participants

in the crime. At the same time, the case materials

do not contain

the minimum prices for timber products for

2008–2009, approved by the General Director

of Kogubka Rafles, Opolev

and by the directors of the following forestry enterprises

— branches of Kogubkerov Les

Vyatskiye Polyany, Yuryansky,

Sarvizhsky, Podosinovsky,

Orichevsky, Nagorsky, Lebyazhsky,

Kumyonsky, Tekhnursky,

Kirovo-Chepetsky, Luzsky, Nemsky,

Tuzhinsky, Yaransky, Oninsky,

Kirovsky, Dorovsky, Kotelnichsky,

Sovetsky, Shabalinsky, Urzhumsky,

Oparinsky. The defendants and their defense counsel

insist that the timber products from

Kogobkerov Les were purchased by LLC

Vyatka Timber Company at prices

equivalent to market prices and not lower than

the minimum prices established

by the General Director of Kogubka Refles and

the directors of the forestry enterprise branches of Kogobka

Refles. The defense has no ability

to independently obtain the minimum

prices for timber products for 2008–2009

approved by the General Director

of Kogobkerov Les and the directors of

Vyatskiye Polyany, Yuryansky,

Sarvizhsky, Podosinovsky,

Orichevsky, Nagorsky, Lebyazhsky,

Kumyonsky, Kiknursky,

Kirovo-Chepetsky, Luzsky, Nemsky,

Tuzhinsky, Luninsky, Kirovsky,

Dorovsky, Kotelnichsky, Sovetsky,

Shabalinsky, Urzhumsky, Aparinsky,

forestry enterprises, branches of Kogubkerov Les. At the same time,

the defense notes that Article 244,

as the defense has consistently noted,

guarantees the defense and the prosecution

equal opportunities to present

evidence. The defense asks

the court to take into account, when deciding this

motion, that defense counsel does not have the same

opportunities as the prosecution when it comes to

obtaining evidence. The defense also

asks the court to take into account that the Federal Law on

Advocacy and the Legal Profession

of the Russian Federation does not oblige

officials to respond to an attorney's

request. No law provides for

liability for failing to provide

an attorney with a response to such a request. Meanwhile,

Article 286 of the Criminal Procedure Code of the Russian Federation provides that

the court has the power to request

documents which may subsequently

be submitted by the parties as

evidence. Given that with respect to

Kogobki Les, insolvency proceedings have been introduced

(bankruptcy proceedings), and the insolvency administrator of

Kogobkirovles has been appointed as Vladimir

Anatolyevich, 6104, Kirov, Surikova Street,

Building 33

with reference to the ruling of the commercial court (arbitrazh court),

it follows that all documents of Kogobkirovs

are in the possession of the insolvency

administrator. Based on the foregoing,

pursuant to Articles 15, 524

and 286 of the Criminal Procedure Code of the Russian Federation, we ask the court to request from the insolvency

administrator of Kogobkerov Les, Perminov

Vladimir Anatolyevich, whose address is indicated,

a copy approved by the General Director

of Kogubkerovle, Sopolev, and by the directors of

Vyatskiye Polyany, Yuryansky,

Sarvizhsky, Podosinovsky,

Orichevsky, Nagorsky, Lebyazhsky,

Kumyonsky, Kiknursky,

Kirovo-Chepetsky, Luzsky, Nemsky,

Tuzhinsky, Yaransky, Uninsky,

Kirovsky, Dorovsky, Kotelnichsky,

Sovetsky, Shabalinsky, Urzhumsky,

Parinsky, forestry enterprises, branches,

of Kogubkerov Les, the minimum

prices for products for 2008–2009. Counsel,

for three years. I would like to draw attention

of the honorable court to the fact that the requested

information is highly relevant for

the defense. In addition, I

would like

to remind the court that the defense side previously

submitted as

evidence the minimum prices for, uh,

for

the Belaya Kholunitsa and Orlov forestry enterprises. And,

uh, after the defense submitted

these minimum prices for 2008–2009,

it was indeed established that

in 2009, uh, there was

a decline in timber product prices. And after

that, having in hand the market prices for

2009 and, uh, in the case materials,

uh, delivery notes and invoices in

which the price is indicated for that

specific product that VLK

purchased from Kogubkerovles, it is possible

quite simply to confirm the position

of my client, officer Pyotr

Yuryevich, that the prices for timber products, uh,

which VLK purchased from Kogubka Refles,

were, well, at a minimum, equal to those

minimum prices that Kogub

set for its forestry enterprises. And for

some items they were even higher,

as we saw when comparing the prices of, uh,

the Orlov and Belokholunitsky forestry enterprises,

when the difference in cost there was

around 300 rubles between timber products. I

ask that this be attached in writing and

that everything I have said be taken into account when deciding

the motion filed.

Please, the defendants' opinion

to be stated.

I support the defense.

>> I support it.

>> I support it. Support.

The prosecution, Your Honor, believes that

The motion is not subject to being granted.

That means we examined, in the course of the court

hearings, the testimony of the directors of the forestry enterprises,

as well as the testimony of witnesses, Opolyev,

the Zagorskins, and other witnesses. As for

the minimum prices,

I ask the court to take into account that the defendants are not charged with

the sale

of timber at below-minimum

prices. What they are charged with, rather, is the sale

of timber below market prices. Therefore, I

believe this is not relevant to the matter at hand.

>> Your Honor, allow me to add something. I ask

forgiveness for the inadvertent violation

of procedure, but, esteemed court, I want

to say this. Please listen to me.

Please. Pyotr Yuryevich Ofitserov is

accused of committing economic

crimes, correct? That is, Ofitserov is

accused of having forced Opolev

to enter into a knowingly disadvantageous contract

and of purchasing timber products from Kirovles

at prices not equivalent to market prices. And,

Your Honor, we cannot allow ourselves

to establish these figures,

whether a price is market or non-market, based

on witness testimony. I remind

everyone present that

crimes in the economic sphere are

quite specific. And, as a

rule, damage is proven, and

the equivalence or

non-equivalence of timber product prices is proven.

All of this is proven by documents. It

cannot be proven by witness

testimony. I think we all know

that. And we cannot attribute guilt to

Ofitserov for purchasing timber products from

Kirovles at below-market prices,

based solely on witness

testimony. Documents are needed. Some

of the documents were submitted by the prosecution, or rather,

excuse me, by the investigative body, and it

included them in the case materials, but this is

only part of them. And if the investigative body

submitted part of these documents, then

why can the court not request the second

part of these documents? And again, we cannot

substitute calculations, we cannot

substitute documents containing figures,

with witness testimony. And moreover,

I want to say one more thing.

Ofitserov is accused of purchasing from

Kirovles timber products at a price

below market. Very well, esteemed

prosecutor, we have heard the testimony

of the prosecution witnesses, the directors

of the forestry enterprises, who said that Kirovles

and the forestry enterprises coordinated

minimum prices. But, Your Honor, we all

remember very well how we all asked

and the esteemed court also asked a number of questions

about how this

minimum price was formed. The directors

of the forestry enterprises explained that they conducted

monitoring of market prices. And on the basis

of monitoring those market prices in this

district for the purchase of timber products by

sole proprietors, various companies, and so on,

they set this

minimum price, which

was coordinated with the state enterprise. Therefore, I

believe that this motion, Your

Honor, is directly relevant to the case. And

moreover, without these documents we are

simply at a dead end, because

we cannot replace documentary evidence with witness testimony

as documentary proof; we

cannot. Can you say,

>> please, what is it that the prosecution is alleging?

It first alleges losses of 16 million rubles (about 16 million RUB).

Then, in the middle of the trial, it says: "You

know, it’s not really 16 million rubles,

rather the prices were non-equivalent, but at the same time

they determine that the prices were non-equivalent

by feel and based on what some old woman said,

yet there is no calculation." Yes,

moreover, market price, as was said today by a competent

expert—actually,

the auditor said that market price

is the price at which the parties

agreed to sell the product in

that region during that period of time.

Market price is the price that

has formed in that region. It is the price

confirmed by the statistical authorities.

That is, market price is the price at which

the goods are actually sold. And yet

the prosecution has never presented proof

of the market price. It has not

submitted even any documents

that would even remotely resemble

evidence of a market or non-market

price. And throughout the proceedings, the prosecution operates

with phrases like “in our view,” “in their

opinion,” “in that guy’s opinion.” But

neither that guy nor their opinion

constitutes an objective factor, because

there is no economic expert examination, and

the prosecution did not even request documents from a single

company in order to

assess this average market price. And

so it turns out all along that the entire

case is built on the opinion of Mr.

Bogdanov, Mr. Cheshinov, as well as

some people who have never even been to Kirov

and have never traded timber. And

their understanding of the concept of average market price comes

from television, from programs they have watched,

and probably not even

economic ones. Therefore, I would like

to ask the court, after all, to request

the evidence that will shed

light on those economic

questions that neither

the investigation nor, it would seem,

the esteemed prosecution has been able to clarify. Thank you.

>> May I add something, please?

>> Yes, please.

>> Your Honor, this entire accusation is

it is about figures and prices and so on,

but all of it is based on the oral testimony

of three people.

of the crook Opalev, his daughter, and

their accountant Bastrygina. From the very

beginning I have said that I know for certain

that at the same time the company

Kirovles was shipping, was selling

products at even lower prices

to other buyers. Just now, the auditor

who prepared the audit report

also said that VLK's prices did not stand out

in any way from the other prices.

Even the directors of the forestry enterprises here

whom the prosecution called in one after another,

told us that minimum prices had been set,

so-called minimum prices, and that

VLK bought above those minimum prices,

and there were even prices below cost,

at which they also sold products

with Opalev's permission. Therefore, I do not

understand how we can continue

to examine this case at all, to engage in

any kind of inquiry, if the court

refuses to request the very

documents that show who

bought what and at what price.

If these documents are brought here, into

the courtroom, and are examined

by the court, then the question of this accusation

will be settled immediately, because everyone

will see and verify from the documents, in

the figures, that the company Kirovles

during the same period sold the same

products as VLK at even lower

prices to other counterparties. And everyone will see

that this case is absolutely and completely

fabricated. And this fabrication can

exist only under conditions where

the honorable court refuses to request

the documents necessary for verification.

Thank you.

In order to resolve this motion, the court

needs to

review the testimony of the directors and

of the forestry enterprises that they gave during

the court hearing precisely on the issue of

minimum prices. Therefore, a recess is declared.

That is, I will announce the ruling

at 10:30.

>> All right, write everything down so I don't have to run around with

this anymore.

Having heard the parties' positions and examined

the testimony of the witnesses concerning

the motion submitted, the court has found:

"None of the forestry enterprise directors questioned

stated in their

testimony that there was any dependence of timber product prices

of timber products

on the prices, on the minimum prices,

set by KOGUP Kirovles (a regional state-owned forestry enterprise). Nor did anyone

say that this price took into account the delivery terms

to the buyer. Nor did anyone

indicate that the prices at which they

sold timber products to other

counterparties were stable and did not

change upward or

downward. They stated that prices in

each case were agreed upon with

Kirovles. That is, the court has established that

the minimum prices were formal in

nature and were not determinative when

selling timber products. Therefore, the court

considers it impossible to base its

conclusions on these established minimum

prices and, consequently, does not consider

or rather considers unfounded

the motion for their

request and inclusion in the case file.

Yes,

>> please. I would like to object, Your

Honor, to your actions. I believe that

you are artificially manipulating

the evidence, admitting or not admitting,

requesting or not

requesting certain evidence in order

to artificially

ensure that the case file contains

only the prosecution's evidence,

even if it is purely unsubstantiated. Thank you.

>> Please. Proceed.

>> We continue. Next,

>> we have a motion. A motion

to admit a specialist's opinion.

Before the Leninsky District Court

of the city of Kirov there is a criminal case

charging Navalny 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 Ofitserov.

With committing an offense

under Part 5 of Article

33 and Part 4 of Article

160 of the Criminal Code of the Russian Federation. The essence of the charges against Navalny

and Ofitserov is that, acting

in collusion with Opalev, Navalny and Ofitserov

signed 36 appendices to contract

No. 01/2009

dated April 15, 2009, which

specified the names of timber products,

the volumes and delivery terms, as well as the price,

which, without any

economic necessity, was

deliberately understated by all participants in the

crime compared with the price at which

the products of KOGUP Kirovles could have been

sold directly to the counterparty

OOO VLK. At the same time, Navalny and Ofitserov

were aware that Opalev was unlawfully

depriving KOGUP Kirovles of the ability

to independently sell the timber products it had produced

at market prices, thereby

transferring these timber products into

the disposal of OOO VLK without

corresponding and equivalent

reimbursement of its market value.

However, the materials of the criminal case

contain no data whatsoever

to support the above-mentioned assertion

by the prosecution. The prosecution did not

conduct any analysis of market prices for

timber products. No experts were engaged

who possessed specialized

financial and economic expertise in

the field of pricing and valuation

activities. No study of the prices

that prevailed during the period relevant

to the investigation in the timber market

was conducted at all.

It is entirely obvious that without carrying out

an appraisal of the allegedly stolen products, given

the complete absence of information about the market

value of timber products as of

2009 in Kirov Region (a federal subject of Russia), and without

researching and analyzing the prices

set by OOV VLK in the appendices

to the contract and stated in the shipping

documents, against the prices prevailing at that

time in the timber market in

Kirov Region. The prosecution’s use

of assertions of this kind

employing terms such as

deliberately understated price, market

price, non-equivalent price, knowingly

inflated price, is entirely

unsupported and inadmissible in

criminal proceedings

which, under criminal law, are classified as

crimes in the sphere of the economy.

In its ruling, the Constitutional Court

of the Russian Federation, dated October 21, 2008,

No. 514-O-O, refusing to accept for consideration

the complaint of citizen

Bugorsky concerning the alleged violation of his constitutional

rights by the provisions of Articles 58, 80, and 168

of the Criminal Procedure Code

of the Russian Federation, the following

legal position was stated. As the

Constitutional Court of the Russian

Federation has repeatedly indicated in its decisions,

the right to judicial protection guaranteed by Article 46, Part 1,

of the Constitution of the Russian Federation,

presupposes the existence of

specific legal guarantees

that make it possible to exercise this

right in full and ensure

the effective restoration of rights

through justice that meets

the requirements of fairness and equality.

In criminal proceedings, this

presupposes, at a minimum,

the establishment, on the basis of examined

evidence, of the circumstances

of the incident in connection with which

the criminal case was initiated, its

proper legal characterization, and the identification of

the specific harm caused to society

and to individual persons, as well as the actual

degree of guilt of the person in committing

the act imputed to him.

In order to safeguard the rights and lawful

interests of the accused, he must be

given the opportunity to bring to

the court’s attention his position on the merits

of the case and those arguments that he considers

necessary to substantiate it.

This is stated, among other things, in the ruling

of the Constitutional Court of February 14, 2000,

No. 2-P, as well as in the ruling of December 8, 2003,

No. 18-P, and others. This rule

is embodied in a number of provisions

of the Criminal Procedure Code

of the Russian Federation, under which

suspects, accused persons, and their defense counsel

are vested with rights to participate in the process

of proving, including the right to engage

a specialist of their choosing to participate in the case.

According to Part 3

of Article 80 and Parts 2 and

3 of Article 86 of the Criminal Procedure Code of the Russian Federation,

the defense has the right to obtain from

a specialist an opinion and submit it

to the investigative authorities and the court for

inclusion as evidence in

the materials of the criminal case. The accused

and his defense counsel may be refused

the inclusion in the criminal case file of

a specialist’s opinion only if

the circumstances that it may

establish are irrelevant to the case.

In exercising the right to defend against

an unfounded accusation, on April 25,

2013, the attorneys applied to LLC

Expert Consulting Firm Eskon with

an attorney’s request

No. 56 dated April 25, 2013, asking

for an analysis of the prices of

timber products specified in Contract No.

0129 dated April 15, 2009, Volume 2, page

70–72 of the case file,

in Appendix

Nos. 1 through 36 to Contract

No. 0129 dated April 15, 2009, Volume

2, pages 73 through 130 of the case file,

Volume 4, page 135 of the case file,

and in VLK shipping documents, Volume 8,

pages 185–249 of the case file, Volume 9, and pages

1 through 127.

And

the request is attached to this motion.

And also in the shipping documents—as I have already

said—the following questions were put to the specialists.

First:

What was the market value of

the timber products specified in

the documents submitted with this request

in April, May, June, August,

and September 2009? Second: determine

the extent to which the prices of the timber products

specified in the submitted documents deviated from

market prices.

On May 20, 2013, Marina Vasilyevna Kolobova

prepared an expert opinion.

specialist No. 3S-13/592.

Marina Vasilyevna Kolobova is

Deputy Director of EKFSON LLC

with the performance of the functional

duties of an appraiser. She has a higher

technical education and a higher

economic education from Vyatka

State University

with a specialization in Economics and Management at

the Enterprise. Qualification:

Economist-Manager.

In 2005, the specialist completed

professional retraining at the

Moscow International Institute of

Econometrics, Informatics, Finance, and

Law, specializing in Valuation of

Enterprise and Business Value, qualification:

Appraiser. By decision of February 9, 2005,

the State Attestation Commission

granted the right to conduct

professional activity in the field of

business enterprise valuation.

Professional retraining in the field of

forensic economic examination in

the specialty of forensic examination

for the valuation of intellectual

property and intangible assets.

Institute of Law, Economics, and Forensic

Examination under the Ministry of Internal Affairs of Russia, in 2008.

By decision of

February 21, 2008, the State

Attestation Commission granted

the right to conduct professional

activity in the field of

forensic economic examinations. Appraiser

Kolobova, on the basis of a certificate of

membership in the self-regulatory organization of

appraisers, the All-Russian organization

of appraisers, the Russian Society of Appraisers (a nationwide professional association),

was entered into the register of members of

the RSA on July 9, 2007.

Registration No. 30137, and has the right

to carry out valuation activities throughout

the entire territory of the Russian Federation in

accordance with the Federal Law on

Valuation Activities in the Russian

Federation.

By the All-Russian public organization

the Russian Society of Appraisers, there was issued

a certificate bearing registration number

0124

conferring the qualification/title of

Certified Real Estate Appraiser.

Her work experience dates from 1982,

and her work experience at the institution

conducting the examination dates from 2001,

while her property valuation experience dates from 2002;

appraisal experience totals 7 years. Supporting

documents are attached to the report.

Accordingly, regarding the qualifications

of this appraiser, I believe no questions

can arise. In preparing the

report, the specialist used

statistical data on average producer prices

and producer price indices

for forest products,

prevailing in Kirov Region in 2009,

as well as regulatory and technical

documentation on forest products. Information

on average producer prices for

forest products from January through December 2009

in Kirov Region was

provided upon request to

Ekskun LLC by the territorial body of the

Federal State Statistics

Service for Kirov Region, that is,

Kirovstat. The letter providing

the information, dated April 30, 2013,

is attached to the report and contains

the following information.

The table included in the report

lists prices

in rubles per cubic meter. In particular,

commercial timber. In April 2009,

the listed price was 680 rubles 7 kopecks.

Commercial timber in May: 553 rubles 76 kopecks.

Commercial timber in June: 570 rubles 81 kopecks.

In July: 595 rubles 40 kopecks.

Round timber for the production of

sawn timber.

April: 1,115 rubles 57 kopecks. In May: 940 rubles

23 kopecks. In June: 1,002 rubles 77 kopecks.

Sawn timber.

April: 3,696

rubles 52 kopecks. May: 3,714

rubles 62 kopecks.

And June: 3,263 rubles 83 kopecks. July: 3,445

rubles 72 kopecks. Edged sawn timber.

April: 4,006 rubles 6 kopecks. May: 3,982

rubles 30 kopecks. June: 3,798

rubles 54 kopecks. July: 3,584

rubles 62 kopecks.

Unedged sawn timber. April: 1,972

rubles 75 kopecks. May: 1,865 rubles 71 kopecks. June:

1,728 rubles 8 kopecks.

And July: 2,000 rubles 25 kopecks; 2,025 rubles 87 kopecks.

In addition, the specialist used

average 2009 prices for commercial timber

and sawn timber published

in the statistical yearbook

"The Timber Industry Complex of Kirov

Region,"

issued by the territorial body of the

Federal State Statistics

Service for Kirov Region. A copy

of this page of the yearbook is also attached

to the report.

In addition, the specialist used

data from the timber industry complex of

Kirov Region, methodological

provisions on monitoring producer prices

for industrial goods and

calculating price indices. Appendix to

the order of the Federal State

Statistics Service dated March 11,

2008, No. 55. Methodological

notes to the regional database of

State Statistics, Kirov

scope, provisions of the Tax Code

of the Russian Federation, Federal Law

dated November 29, 2007, on official

statistical accounting in the system of

state statistics in the Russian

Federation, the Regulations on the Federal

State Statistics Service

GOST 9463-88

round coniferous timber

technical specifications

GOST 9462-88

round deciduous timber

technical specifications GOST 17462

-84 interstate standard

logging industry products

terms and definitions

GOST 18288

-87

sawmill production

terms and definitions

In addition, the specialists were instructed as follows

the following. In order to answer the

questions posed, it is necessary

to determine the market prices for

timber products prevailing in 2009

in the territory of Kirov Region.

To identify the product groups

of timber products specified in the

documents submitted. To determine

the average prices for the timber products specified

in the submitted documents. Based on

the total volume of deliveries and broken down by

months of delivery, to carry out

a comparison of the data obtained and

establish the degree of deviation of the prices for

timber products specified in the submitted

documents from market prices.

In addition, the opinion stated

the following. The market price of goods,

work, or services is recognized as the price

formed through the interaction of supply and

demand in the market for identical, or in the absence of such,

homogeneous goods, work,

or services, under comparable economic

and commercial conditions. Part six

of Article 40 of the Tax Code. When

determining the market prices of goods, work

or services, information is taken into account about

transactions concluded at the time of sale of these

goods, work, or services, involving

identical or homogeneous goods,

work, or services under comparable

conditions. In particular, such

transaction terms are taken into account as quantity and volume

of goods supplied, for example, the size

of the shipment lot, сроки исполнения

of obligations, payment terms, usually

applied in transactions of this kind, as

well as other reasonable conditions that

may demonstrate an effect on prices.

This is also Article 40 of the Tax

Code. By Federal Law of November 29,

2007, on official

statistical accounting in the system of

state statistics in the Russian

Federation, the legal foundations were established for

implementing a unified state

policy in the field of official

statistical accounting aimed at

meeting the information needs

of the state and society through complete, լի? and

reliable and scientifically grounded,

official statistical information provided in a timely manner

on social,

social, economic,

demographic, environmental, and

other social processes in

the Russian Federation.

The Federal State Statistics

Service, Rosstat, is

a federal executive body

that performs functions related to

the development of state policy and

legal regulation in

the field of official statistical

accounting, and also provides, in the

prescribed manner, official

statistical information to state

authorities, local self-government

bodies, mass media

outlets, organizations, and citizens.

Official statistical accounting covers

consumer prices, prices in the

housing market, producer prices, and prices

for consumption. Prices for timber products

are recorded by Rosstat in the producer price

group. The Methodological Provisions

for monitoring producer prices

for industrial goods and

calculating price indices, approved

by the appendix to the order of the Federal

State Statistics Service dated March 11,

2008 No. 55, establish a system

of producer price statistics indicators

for industrial goods and

the purposes of their use. Subject to registration

by the statistical authorities are:

Actual prices for products manufactured and

shipped in the current month

to the domestic Russian market, excluding value-added

tax, excise duties, and other

taxes not included in cost,

which prevailed in the market during

a given reporting period

month, quarter, half-year, or year. Based on

the recorded actual prices

the state statistical authorities

calculate the system

of producer price statistics indicators

for industrial goods,

which are characterized by the following

set of interrelated and

mutually complementary indicators, one

of which is average producer prices

.

Average producer prices are formed

under the influence of various

assortment and structural shifts in

different organizations, seasonal

fluctuations, market conditions, and so

on. They are used to study

the characteristics of pricing processes

in the economy, for comparative analysis of prices for

products of specific types of economic

activity, carrying out various

economic calculations, and forecasting

at the macro level. The calculation of average prices for

representative goods is based on

actual price levels and

quantities of products manufactured,

recorded for each type of

product in all organizations within the constituent entity of the

Russian Federation during the reporting period.

Based on the calculated weighted average

prices for representative goods, through

successive aggregation,

average prices are calculated for commodity

groups in a constituent entity of the Russian Federation,

and then in the federal districts and in Russia

as a whole.

Further on, the conclusion presents tables

containing data provided

by the Federal State Statistics Service

for Kirov Oblast. Production volumes

of forest products in Kirov Oblast.

In particular, in Kirov Oblast

in 2009, 3.5

million cubic meters of commercial timber and 1 million

cubic meters of sawn timber were produced.

Average producer prices in Kirov

Oblast for forest products in 2009.

Thus, in Kirov Oblast in 2009,

the average price of commercial timber

was 630.6

rubles per cubic meter, while sawn

timber was 3,448.3

rubles per cubic meter. Average prices

for price changes in 2009 for

forest products for each calendar

month. The specialists were presented with

a chart

showing the dynamics of average prices for

forest products of producers in Kirov

Oblast in 2009. Thus, prices for

round timber intended for the production of

sawn timber were

fairly stable in 2009. The minimum price

was 940.23

rubles, and the maximum was 1,111 rubles 41 kopecks.

Slight price fluctuations were noted for

unedged sawn timber. The minimum

price was 1,728

rubles 8 kopecks, and the maximum was 2,364

rubles 23 kopecks. The greatest price fluctuations

were observed in the market for sawn timber and

edged sawn timber. The minimum

price for edged sawn timber was

2,879

rubles 72 kopecks, and the maximum was 4,103 rubles

36 kopecks. The minimum price for

sawn timber was 2,628 rubles 23

kopecks, and the maximum was 3,975 rubles 13 kopecks.

The specialists conducted an analysis of

the commodity groups in the waybills

issued by the KOGUP Kirovles in favor of

OOVLK, submitted by the defense,

contained in volume 8 of the case file, pages 185–249,

and volume 9 of the case file, pages 1 through 127.

According to the specialist, the volume of deliveries

of products from Kagurafles to OVLK under

the waybills amounted to 9,166.259

cubic meters for a total amount of 13,910,352

rubles 22 kopecks. Of this, 7,764.423

cubic meters were commercial timber, with an average price

excluding VAT of 1.61

rubles 25 kopecks. Another 1,080.891

cubic meters

were sawn timber, with an average price of

3,453 rubles excluding VAT

85 kopecks. These data indicate

that the prices at which OOVLK

purchased products from KOGUP Kirovles,

fell within the range of the dynamics of average prices

for forest products of producers

in Kirov Oblast in 2009,

set out above. An analysis comparing

average prices for forest products under the waybills with

average market prices

of producers in Kirov Oblast for 2009

showed that commercial timber was purchased by OOVLK

from KOGUP Kirovles at an average

price of 1.61

rubles 30 kopecks per cubic meter. With

the average producer price in Kirov

Oblast being 630 rubles 60 kopecks per cubic

meter, that is, 430 rubles 70 kopecks higher than

the average market price,

the deviation from the average market price was 40.6%.

Sawn timber was purchased at an average

price of 3,453

rubles 80 kopecks per cubic meter. With

the average market price being 3,448

rubles 30 kopecks per cubic meter, that is

5.5

rubles above the average market price, which

amounted to a deviation of 0.2%.

An analysis of the prices at which OOVLK purchased

products from KOGUP Kirovles and the average market

prices of producers in Kirov Oblast, broken down

by month, yielded the following

result. In particular, for the item

commercial timber, the following

data were provided. In April, the total volume supplied by

KOGUP Kirovles amounted to 1,121.32

cubic meters for a total amount excluding VAT of

1,369,240

rubles 74 kopecks. The average monthly price

of the product excluding VAT was 1 million—sorry,

1,221

per cubic meter. The average monthly price,

according to Kirovstat, was 680 rubles

7 kopecks. Thus, the average monthly

price at which OVLK purchased in April

2009 products from KOGUP Kirovles, was

541 rubles per cubic meter higher than

the average monthly price recorded in

the same period in Kirov Region. In May

2009

93,381

cubic meters of commercial timber were

sold by Kogub Kirovles at a price of 1,138

rubles 76 kopecks per cubic meter, which was

585 rubles above the average monthly price for

similar products in Kirov

Region. Commercial timber was also purchased at prices above

the average monthly prices in Kirov Region

by OOVLK in June

and July 2009. The deviation of average prices

under the waybills from the average prices in

Kirov Region amounted in April to

+79.6%,

in May +105.6%,

in June +2.6%,

in July +234.9%.

Thus, during the period from

April through July 2009, OOVLK purchased from Kogubkeryfles

commercial timber in the amount of 7,764.423

764.423

cu. m, which accounts for more than 70%

of the total volume of products purchased at a

price significantly exceeding

the average market price of similar products,

as applied by other

producers in Kirov Region during that

period. According to the Federal State

Statistics Service for Kirov

Region, the specialist's opinion contains

an analysis comparing average monthly prices

under the waybills with the average monthly

prices of producers in Kirov Region, as well as

for other product groups. In the section

"Conclusions," I answer question number one.

What was the market value of

the timber products specified in

the documents submitted with this request?

In April, May, June,

August, and September 2009, the specialist

states the average market prices for

timber products of producers that

were recorded in Kirov Region in

2009. April. Commercial timber: 680

rubles 7 kopecks. Round timber for the production of

materials: 1,115 rubles 57 kopecks.

Sawn timber: 3,696 rubles 52 kopecks.

Edged lumber: 4,006 rubles 6 kopecks.

Unedged lumber: 1,972 rubles 75

kopecks. May. Commercial timber: 553 rubles 76

kopecks. And round timber for the production of

sawn timber: 940 rubles 23

kopecks. Sawn timber: 3,714 rubles 62 kopecks.

Edged lumber: 3,982

rubles 30 kopecks. Unedged lumber:

1,865 rubles 71 kopecks. June. Commercial timber:

570 rubles 81 kopecks. Round timber

for the production of sawn timber: 1,200

rubles 77 kopecks. Sawn timber:

3,263 rubles 83 kopecks. Edged lumber:

3,798 rubles 54 kopecks.

Unedged lumber: 1,728 rubles 8

kopecks.

The data for July, August,

and September follow.

The same categories. In answering

question number two, which asks to determine

the degree of deviation of timber product prices

specified in the submitted documents from

market prices, the specialist sets out

the degree of deviation for the timber products

specified in the submitted documents,

from market prices, broken down by product

groups and months, and all the data obtained

are consolidated into a summary table. The degree

of price deviation is determined in rubles and

percentages. According to the opinion,

based on statistical data from

the territorial body of the Federal

State Statistics Service for

Kirov Region, the average monthly prices

at which Kogubkerov Les sold

timber products to VLK, in particular commercial

timber, were significantly higher than

the average monthly prices at which the same

timber was sold by other

producers in Kirov Region.

The deviation from the average market price was 541

rubles 5 kopecks per cubic meter. This was

79.6%

in April 2009. 585 rubles per cubic meter

105.6%

in May. 14.85

rubles

per cubic meter, 2.6%.

June 2009. 1,398

rubles 72 kopecks per cubic meter — this was

234.9%

for July 2009. This specialist's opinion

shows that

OVLK purchased timber products from

Kogubkirov Les not at deliberately

undervalued prices without corresponding

equivalent compensation for their market

value, as the prosecution claims, but rather

at market prices, which, moreover,

for some product groups

substantially exceeded the average market prices

charged at that time by producers in

Kirov Region. On the basis of the foregoing,

and pursuant to Articles

47, 53, 80, 86, 244, 274, 285, and 286.

We ask that the following be added to the case file:

the specialist's opinion

dated May 20, 2013, and admitted as

evidence in this

criminal case. Attached are the attorney's

request and, accordingly, the opinion

itself.

Please, the parties' views on this

issue.

>> Your Honor, I support the motion, well,

the defense lawyers' motion. I would like to note that this is

an economic opinion prepared by

specialists

living in this region, who

had the opportunity to communicate with local

manufacturers that have a large

database. Moreover, I would like

to note that this opinion is

economic,

not psychological or any other kind, but

specifically economic. I would also like

to point out that the conclusions of this opinion

state that VLK purchased

at prices that, in many cases, were far

above market rates, which also

refute the prosecution's position that

these prices were not equivalent.

the average market level, and they are equivalent only in one

direction: they are substantially higher. That is,

Kogubkirovles, by working with VLK, received

greater profit than it did when working with

other companies. I would also like to note

that this is an economic opinion, like

the previous economic opinions

that were in the case, the expert examinations

that were commissioned by the Kirov

Investigative Committee in Kirov

and which also state that

Gubkerov Les suffered no losses

from working with VLK. And, in summary, I want

to emphasize that this is the third

economic opinion that, within

the framework of this case, likewise on economic grounds,

completely refutes the prosecution's position,

which is based solely on speculation and

the judgments of non-professionals, as well as

a psychological examination.

Thank you.

Your opinion.

>> Yes, Your Honor, I support

the position set out by counsel, especially since

this is a joint motion. I would like to say to

the court that under Article 286 of the Russian Code of Criminal Procedure,

the court may admit documents

submitted by the parties and allow their

examination as evidence. I

would like to remind everyone that this

specialist's opinion constitutes

evidence within the meaning of Article 74

of the Russian Code of Criminal Procedure. I would also like to say that this

specialist's opinion has a direct

and immediate relation to Article

73; that is, it falls within

the scope of proof in this

criminal case, because

under paragraph 7 of part 1

of Article 73 of the Russian Code of Criminal Procedure, the parties

have the right to present, and the court is obliged

to examine evidence that may, among other things,

exclude the criminal nature

of the act imputed to Ofitserov. I believe

that this is, in essence, the only

piece of evidence that should have been

presented, that the party should have

presented—the prosecution—but

for some reason it did not. And when the indictment says

that my client

Ofitserov purchased timber products from VLK at a

price below market value. Well then, the

prosecution, presumably, could also have

taken the trouble to conduct some kind of

economic analysis, if

the investigator did not consider it necessary to do so.

I believe that this specialist's opinion

completely rules out the criminal nature

of the act imputed to Ofitserov. It

confirms that Ofitserov purchased

Kogubkerov Les products at a price not merely

below market value, but at a price far

above market value at that time.

Therefore, I ask the court to admit this

evidence. Investigat-

>> Please.

Your Honor, I support this

motion, because I would very much like

for the case file finally to contain

at least one document based

on figures and genuinely based on

expert analysis, prepared by specialists.

Because right now all our, uh,

speculation about prices is based either on

some investigators' fevered fantasies

or simply on the oral testimony

of witnesses. This expert examination was prepared

by an organization whose qualifications

are beyond doubt. This examination was

written by people whose qualifications

are beyond doubt. This examination

was commissioned from a local expert

organization in Kirov, and not, as the

investigation did, somewhere in Moscow

or in some obscure offices in

Volgograd.

In this examination, the sources of all

prices and the sources of all data, as

required by law, can be traced.

They rely on local statistics,

local data, and so on. Therefore I

insist that this examination

be admitted. And from this examination

it will be perfectly clear that everything

that the Moscow

researchers, who understand absolutely nothing

about timber of any kind, came up with is

simply part of the effort to fabricate this

case. Thank you.

>> Please.

>> Support. The prosecution supports it.

would like to review the motion on the spot and

the examination itself so that the court may assess it.

Well, it is lengthy; I am giving you time until

11:45

.

A recess was announced.

Re-,

>> Please, your position.

Your Honor, having reviewed the defense's motion

to admit specialist's opinion

No. 3SI/13/59

592, excuse me, as well as the

opinion itself,

the prosecution objects both to

the admission of this opinion and

both the motion and the examination in

the court hearing for the following

reasons: in the course of it, as source

data for conducting the examination

by the specialist, in the prosecution’s

view, there were, uh,

not all of the case materials attached. In

particular, there is only contract

No. 01/2009 with its appendix and delivery

notes.

The source data for the opinion do not

include, for example, documents,

evidence of Kagub’s work with

counterparties that later moved to

VOV VVK.

During the court hearing, moreover,

the report of auditor Ratova has already been examined, in

which an assessment is given of deviations from

market prices under contract No. 0129 between VLK

and Kirovlesk. It also confirms, in

particular, that the data

of Rosstat statistics on market prices are

advisory in nature. And in fact

the market price is the price at which

a given product can be sold

by a specific business entity

to another entity. The same point was made during

questioning by auditor Zagoskina as well

with reference to the conclusions of her audit

report, including deviations

from market prices in the performance of contract

No. 0129.

In addition, during the court hearing

the opinion of the

forensic accounting examination No.

79 EK was also examined; its source data

included both primary accounting

documents and other materials

from the criminal case. The examination materials

contain information about the prices at which

VLK purchased timber and

sold it to its counterparties.

The total amount has also been established of

the timber purchased by VLK from OKGUB and

sold by it to its counterparties.

There are no grounds to doubt the conclusions

of the experts in this examination.

The economic calculations were carried out on the

basis of the materials available in

>> Please pass it over.

>> Thank you.

The court heard the parties’ views on

the motion filed and ruled as follows.

Accordingly, the specialist’s opinion

submitted by the defense,

meets the admissibility requirements and

relates to the subject matter to be proven in

this case. Therefore, the court

admits this opinion into the case

file of the criminal case

and permits it to be examined at the court

hearing.

>> Please read it out yourself. The

specialist’s report No. 3SI13/592

introductory section: grounds for conducting the

examination: attorney request No. 56

dated April 25, 2013, from the attorneys of the MGC

Dalit, Mikhailova, Davydova, contract No.

592

of April 2013.

Institution conducting the examination: LLC

Expert Consulting Firm Eskon.

Date the materials were received for

examination: April 25, 2013.

The materials were submitted to the specialist.

A copy of contract No.

01/2009

dated April 15, 2009; copies of appendix

No. 1–36 to contract No. 01/2009

dated April 15, 2009; copies of delivery

notes totaling 140 items. Subject

of the examination: the price of timber products

specified in the submitted documents.

Questions put to the

specialist. First: What was the

market value of the timber products

specified in the documents submitted with this

request in April, May, June,

July, August, and September 2009?

Second: Determine the extent of deviation

of the prices for the timber products specified in

the submitted documents from market

prices.

Place where the examination was conducted:

OOKF Skon.

Date and time of commencement: April 26,

2013. Completion: May 20, 2013.

Date the examination was signed: May 20,

2013. The examination was carried out by

specialist

Marina Vasilievna Kolubova. Information on

the specialist’s education and specialty

is provided here. I already indicated it earlier in the motion,

so I will not repeat it

now.

The specialist’s examination was conducted using

statistical data on

average producer prices, producer price indices

for timber products,

as recorded in Kirov Region in 2009,

and regulatory and technical

documentation on timber products.

Information base for the examination, first:

Regional statistical database of

Kirov Region of the territorial body of the

Federal State Statistics Service

for Kirov Region,

Kirovstat, available in

open access at the following Internet

address. Section: Prices and Tariffs

(web address provided). Timber industry

Second: The Timber Industry Complex

of Kirov Region, statistical yearbook,

Kirov: Territorial body of the Federal

State Statistics Service for

Kirov Region, 2012, page

52.

Third: Statistical data for 2009

year at average prices for 2009,

provided to the territorial bodies of

the Federal State Statistics Service

for Kirov Oblast (region)

letter No. 17-01-12/131

dated April 30, 2013. Methodological

guidelines for monitoring producer prices

for industrial goods and

calculating price indices. Appendix to

Order of the Federal State Statistics Service

dated March 11

2008, No. 55. Fifth.

Methodological notes to

the regional database of state

statistics for Kirov Oblast. The document

is available on the official website of

territorial body of the Federal

State Statistics Service for

Kirov Oblast. The full

web address is given below.

Sixth. The Tax Code of the Russian

Federation. Part One.

Seventh. Federal Law of November 29

2007 No. 282-FZ on official

statistical accounting in the system of

state statistics in the Russian

Federation.

Eighth. Regulations on the Federal State Statistics Service

as amended by

Government resolutions of November 7

2008 and January 27, 2009, with amendments for the 2010s

including 2011–2012. Ninth.

GOST 9463-88

Round timber of coniferous species.

Technical specifications,

approved by a resolution of the USSR State Standard Committee

of April 21

1988, as amended on March 1

1990. GOST 9462-88

Round timber of deciduous

species. Technical specifications, also

approved by a resolution of the State Standard Committee.

GOST 17462

-84, an interstate standard

for products of the logging

industry. Terms and definitions,

approved by a resolution of

the State Standard Committee.

And GOST 18288

-87, Sawmill production. Terms and

definitions. Also approved and put into

effect by a resolution of the State

Committee for Standards dated June 29

1987.

Methods used in conducting the

study. In carrying out the

study, the following

general scientific methods were used: observation,

description, comparison, and methods of

logical analysis. In conducting the

study, the following

specialized methods were used:

statistical methods.

Appendix to the specialist's opinion.

Listed here are a copy of the letter, uh,

from Kirovstat (the regional statistics office).

Next are copies of pages from the statistical

compendium *Timber Industry Complex*, copies

of documents confirming the specialist's education and

qualifications.

Research section.

In order to answer the questions posed,

it is necessary to

determine the market prices for

timber products prevailing in 2009 in

Kirov Oblast. Determine

the product groups of timber products specified

in the submitted documents. Determine

the average prices for the listed products,

specified in the submitted documents,

based on the total volume of deliveries and

broken down by month of delivery. Carry out

a comparison of the data obtained and

establish the degree of deviation of prices for

the timber products specified in

the submitted documents from market

prices.

The market price of goods, works, or services

is recognized as the price formed through

the interaction of supply and demand in the market for

identical goods, works, or services, and in their absence,

homogeneous goods, works, or services, under

comparable economic and commercial

conditions. Further in the research

section, the provisions of

the legislation are cited, which had previously been

set out in the motion.

And

it also explains here how

average producer prices are determined. The average

price is given, and formulas are provided for the

weighted arithmetic mean

and the calculation of average prices for representative

goods is carried out on the basis of

the actual price levels of the recorded

products, registered for each

type of goods in all organizations of

the constituent entity of the Russian Federation during the reporting

period. Based on the calculated

weighted average prices for representative

goods, through successive

aggregation, average

prices are calculated for product groups within the constituent entity of the

Russian Federation, and then in

Russia's federal districts as a whole.

And

the following tables are then provided,

which contain

data from the

territorial body of the Federal

State Statistics Service for

Kirov Oblast for 2009,

recording the following indicators: volumes

of timber production in Kirov

Oblast under the category of commercial timber

for the period from 1990

through 2000, 2005, 2006, 2007, and 2008–2009

and, uh, for 2009 the volume is indicated

3.5 million solid cubic meters, including

3.3 million cubic meters of round timber,

cubic meters,

and sawn timber

1 million.

Average prices are also presented in the table

of average producer prices in Kirov Oblast

for timber products in 2009.

Commercial timber: 630 rubles 6 kopecks per

cubic meter. Round timber

for sawn timber production: 1,045 rubles

30 kopecks. Sawn timber: 3,448

rubles 3 kopecks. Edged sawn timber: 3,670

rubles 4 kopecks. Unedged sawn timber:

2,031 rubles 10 kopecks.

Table 3 presents the average producer prices

in Kirov Oblast for

timber products over the course of 2009,

by month from January through December.

The period under review.

Accordingly, we have already stated these

prices from May to June for the following items:

commercial timber, round timber,

sawn timber, edged sawn timber,

and unedged sawn timber.

The table also shows the change in prices

over the year. Commercial timber: 119.5

rubles. Round timber for the production of

sawn timber: 8.1 rubles. Sawn timber:

28.45.

Edged sawn timber: 72.77.

Unedged sawn timber: -78.18

rubles. The annual price change in percentage terms

was: commercial timber, 20.85%.

Round timber for the production of

sawn timber: 7.8%.

Sawn timber: 1.4%.

Edged sawn timber: 2.43%

and unedged sawn timber: -3.60%.

Next,

a chart table is provided showing the dynamics of

average prices for timber products

of producers in Kirov Oblast.

For the categories of round timber,

sawn timber, edged sawn timber,

unedged sawn timber, and the dynamics

are shown in prices for each month.

Very nice color charts.

Chart. Next, in tabular form,

information is presented on prices for

timber products and delivery volumes

contained in the submitted

documents.

There is a heading:

Summary Table 4. Summary

information on timber product prices and

delivery volumes contained in

the submitted documents. This is followed by

a list: payment order number,

payment order number, number

of the appendix to contract No. 012009 dated 15

April 2009. Date, number of the waybill.

Date of issue of the waybill.

Name of the goods as listed on the

waybill. Quantity

in cubic meters, price

per cubic meter excluding VAT, total

delivery amount excluding VAT, in rubles. Total

delivery amount in rubles including VAT, price in rubles including

VAT.

Accordingly, these

data were submitted by the defense from the

materials of the criminal case.

Well, I do not think we need to list all the

prices once again that are indicated

in the waybills.

The next table presents the summary

results for the waybills.

And the number of waybills is 140.

The delivery volume according to the

waybills, quantity in

cubic meters:

9,166.259000

cubic meters.

The total amount of deliveries under the waybills excluding

VAT is 11,997,997.874

rubles. The total amount of deliveries under the waybills

under the waybills

including VAT is 13,970,352

rubles 22 kopecks.

It was previously established that the average

market prices for timber products were determined

by the territorial body of the Federal

State Statistics Service for

Kirov Oblast, the territorial

body, using the weighted-average method

for the following product groups: commercial timber,

which includes

the product group of round timber

for the production of sawn timber.

Sawn timber, which includes

the product groups of edged sawn timber and

unedged sawn timber. For

comparability

of the data being compared, it is necessary to carry out

a grouping of the goods listed in the

waybills and determine the average

prices for the product groups using the

weighted-average method.

The terms and definitions used to carry out

the grouping of

timber products are set out below.

The term “timber materials.”

Its definition is given in the specialist’s

report. It is a material made of wood

that has retained its natural physical

structure and chemical composition, obtained

from felled trees, stems, or

their parts by means of crosswise or

lengthwise division. Crosswise and

lengthwise division includes sawing,

splitting,

planing, peeling, milling,

and shredding. Commercial timber includes round

and split timber materials, excluding firewood and

wood unsuitable for industrial

processing, as well as

resinous stumpwood and industrial wood chips.

The following also provides definitions of what

round timber, sawlogs,

veneer logs, matchwood logs,

pulpwood, firewood, and sawn timber are.

Sawn timber: edged and unedged.

The first classification by product groups

of commercial timber and sawn timber

was carried out by assigning the goods

listed in the waybill to one or another

product group in accordance with

the above terms and

definitions. To eliminate the impact on

the results of calculating average prices for

the product categories of firewood and defective

products, they were consolidated into

the corresponding groups. The calculations

were performed using the standard

Microsoft Office software package.

The results of processing the data

contained in Table 4 for the first

classification are presented below in the text.

A table is provided

below. Indicators obtained as a result of

data processing for the first classification.

Commercial timber. Delivery volume

of products: 7,764.423.

cu. m. The share of this group in the total volume

of products was 1.3%.

The total value of deliveries under goods waybills

excluding VAT was 8,240,29

rubles and 83 kopecks. The total value of deliveries under goods

waybills including VAT was 9,751,036

rubles and 36 kopecks. The average price per cubic

meter of products excluding VAT was 1,061 rubles and 25

kopecks. The average price per cubic meter

of products, including VAT, was 1,256 rubles.

86 kopecks. Sawn timber. Delivery volume

of products

1,080,891.000.

The share of the product group in the total volume

of products was 2.48%.

The total value of deliveries excluding VAT was 3,733,235

rubles and 38 kopecks. The total value of deliveries under goods

waybills including VAT was 4,130,277

rubles and 51 kopecks. The average price per cubic

meter excluding VAT was 3,453

rubles and 85 kopecks.

Including VAT: 3,821

rubles and 18 kopecks.

Firewood. Delivery volume: 93,965.000

cubic meters. The share was 84.71%.

The total value of deliveries was 7,296 rubles and 71 kopecks.

Including VAT, deliveries amounted to 8,000, 1,610 rubles and 15 kopecks.

The average price was 77 rubles and 65 kopecks.

Excluding VAT; 91 rubles and 63 kopecks including VAT.

Defective products. Delivery volume: 226.98,

share: 11.79%.

The total value of deliveries was 17,312

rubles and 9 kopecks.

Including VAT: 20,428.

28 rubles and 20 kopecks. The average price per cubic meter

was 76 rubles and 27 kopecks. And the average price including VAT

was 90 rubles.

Total

delivery volume of products under goods

waybills: 9,166

9,166,259.000

cu. m.

The share of the product group was 100%. The total

value of deliveries under waybills excluding VAT was 11,997,874

rubles. The total value of deliveries including VAT was 13,910

rubles.

13,000—sorry, 13,910,352

rubles and 22 kopecks. Next, a chart is provided

showing the volume of forest product deliveries, from

which it is clear that commercial timber

accounts for the largest share in the goods

waybills in cubic meters. And there was

delivered

less sawn timber, and only very small amounts of

firewood and defective products.

The second classification was carried out within

the groups of the first classification. The classification

"Commercial timber" includes

the product group of round timber for

processing into timber. All other round

forest materials were included in the product

group "forest materials and other materials not