The “Kirovles Case.” Court Video Recording. Hearing 18

Please be seated.

The court session is open to the public.

Before the Leninsky District Court of the city of Kirov.

In this open court session, the court continues

the examination of the criminal

case against Navalny and Ofitserov. The following have arrived at

the court hearing:

the state prosecutors, the representative

of the injured party, and his counsel. The defense side

is present in full. Accordingly,

at the previous court session it was

announced that today additional submissions would be heard.

Such additions are available from

the representative of the injured party and the defense counsel.

After that, the court will proceed to closing arguments.

Uh, please, representative

of the injured party, stand up.

Please tell the court, are you familiar with

the results of the judicial investigation?

Do you have any additions? And,

>> I have familiarized myself with the results of the judicial investigation and with

all the materials.

Noted.

>> Thank you. Please be seated,

defense counsel for the injured party.

>> Your side? Have you familiarized yourselves with the materials of the judicial

investigation in full?

Any additions?

>> The judicial investigation is declared closed.

The court proceeds to the parties' arguments. Is

the prosecution ready? Your

>> Yes, Your Honor, we are ready.

>> The court will now hear the parties' statements.

Please proceed.

>> Thank you.

Your Honor, esteemed participants

in the proceedings, those present in the courtroom. For more than

two months we have been examining the criminal

case against the defendants Ofitserov and

Navalny. We heard witnesses,

and examined the written materials of the case.

It took us more than two months

to complete the judicial

investigation.

Today we have been given the right

to speak in closing arguments. As

a rule, crimes in the economic sphere,

to which this case also belongs,

are often not so interesting to

listeners. In their ordinariness they

are banal and dull, and do not arouse

much interest. People do not die in them, nor is

harm caused to citizens' health, and

the circumstances of their commission do not lie

on the surface. On the contrary, crimes of this kind

are carefully concealed,

made to look like civil-law

relations. The persons who commit them

enrich themselves unlawfully and cause damage

to the property of citizens and the state. In

this lies their danger to

society. There are a great many examples of such crimes.

And in our criminal

case there is nothing new in either the goals or the

motives, the means, or the methods

of their commission. There is only one difference: the composition

of the defendants. And it is precisely this that arouses

genuine public interest,

and gives this case a certain

resonance. This criminal case has become the subject

of discussion and dispute both in society and in

the mass media, where there have appeared

corresponding articles, with evidence and the investigation's conclusions distorted

beyond recognition,

There is nothing worse for

justice than when, in the court's view,

public opinion comes first,

which, as a rule, boils down to the opinion

of individual persons who do not know the details

of the case. The law requires objectivity

and impartiality from us, and therefore a conclusion as to

the guilt or innocence of the defendants

will be made by us on the basis

of the evidence examined and analyzed.

Let me remind you of

the circumstances of the case.

In January-February 2009, Navalny

knowingly aware of his ability to exert influence

over the activities of the state

unitary enterprises of Kirov Region

by virtue of his actual exercise

of the powers of an unpaid adviser to the governor,

formed the intent to steal

property belonging

to KOGUP Kirovles (a regional state-owned forestry enterprise).

Acting out of self-interest as

the organizer of the crime,

Navalny, while also planning

to direct its execution jointly with

his acquaintance Ofitserov, brought in as

an accomplice to the crime, developed

a criminal plan to steal

the property of KOGUP Kirovles by

misappropriating it in favor of a newly created and

organization under their control, which

Ofitserov was to establish and head.

While preparing for

the impending theft, around February

2009, Navalny, while in practice exercising

the above-mentioned powers of an adviser

to the governor on an unpaid basis,

acting on the instructions of the leadership

of Kirov Region, which was unaware of

the crime being committed, together with

Ofitserov, allegedly for the purpose of studying

and analyzing the efficiency of the operations of KOGUP

Kirovles, arrived at the said

enterprise. After that, Navalny

introduced Ofitserov to the general

director of KOGUP Kirovles, Opalev, and

instructed him to provide Ofitserov with

information about the structure of KOGUP Kirovles,

the range of timber products harvested and

processed, as well as

other necessary data, which Opalev

did provide. Around February-March of that year,

Navalny, continuing to carry out his

criminal intent aimed at

the theft of property belonging to KOGUP Kirovles,

while directing the commission of the crime,

while in the government building

of Kirov Region, informed Opalev about

the forthcoming creation by Ofitserov of a

company to provide intermediary

services for the sale of harvested and processed

timber products of KOGUP Kirovles for the purpose of

the subsequent embezzlement

of the property entrusted to Opalev.

Under these circumstances, Opalev,

being aware that as a result of the creation

of this company and its further operations

KOGUP Kirovles would suffer

property damage, took no actions

aimed at preventing

Navalny’s unlawful actions,

and agreed to proceed with

the latter’s proposal. Thus,

he entered into a prior criminal conspiracy with Navalny and Ofitserov,

a prior criminal agreement,

aimed at embezzling the property entrusted to him,

that is, the property of KOGUP

Kirovles on an especially large scale.

Ofitserov, carrying out the role assigned to him

for the purpose of implementing Navalny’s criminal plan,

acting jointly and

in coordination with him, in March 2009

arranged for the establishment and state

registration in Kirov Region

of a limited liability company controlled by him and Navalny,

a limited liability company

Vyatskaya Timber Company, hereinafter LLC VLK, and

also the opening of a bank account, thereby

facilitating the commission of the crime

by providing information

and the means for carrying it out. Subsequently, the

Inspectorate of the Federal

Tax Service for the city of Kirov

carried out the state registration

of LLC VLK.

Its sole founder

and general director was

Ofitserov, who also opened for LLC

VLK a settlement account with JSCB Vyatka Bank.

Around March and the first half of April

2009, in the city of Kirov, Ofitserov,

acting on the instructions of the organizer

of the crime, Navalny, and continuing

to aid in the commission

of the embezzlement, arranged the drafting of a

contract that was knowingly disadvantageous for KOGUP Kirovles

supply agreement with LLC VLK and signed

it on behalf of LLC VLK.

Under this agreement, KOGUP Kirovles

undertook the obligation to supply

timber products entirely at its own expense

to consignees that were legal entities and

individuals, including those who

were in fact existing

buyers of timber products from KOGUP

Kirovles. Therefore, refusing

to conclude direct supply contracts with them

made no economic sense and

entailed causing damage to

Kirovles.

Moreover, in the said agreement

there was initially no information about the price

of the timber products that would correspond to

and equivalently compensate, on the part of

VLK, the market value of the timber products supplied by

KOGUP Kirovles. Next,

Ofitserov submitted the said agreement

to Opalev for signature, and on 15

April 2009, while in the building

of KOGUP Kirovles at the address: Kirov,

Avtotransportny Lane, Building 4,

acting deliberately and in coordination with

Navalny and Ofitserov, being

the general director of KOGUP Kirovles,

and using his official position,

signed the said supply agreement

No. 01/2009 with LLC VLK, providing for

the execution of appendices to it

defining the main terms for the supply

of timber products, including their price.

At the same time, Opalev fully understood

the social danger of his actions and

the inevitability of socially dangerous

consequences resulting from

the conclusion of the supply agreement with LLC VLK in

the form of embezzlement of the timber products

entrusted to him from KOGUP Kirovles in favor of

LLC VLK and the causing of property damage

due to the absence, on the part of

VLK, of equivalent compensation for the market

value of the said timber products.

Under the agreement concluded with LLC VLK,

KOGUP Kirovles undertook to supply

timber products to the consignees

specified in the appendices to this

agreement, while LLC VLK would pay for the

goods. At the same time, Navalny, Opalev, and

Ofitserov knew for certain that

LLC VLK would pay for the goods

under the terms established by the agreement and

its appendices, at a knowingly

undervalued price compared with the price

that KOGUP Kirovles could have obtained

from buyers without using

the intermediary services of VLK. And the said

agreement was aimed exclusively at

creating the appearance that KOGUP

Kirovles had civil-law obligations

to LLC VLK.

Supposedly, it was to transfer

timber products to consignees for consideration, whereas in

reality these goods would be

transferred without equivalent and

appropriate compensation from

LLC VLK.

From 15 April to 13 July 2009, in

Kirov, in execution of their joint

criminal intent, Opalev, using his

official position as general

director of KOGUP Kirovles, as well as

Ofitserov, the general director of LLC VLK,

acting deliberately and in coordination, in

in complicity with Navalny, who organized

the commission of the said crime and

directed its execution, signed

36 appendices

to supply contract No. 01/2009,

which specified the types

of timber products, volumes, delivery terms,

as well as the price, which, without any

economic necessity whatsoever,

was deliberately understated by all

participants in the crime compared with

the price at which the products, as timber, could

have been sold directly by the counterparty

LLC VLK

for his part, Ofitserov, during the above-mentioned

period of time, acting on behalf of LLC VLK,

entered into supply contracts for the sale of the produced

KOGUP Kirovles timber products with

buyers for the purpose of increasing the volume of

KOGUP Kirovles property subject

to embezzlement, as well as creating for VLK

conditions allowing it to exclusively

supply and sell the produced

KOGUP Kirovles timber products. Opalev,

acting on Navalny’s instructions,

deliberately and in coordination with him and

Ofitserov, using his

official position, as general director issued

Order No. 76 establishing the procedure

for the sale of timber products by KOGUP

Kirovles dated May 19, 2009, under which

a ban was introduced on forestry branch offices

of KOGUP Kirovles independently

entering into supply and

purchase-and-sale contracts for timber products with

legal entities and individuals, as well

as sole proprietors.

At the same time, Navalny and Ofitserov were aware

that Opalev, in part, was unlawfully depriving

KOGUP Kirovles of the ability

to independently sell the produced

timber products at market prices, thereby

placing these timber products at the disposal

of LLC VLK without

appropriate and equivalent

compensation for their market value. During the

period from April 15 to September 30, 2009,

in Kirov, Opalev, using

his official position, and Ofitserov,

acting deliberately and in coordination with

Navalny and on his instructions, ensured

the performance of the terms of supply contract

No. 01/2009 and its appendices, as a result of which

KOGUP Kirovles shipped

timber products in the amount of 10,842.7 cubic meters

for a total sum of 16,165,826

rubles and 65 kopecks to the following

counterparties of LLC VLK: LLC Domostroitel,

LLC AVS, LLC Lesgarant, OJSC KMDK, OJSC

Volga, LLC Vlada, OJSC Vantazhnik, LLC

Sevlespil, sole proprietor Podgornov, OJSC Mari Pulp and Paper Mill,

CJSC Krasny Yakor, LLC Match

Factory Pobeda, LLC Ufimskie Spichki, LLC

Krymskie Zori, CJSC Spichprom, Zoo and

Mont. During the trial,

Navalny and Ofitserov did not admit guilt in the

crime charged, explaining that in their

actions the elements of theft, namely

self-interest, unlawfulness,

and gratuitous infliction of damage

on the owner, were absent. The charges brought

against them were unclear to them. The crime

is alleged to have been aimed at the theft of state

property. They regard it as skillful

performance by Navalny of the duties

of adviser to the regional governor in 2009,

and Ofitserov’s actions as having been carried out

within the framework of lawful business

activity.

This is the defendants’ version—that is, the version of persons

facing criminal punishment, persons

who are interested in a favorable

outcome of the case. Therefore, whether deliberately or not,

they color all the events of the crime

and their own participation in it in a defensive light,

softening or passing over in silence the

points most unfavorable to themselves.

But let us step out of the world

of fantasies and fairy tales and look objectively

at the events of 2009, relying on

the evidence and the established facts.

Let us assess the defendants’ version.

It should be noted that in this

criminal case there are two defendants. They are

Navalny, the organizer of the crime, and his

accomplice Ofitserov. As for the third

participant in the crime, the direct perpetrator,

the former general director of KOGUP

Kirovles, Opalev, the criminal case

was separated into a distinct proceeding due

to the conclusion with him of a pre-trial

agreement requiring a full

admission of guilt.

The case was heard, and by the judgment

of the Leninsky District Court of the city of Kirov

dated December 24, 2012, Opalev was found

guilty of embezzling

timber products in the amount of 10,842.77

cubic meters, worth 16,165,826

rubles and 65 kopecks—that is, theft of property

belonging to KOGUP Kirovles, entrusted to Opalev,

using his official

position, on an especially large scale, by

prior conspiracy, together

with citizens N and O, that is, of committing

the crime provided for by

Part 4 of Article 160 of the Criminal Code of the Russian Federation

The judgment entered into legal force.

Since the criminal case against

Opalev was considered under a special procedure

of criminal judicial proceedings

and the available evidence was not examined

by the court, it cannot therefore be

used in full as prejudicial evidence

in the present criminal

case. However, the numerous

items of evidence examined during the court

hearings fully confirm

Navalny’s involvement in organizing

the embezzlement jointly with Sopolev

of timber products from KAGUB Perv Les, and

Ofitserov’s, accordingly, in aiding and abetting

the embezzlement of these timber products.

From the testimony of witness Opolev,

who in 2009 held the position of

general director of KGUBles, it follows that

the initiative to create an organization

to act as an intermediary between KAGUB and the end

consignees, as it turned out, VLK,

came personally from the governor’s adviser

of Kirov Region, Navalny. It was

Navalny who, while in his office,

office,

introduced Ofitserov to him as

a person who would provide KAGUB

with assistance in organizing the sale of

timber products. The subsequent familiarization

of Ofitserov with the activities of KAGUB

was also carried out on the direct instruction

of Navalny.

Opolya’s testimony indicated that

Navalny promised to assist in

increasing budget funding for

KAGUB Kirovles. However, the general director

of the state enterprise understood that these promises

were connected solely with Navalny’s interest

in selling timber products

through OOO VLK and receiving from its

operations profits for himself and Ofitserov,

with whom he maintained friendly relations.

In addition, Ofitserov, referring to

Navalny, promised that after

KOGUB Kirovles secured for OOO VLK

significant volumes of timber

supplies, his personal interest in the form

of receiving part of the profits from the activities

of VLK would also be taken into account. Thereafter,

acting on Navalny’s behalf, Ofitserov

presented Opol to a draft contract between

KOGUB Kirovles and OVK for the supply of

timber products, containing one-sided

liability for the state

enterprise. The supply contract was

submitted by Opolev for review to

employees of KAGUBrofles, who expressed

the unanimous opinion that it was disadvantageous and

inadvisable.

Despite this, understanding that OVLK

was merely an intermediary, and that

this cooperation and contract could

cause property damage to

KOGUB Kirovles, since the price difference,

that is, the profit earned, would

remain with OOO VLK rather than with KOGUB Kirovles,

Ole, in April 2009, on behalf of

KOGUB Kirovles, signed supply contract

No. 01/2009

with VLK, and later 36 appendices to

it.

For Opolev, this decision became the key

circumstance that brought him and the other

defendants in the case to the dock.

Further, acting jointly and according to the testimony

of Ofitserov and Navalny, Oplev organized

the renegotiation of contracts that had previously

been concluded with major clients of

KGUBles. He persuaded Ofitserov to employ in

OOO VLK his foster daughter Bura and issued

an order prohibiting directors of

forestry enterprises from independently concluding

contracts for the supply of timber products. As

follows from Opolev’s testimony, he

understood that KOGUB Kirovles,

by working through VLK, was receiving a smaller

amount of revenue than it would have if

it had worked directly with its clients

and new buyers.

Such sales of timber products through VLK

were also unprofitable for the branches of

the forestry enterprises, which mainly

sold timber products locally

to local buyers, since they did not have

their own transport or the ability

to deliver.

And when working with OOO VLK, the forestry enterprises bore

costs for loading and

loading/unloading operations, transport

services, and did not receive money directly. Nevertheless,

for nearly 3

months, Opolev took no measures to terminate the contractual

relations with OOO VLK.

The owner of the enterprise, the regional government,

was not fully informed about the situation

that had arisen. Witness

Bastrygina, questioned at the court

hearing, explained that in 2009 she

held the position of deputy

general director of KAGUB Kirovles. In the spring of 2009,

in the KAGUB administrative building

a meeting of the directors of the forestry enterprises

of KAGUB was held, at which Opolev, in the presence of

Navalny as the governor’s adviser, introduced

the general director of OOO VLK, Ofitserov, and

announced the need to sell

products only under contracts through the LLC,

while promising that the company would

purchase all timber products, which

Ofitserov confirmed. However, in practice

everything turned out differently, since in fact

OOO VLK began taking for resale

primarily only

high-quality timber and

sawn timber. And the sale of low-grade timber

promised by Ofitserov was not

carried out. In addition, the forestry enterprises

saw increased costs as a result of

transporting timber to the place

of shipment in other districts. In this connection,

the management of KOGUB Kirovles received

numerous complaints from forestry enterprise directors

about this. Having studied the contract,

she reached the unequivocal conclusion

that the contract was disadvantageous, and informed

Opolev of this. Opolev explained that the initiative

to conclude the contract came from

the regional government. With the conducted in

with respect to KAGUP in June 2009

by an audit that confirmed the arguments about the clear

disadvantageous nature of the contract between the state unitary enterprise and LLC

VLK, at a meeting with the regional governor in the presence of

Navalny and Ofitserov, there was

a meeting at which the aforementioned persons

stated that the inspection had been biased.

According to

Bastrigino, Navalny and Ofitserov

maintained friendly relations,

and worked as a team. Ofitserov, together with

Navalnaya, took part in meetings of

the regional government. Their calculations and ideas

fully coincided, as if they had developed them

together. Similar testimony

was given by witnesses Makaveev and Zmeev, who also

in 2009 held the positions of

deputy directors of KOGUP Kirovles.

Thus, Makoveev explained that the terms

of the Kirovles-VLK contract were, literally speaking,

luxurious for one side, since the contract

provided only for unilateral

liability on the part of the state enterprise for performance of

the contractual obligations, and therefore he was

categorically opposed to its conclusion.

In addition, the subject matter of the contract

provided that LLC VLK would render

intermediary services in the sale of

timber products, although KAGUP could have done

this independently. Subsequently,

contracts with the main counterparties of

KOGUP Kirovles were reassigned to LLC

VLK. At the same time, the price for the end buyer

or recipient and the delivery terms did not

change, which once again indicated

that there was no need for VLK's involvement.

He expressed his opinion about the inexpediency

of concluding the contract with VLK to

Opolev, who nevertheless

signed the contract and entrusted its performance

to Bura. In June 2009, Makaveev

resigned from his position. One

of the reasons was, among other things,

the sales policy, which he found incomprehensible,

of Kirovles, represented by director

Opolev.

Witness Zmeev told the court that, due to

the disadvantageous nature of the supply contract between

LLC VLK and KOGUP Kirovles, the management began receiving

relevant complaints

from the directors of the forestry branch offices of

KOGUP Kirovles.

At the end of the summer of 2009, addressed to the

general director of KOGUP Kirovles, he prepared

an analytical memorandum in which,

on the basis of the data obtained,

an unequivocal conclusion was drawn about

the inexpediency of the contract's conclusion.

From the testimony of witness Bura, who in 2009

held the position of head of

the commercial department of KOGUP Kirovles,

it follows that, on Opolev's instructions, she

dealt with matters relating to the organization of

the supply of timber products from KOGUP Kirovles under

the contract with LLC VLK. According to Opolev, she

knew that this arrangement had been coordinated

with the government of the Kirov Region.

Later, Ofitserov sent her a draft

supply contract. After reviewing the contract, she

repeatedly informed Opolev of

the disadvantageous nature of such cooperation, including

because of the pre-set and

completely unjustified percentage markup

charged by LLC VLK on the sale of timber products produced by KAGUP.

However, Ofitserov constantly

pressed her to conclude this

contract, asserting that its

conclusion and the start of supplies of

timber products through LLC VLK were being insisted upon by

the regional government. Ofitserov

demanded that the contract be concluded in

an ultimatum-like manner, stating that if

they refused to conclude it, Popolev

and Bura would be removed from their positions. The same

would happen to the directors of the forestry enterprises

who opposed supplies to

VLK.

Opolev was also informed about the disadvantageous nature of the supply contract

by other employees of KOGUP

Kirovles,

to whom the draft contract had been submitted

for review. Nevertheless, in April

2009, Opolev signed the contract with VLK.

In May 2009, at Ofitserov's suggestion,

she took a second job at LLC VLK as

a part-time employee in the position of

commercial director. In addition,

while complying with Ofitserov's demands regarding

the need to re-execute through LLC VLK previously

concluded contracts of KOGUP with

buyers of timber products, she

using a special script prepared by Ofitserov,

visited clients of

KAGUP in order to convince them of

the need to re-sign their contracts with

LLC VLK as the alleged official dealer of

KAGUP. Thus, contracts were reassigned to LLC VLK

with six

major buyers of timber products from

KOGUP Kirovles, and contracts were also concluded

with six enterprises with which

KAGUP had been conducting negotiations and with respect to which they

were already at

the stage of finalizing those agreements.

Subsequent dealings confirmed

her conclusions about the disadvantageous nature of the contract with

VLK, which imposed requirements regarding

timing, volume, and product assortment

that did not correspond to the capabilities of KOGUP

Kirovles. As a result, the products

had to be collected and shipped from

several forestry enterprises, thereby placing

transportation costs on them.

Witness Zagoskina, questioned at the

court hearing, explained that in the summer of

2009, together with auditor

Shulyatyeva, on instructions from the Department of

State Property of the Kirov

the region conducted an audit

of KGU Kirovles for the second quarter of 2009

The audit's objectives included, among other things,

examining the company's sales policy.

Based on the audit results,

it was established that one of the main

buyers of Kirovles timber products

was OOO VLK.

Other companies and individual

entrepreneurs purchased

timber products through the forestry units, branches

of KOGUP Kirovles.

From the moment products were shipped to

the consignee OVLK, previously

concluded supply contracts with a number of enterprises

were terminated and

re-entered into, but this time with OVLK. At the same time,

the price of the timber products sold was

reduced by 17% to 35%, which indicated

the economically disadvantageous nature

of relations with OOO VLK.

The audit findings were discussed at

a meeting with the regional governor, during

which Navalny and Ofitserov,

who were present, expressed their

disagreement with the auditors' conclusions.

Witness Belykh, questioned at the trial,

explained that in 2009,

after being appointed governor of Kirov Region,

while forming his staff and

advisory team, he invited Navalny to take the said

position; he had known him since

2005 through their joint political

activities. Officially, Navalny was appointed to the said

adviser position

in May 2009. However, even before

that date, he took part in

various meetings and sessions, including

meetings introducing him to the heads of

state-owned enterprises.

Navalny was introduced as a member of his

new team. Press releases stated

his position. In the first

half of 2009, he instructed

Navalny to analyze the financial

condition of KOGUP Kirovles, in connection with which

the latter was included in the

working group. Following the analysis carried out,

Navalny prepared an internal memorandum,

according to which the enterprise

had serious debts and problems with

selling timber products, and also needed

reorganization.

In order to improve the situation in the

timber industry sector, together

with Navalny, he visited OOO Salkhans

Bumprom, having preliminarily agreed on

increasing the volume of timber product supplies.

He gave Navalny no instructions

to prepare a written proposal to

the said enterprise; he did not

give any. They were not coordinated with him.

He was not personally acquainted with Ofitserov. He did not invite him

to engage in business activities in

Kirov Region.

He saw him only at a meeting in

Kirov Region administration on

the issue of reforming KOGUP Kirovles and

removing General Director

Opolev from office. One of the reasons for

this decision was that

Opolev's daughter, in addition to KOGUP Kirovles, also

worked at VLK, that is, at one of the

counterparty companies of KOGUP, which

could indicate an interest on

Opolev's part in cooperation with

the company. He had not reviewed the materials of the criminal case,

so he could not

say with certainty whether

damage had been caused to the region as a result of

Navalny's activities.

Witness Shcherchkov, who since 2009 has held the position

up to the present time of

Deputy Chairman of the Government

of Kirov Region, explained that in addition to

other duties, he also oversees the regional

Forestry Department. Navalny

is known to him. In 2009, he held the

position of adviser to the governor. In the

regional administration building, he had his own

office. On Belykh's instructions, he studied

the region's forestry sector.

In Opolev's presence, Navalny took

part in working meetings

devoted to this issue. At them, he had

the right to an advisory voice,

and offered his opinion, including

voicing the idea of creating a timber exchange.

In spring 2009, at Opolev's suggestion,

together with Navalny, he visited

KOGUP Kirovles, after which the latter began

regularly contacting him on issues concerning

the enterprise's activities. At the beginning of summer

2009, Opolev asked for his

opinion regarding the commercial

relations between KOGUP Kirovles and OVLK,

cooperation with which had been requested by the

government of Kirov Region, to which

he proposed that all interested parties

be referred to him. Navalny introduced him to the director of OOO VLK,

Ofitserov, and at Navalny's

initiative, later

Ofitserov took part in meetings

of the working group made up of employees of the

Kirov Region administration on

assessing the effectiveness of the activities of

KOGUP Kirovles.

Among other things, Ofitserov also took part

in the discussion of the audit

conducted in relation to KOGUP Kirovles in

early summer 2009, expressing his

dissatisfaction with the auditor's conclusions.

Navalny also disagreed

with the audit results, questioning

the conclusion that

cooperation between KOGUP Kirovles and VLK was unprofitable.

Cherchkov believes that as a result of

the cooperation between KOGUP Kirovles and OVK

the enterprise suffered corresponding

damage.

Witness Votina, questioned during the court

hearings, explained that in 2009,

while serving as an adviser to the regional governor,

he oversaw matters relating to the economic

sector, including studying the structure

of the timber industry complex. In this connection,

in the winter of 2009, together with

Opolev, he traveled around the forestry units of the KOGUP

Ruffles. Also taking part in this trip

was Ofitserov, whom he later

met several times in the government

of Kirov Region, including in

Navalny's company.

Witness Rzamassy, whose testimony

in accordance with the requirements of Part 2

of Article 281 of the Russian Criminal Procedure Code was read out at

the court hearing, stated during

the preliminary investigation

of the criminal case that in 2009

he, while holding the position of director

of the regional state property department,

supervised the activities of KOGUP

Rafles, headed by Sopolev. The enterprise

had large debts due to non-payment of

lease payments for the forest fund,

transferred to KAGUP. In the spring and summer of 2009,

at his initiative there was conducted

an audit of KAGUP's activities,

as a result of which it became known that

a contract had been concluded that was knowingly disadvantageous for

this enterprise: a supply agreement

with SOVLK, headed by Ofitserov.

The audit results were reviewed at

a working group meeting attended by Navalny,

who cast doubt on the conclusions

of the audit, demanding a repeat

audit. He believes that the audit concerning

KOGUP was conducted objectively by a company

holding a strong position in this

market. After that meeting, Opolev

explained that before concluding the supply

agreement, Ofitserov had promised to expand the market

for KAGUP's timber products. The representative

of the injured party, Smertin, questioned at

the court hearing, explained that at

present he holds the position

of director of the department of state

property of Kirov Region. In the autumn of

2009 he took part in

a meeting held at the initiative

of the acting general director

of KGUB Gerofle, Bastrygina, who believed

that after Opolev's departure, Navalny

was trying to direct the activities of KOGUP

Kerofles. In addition, the meeting also

discussed the issue of the concluded contract

between OVK and KOGUP Kerofles, which was

clearly oppressive and contained only

one-sided liability for Kirofles.

At the same time, the price and terms for timber deliveries were not

specified.

He agrees with the investigators' conclusion that as a result

of the defendants' actions, there was

damage caused to KAGUP Kirovles in the amount of

16,165,826

rubles and 65 kopecks.

Former directors of the forestry branch units of KOGUP

Kirofles — Kiselyov, Krylatov, Kozlov,

Osapov, Zentsov, Sergeyev, Panteleyev,

Sadriev, Buzmakov, Beloglazov, Koretnyuk,

Posnov, Baldin, Smertin, Yu. N., Litvinenko,

Sukhikh, Bulatov, Grebneva, Glazyrina,

Knyazev, Barantsev, Kuznetsov, Shutova.

questioned during the court hearing,

explained that in 2009 they were required

to follow the instructions of the general director

of Kokubkirov, Sopolo, since he was

their immediate superior.

The forestry units were vested with the right

to independently sell

timber products at prices that had been approved

by KOGUP Rafles,

independently concluding the relevant

contracts.

Contracts with the largest

timber-purchasing enterprises

were concluded directly by

the administration of KOGUP Kirovlyas, one of

which was OOVLK. The need

to cooperate with this enterprise

was communicated by Opolev at a meeting

of directors in April 2009. According to

Opolev, VLK was supposed to take all

timber products, including

low-grade products, which was also confirmed by

Ofitserov, the general director of OOVLK,

who was present at that meeting.

Subsequently, in May 2009, Opolev

issued Order No. 76 on

the need to sell all

timber products directly through

KOGUP Kirofles. By Opolev, as well as

by Kirofles's commercial department headed

by Bura, the forestry units were sent

the relevant specifications, or

they were informed orally of the volumes,

assortment, and prices of the products

that had to be shipped through OOV

VLK to the final consignee. However,

the proposed terms of cooperation with

OOVLK were disadvantageous.

Transportation of timber products to the shipping station

or from warehouse to warehouse

of the recipient was carried out at the expense

of the forestry units. Prices for

timber products remained unchanged without regard

to seasonal logging patterns and demand.

They were often lower than those at which

similar timber products

were sold to other counterparties. Payment for

the delivered products was

untimely, or the goods were not

paid for at all. Moreover, despite

the unchanged delivery terms

for timber products to former

counterparties of KGUP Kirovles, namely OAO

KMDK, ZAO Plits Pechprom, ZAO Krasny

Yakor, OAO Domostroitel, cooperation

was also unprofitable, since OOO VLK

kept a certain percentage of

the amount received from the timber sold.

Thus, the director of the Tuzha forestry enterprise

Kolchin explained that, according to Opolev,

he knew that VLK received from 5 to

7%. Despite the fact that cooperation

with OOO VLK was unprofitable, the directors

of the forestry enterprises were obliged to comply with the terms

of the contract and the instructions of the general director of KGUP

Kirovles. The director of the Kirovo-Chepetsk

forestry enterprise, Kuzyakin, testified that questions

about the sale of timber products at reduced prices

were put to Sopolev by the directors

of the forestry enterprises, to which he explained that

the initiative to sell the produced

timber products through OOO VLK came from

Navalny, who, on behalf of

the Kirov Region government,

oversaw the activities of KGUP Kirovles. According to

Opolev, Navalny had a personal interest in

the activities of OOO VLK. If not for

Opolev's instruction, he would not have

cooperated with OOO VLK because of the unprofitability

of these arrangements.

Witnesses questioned during the court hearing

— Chernikh and Fursov — explained that in

2009, AOKMDK, where they

worked, had a valid contract

for the supply of timber products with KGUP Kirovles,

the terms of which fully satisfied both parties.

In the spring of 2009, on the same

terms and at the same prices, at the initiative of

Opolev and Bura, a supply contract was concluded

with OOO VLK, which, according to the latter,

was a representative of KGUP.

Present at the meeting with Bura was

OOO VLK General Director Ofitserov,

witness Ovchinnikov, director of OOO Vlada,

and witness Minin, a representative of ZAO Vest

Lesprom, stated in court that there were

contractual relations with

KGUP Kirovles in 2009. There was no need

to change them. However, in the spring

of 2009, at the initiative of KGUP Kirovles,

a contract was concluded with OOO VLK. At the same time,

the supply terms and prices did not change. They were

introduced to OOO VLK director Ofitserov by

Bura, who presented him

to the company's management as a dealer of

KGUP.

Witness Fedotov explained that since 2008

he has held the position of director for

timber supply at OAO Syktyvkar Pulp and Paper,

which purchases timber, including

in the Kirov Region. At the beginning of

May 2009, a conversation took place with the participation of

its general director

Baranov of OAO Syktyvkar Pulp and Paper and the governor

of the Kirov Region, Belykh, during which

Belykh proposed cooperation with the Kirov

Region, where it was planned to create

procurement platforms for timber products in order

to improve the unfavorable situation with

timber sales in the Kirov Region. Baranov

confirmed the possibility of continuing

relations with logging

enterprises of the Kirov Region on the same

terms as before. During the conversation,

issues of timber shipment,

logistics, and payment were discussed. Belykh did not name

any logging

enterprises in the Kirov Region that might later

become partners of OAO

Syktyvkar Pulp and Paper. A little later, a letter was sent to

OAO Syktyvkar Pulp and Paper

signed by Navalny regarding timber supply,

informational in nature.

The letter stated

the possibility of supplying timber products

through OOO VLK.

In addition, during the court hearing

written materials of the

criminal case were examined.

According to the charter of KGUP Kirovles,

the owner of the enterprise is

the regional government, and its interests are represented by

and the enterprise is managed on the basis of sole

executive authority by the general

director. In accordance with Order

No. 07-158 of December 7, 2007, and

the employment contract of December 12, 2007,

the general director of KGUP

Kirovles in 2009 was Opolev,

appointed to that position on

December 12, 2007. During the examination of

the lease agreements for forest plots

in federal ownership,

Nos. 1, 2, and 3 of November 10,

2008, and state contracts Nos. 4, 5, 6,

7, and 8 of March 30, 2009, and Nos. 92, 93, 94,

95, and 96 of August 12, 2009,

it was established that the harvested timber

is the property of KGUP Kirovles.

According to Order

No. 76/6 of May 19, 2009, establishing

the procedure for the sale of timber products by KGUP

Kirovles, as of May 20, 2009, a ban was introduced

prohibiting forestry enterprises from independently concluding

supply and sale contracts for

timber products.

In accordance with the order of

the governor of the Kirov Region dated May 21,

2009, No. 60, Navalny was

appointed as an adviser to the governor

on a voluntary basis as of May 20, 2009.

According to the record of document inspection dated

October 17, 2012, the employment

contract between Bura and OOO VLK was examined,

confirming the existence of an employment

relationship between the said persons.

The employment contract was added to the case materials

of the criminal case as physical

evidence. Based on the responses to inquiries sent to

OOO KMDK, OOO Vlada, OAO

Domostroitel, the price of timber products

after the contract with Kogub was renewed

Kirovles to VLK LLC remained unchanged.

According to the response to the inquiry,

from Kirovo-Chepetsk Leskhoz (a state forestry enterprise), the price of

timber products supplied to KMDK through

OOVLK was lower by 70–90 rubles per 1

cubic meter than the price for

direct deliveries of timber products.

seized during the search and seizure on June 8, 2011, from

OOV VLK General Director Ofitserov: the contract

between Kogubkirovles and OOVLK, an appendix

to it, contracts of OOOV VLK with

counterparties, primary accounting

documents of OOVLK concerning

the purchase and sale of timber products, from Kogubki

rovles and its payment, documents

concerning Bur’s employment, as well as

documents seized from the Volgo-Vyatka Bank

of the Udmurt branch of Sberbank of Russia, namely

the legal file of Kogubkirovles, an account statement

for transactions on the account of Kogubke

Rafles for the period from April 15, 2009,

to October 1, 2009, as well as seized

from VCB "Vyatka Bank," namely the legal

file of OOV VLK, containing copies

of certificates of state registration of the LLC,

Ofitserov’s application to open

a settlement account for the company and the agreement on

opening a bank account, as well as

statements of transactions on the company’s accounts with

counterparties for the period from April 15, 2009,

to October 1, 2009. These

documents were examined on October 5,

2012 and added to

the case materials.

The examined documents show that on April 15,

April

2009, a contract was concluded between OOVLK and Kogubki Rafles

under No. 01/2009 for

the supply of timber products, with appendices,

which confirm the existence

of business relations between OOV VLK and Kogubki

Rofles regarding the supply of timber products during

the period from April 15, 2009, to

October 1, 2009. The contract

provides for unilateral

liability of the supplier, namely

Kogubkerofles, for breach of its terms,

which indicates the deliberate and

disadvantageous nature of its conclusion.

Contracts between OOV VLK and LLC

Domostroitel, LLC Kirov

Furniture and Woodworking Plant,

LLC AVS, ZAO Lits, Spichprom, OAO Volga,

LLC Lesgarant, LLC Match Factory

Pobeda, LLC Vlada, OAO Mari

Pulp and Paper Mill, ZAO Krasny

Yakor, LLC Sevlespil, sole proprietor Podgorny, OAO

Montazhnik. They confirm the fact

of business relations between OOVLK and

its counterparties for the supply of timber products

from April 15, 2009, to October 1, 2009.

A review of the said contracts

showed that they provide for

mutual liability of the parties.

The examined waybills and invoices

of Kogubkerafles, issued to

the timber buyer OOVLK,

confirm that OOVLK purchased

timber products in a total volume of

10,084.277 cubic meters

with a total value of 16,165,826

rubles and 65 kopecks from Kogubkerovles for

subsequent resale under contract

No. 01/2009.

Invoices, waybills,

invoices, cargo customs declarations

of OOOVLK, issued to buyers

of timber products supplied by Kogubke RFS under

contract 01/2009, confirm

the fact of its sale.

The payment order for the transfer

of funds from OVLK’s settlement account

to the settlement account of Kagub Kirovles

confirms the transfer of funds

for the purchased timber products under

contract No. 01/2009.

Registers of amounts credited to

OOV VLK’s settlement account confirm

the transfer of funds

from OOVLK’s counterparties to OOVLK’s settlement account

for delivered timber products in the

total amount of 16,3,880

rubles and 28 kopecks under contract No.

01/29

as evidenced by payment orders.

OVLK timesheets dated April 30,

2009, May 31, 2009, and June 30,

2009, and OOV

VLK payroll sheets for April, May, and June 2009

confirm that Bur was employed on the staff of

OOVLK.

OOVLK’s legal file indicates

that the enterprise was registered as a

legal entity on March 18, 2009, and

the bank account statements show the fact

that OOVLK used VCB

"Vyatka Bank": a settlement account in

rubles and a current account in euros.

Bank account statements from Sberbank

of Russia for the period from April 15, 2009, to

October 1, 2009, confirm the existence and use

by Kogubki Refle of a settlement

account in rubles. These documents were

added to the case materials as

physical evidence.

The forensic accounting expert report

No. 79 EK dated December 12,

2011 states that during

the period from April 15, 2009, to September 30,

2009, OLK purchased timber products from UKGUBKOS

which were subsequently sold

to counterparties LLC AVS, LLC

Lesgarant, LLC Domostroitel, LLC KMDK, OAO

Volga, LLC Vlada, LLC Match Factory

Pobeda, sole proprietor Podgornov, ZAO Krasny Yakor

LLC Sevspil, LLC Ufimskie Spichki, LLC

Krymskie Zori.

Uvaumo, Montazhnik, Zalpichprom.

Mari Pulp and Paper Mill, Iman, in the amount of 14,785.94

rubles and 66 kopecks.

During the period from April 15, 2009, to

September 30, 2009, LLC VLK shipped

timber products to its counterparties: LLC

AVS, LLC Lesgarant, Domostroitel, KMDK,

Volga, Vlada, the Pobeda Match Factory,

Podgornov, Krasny Yakor, Sev, Lespil,

Ufimskie Spichki, Krymskie Zori,

Montazhnik, Plispichprom, Mari Pulp and Paper Mill, and

Imond, in the amount of 16,165,826

rubles and 65 kopecks.

According to the appendix to the expert opinion,

the total volume of timber products

sold by Kogubkirovles to

LLC VLK amounted to 10.084

277.000

cubic meters.

Most of VLK's counterparties were

former counterparties of Kogub

kirovles. According to the inspection report,

on October 22, 2012, a letter from the

administration of the government of Kirov

Region, signed in the name of adviser to the

Governor of Kirov Region, Navalny (Alexei Navalny),

addressed to the president of Salikans BumProm

Baranov, concerning possible options for developing

VLK's timber supplies, which

is the official dealer of

Kogubkirovles, indicates

Navalny's interest in the development of the

enterprise and his use of his

status to resolve this issue.

According to handwriting expert opinion

No. 363 dated December 6, 2012,

the signature in Navalny's name on the

letter from the administration of the government

of Kirov Region was made by Navalny.

The prosecution also examined and

presented email correspondence between

Navalny and Ofitserov, confirming

Navalny's direct and obvious interest in

the operations of Gubki Rufles and LLC VLK and

refuting the defendants' testimony about

the absence of mutual contacts between them and

Navalny's non-involvement in the activities of LLC

VLK and Kogubki Reflies.

Thus, even before the contract was concluded,

between LLC VLK and Kogubkirovles,

Ofitserov coordinated with Navalny the scheme for including

LLC VLK in the supply of timber products from

Kogubkirovles, as well as the legal details

of the draft contract between LLC Vyatka Timber

Company and Kogubkirovles. Headed

by O., as referred to in the text as O.'s friend, including

the amount of planned profit. Also,

Ofitserov coordinated with Navalny

the current activities of LLC VLK, financial

issues, and marketing policy. Also,

Navalny and Ofitserov planned

to work on substantiating the creation, on the basis of

LLC VLK, of a unified trading platform for

the sale of timber products, with discussion of

the issue of the subsequent allocation of

credit funds for the development of

LLC VLK as a structure already created

with the consent of the government of Kirov

Region.

In addition, Navalny and Ofitserov

planned measures to monitor

compliance by forestry enterprises, branches of

Kogubkirovles, with Opalev's ban on

independently concluding contracts for

the supply and purchase/sale of timber products with

legal entities and individuals, as well as

sole proprietors.

Also, Navalny and Ofitserov repeatedly

discussed in their correspondence issues

concerning the need to maintain secrecy when

communicating both by mobile phone using

subscriber numbers

registered to third parties, and by

electronic communication using

email addresses whose domains

were registered outside

the Russian Federation, with the use of

encrypted files.

In addition to the email correspondence between

Navalny and Ofitserov, the court examined

files containing the text of draft contract

No. 012009 between LLC VLK and

Kogubkirafles; a profit and loss report;

the accounting balance sheet of Kogubki

Rofles for 2008; a work plan for

analyzing the financial and economic

situation at Kagubka Rafles; a letter from the

administration of the government of Kirov

Region addressed to the president of LLC

Salikansbumprom, Baranov; a negative

review of the report by the firm Vyatka Academy

Audit, in Navalny's name; a memorandum on

the results of the joint activities of VLK

and Kogubkerovles, in Ofitserov's name.

The court examined information on more than

a thousand connections between the subscribers and

subscriber devices of Ofitserov and

Navalny during the period under review in 2009, which

confirms the fact of постоянных

contacts between Navalny and Ofitserov and

Navalny's participation in the activities of LLC

VLK and Kogubki Rafles. Also examined

in court were recordings of telephone

conversations between Navalny and Ofitserov,

as well as the phonoscopic and

psychological-linguistic examinations conducted on them.

These quite clearly confirm the facts of

the interest and agreement of

Navalny and Ofitserov in obtaining

benefit from the management activities of

Kogubkerafles in favor of LLC VLK.

They had common goals and objectives, planned

and carried out joint actions with regard to

Gubkerovles, including

discussing Ofitserov's participation in managing

this organization.

Your Honor, after this it becomes

clear what the defendants' position and their

the defense's motions to have the aforementioned

evidence declared inadmissible. Their unwillingness

to examine the aforementioned evidence,

which the court found admissible at the trial

hearing, since this

evidence unequivocally confirms

the facts of deliberate, joint, and

coordinated actions by Navalny

and Ofitserov in the interests of OOO VLK and to the detriment of

KOGUP Kirovles.

Thus, the events that took place in

2009 are straightforward and logical.

They show that in 2009

the general director of KOGUP Kirovles, Opalev,

together with Navalny, on whose instructions

and with the participation of his acquaintance Ofitserov, there was

created OOO VLK, and as a result of concluding

a knowingly disadvantageous contract, there was

misappropriation of timber products

belonging to the state enterprise in the amount of

more than 10,000 m³ worth more than 16 million

rubles (about 16 million RUB).

Why deny that entering into a knowingly

disadvantageous contract caused losses to

KOGUP Kirovles, if that is obvious? Why

was it necessary to create an intermediary company

to sell the products if

the supplying state enterprise

could do so on its own? Did

the employees of KOGUP Kirovles and

its district branches not understand this? More than 30 people,

questioned at the trial,

testified to the disadvantageous nature of cooperation

with OOO VLK, but nevertheless were forced

to carry out the instructions of their

immediate superior, Opalev, regarding

the supply of timber products under the contract and

the corresponding demands of the management of

OOO VLK.

During the proceedings, the defense repeatedly

stated its view that it

did not understand what exactly constituted

Navalny's organizing role, if

it was Opalev and the employees subordinate to him who gave forest enterprise directors instructions on selling

the products, and the employees subordinate to him

from the commercial department

of the state enterprise. Why is Ofitserov, acting

within the framework of the timber supply contract,

being accused of aiding and abetting

embezzlement? The director of Kirovles

is Opalev. The property was entrusted

to him. He is the one who should have borne

responsibility. Indeed, Opalev

is guilty; he is the direct perpetrator, but we are not

trying him. He has already been convicted of embezzling

the property of KOGUP Kirovles, and that verdict

has been examined by us. In this criminal

case, however, we are dealing with the organizer and

the accomplice to this crime. Their guilt

is what we are proving. In accordance with Part

3 of Article 33 of the Criminal Code of the Russian Federation,

an organizer is recognized as a person who

organized the commission of a crime

or directed its execution. In 2009,

Navalny, having the ability

to influence the regional state

enterprise, having studied the structure of

the KOGUP, its financial situation,

and its contractual relations, deliberately

undertook actions to organize OOO VLK,

whose role was to provide

intermediary services in the sale of

Kirovles timber products. Despite

the fact that there was no need for an intermediary,

he instructed Ofitserov

to create OOO VLK, convinced

Opalev of the need to cooperate with it,

and demanded that he conclude the contract as quickly as possible,

promising

to take the latter's interests into account in the event of

successful contractual relations.

Knowing full well that the contract between

the KOGUP and the LLC was disadvantageous, he took measures

aimed at preserving the relations that had arisen

between them and increasing the sale of

timber products through the LLC.

He organized working group meetings,

proposing that the sale of

timber products be centralized specifically through OOO VLK,

thereby justifying the expediency

of its creation and the increase in the volume of

timber sales.

He instructed Opalev to issue, in connection

with this, the relevant orders,

and prepared and sent a letter to OAO

Syktyvkar Pulp and Paper.

Being an adviser to the governor and a member

of the working group on improving the efficiency of

KOGUP Kirovles, he defended the interests of

the LLC he had organized and challenged

findings, including those of the audit

inspection.

Thus, Navalny, fully aware

of the economic and financial

position of KOGUP Kirovles and of its

counterparties, deliberately undertook

actions aimed at creating OOO VLK,

an intermediary for the sale of KOGUP timber products,

concluding between these enterprises

a contract, and taking steps to preserve

the contractual relationship and increase the volume of

products supplied, as a result of which

property damage was caused to the KOGUP

.

In accordance with Part 5 of Article

33 of the Criminal Code of the Russian Federation, an accomplice

is recognized as a person who facilitated

the commission of a crime by advice,

instructions, the provision of information,

means or instruments for committing

the crime, or by removing

obstacles. Acting on Navalny's instructions, Ofitserov,

having created OOO VLK, opened

the company's bank account and drafted

a draft timber supply contract knowingly disadvantageous to

KOGUP Kirovles,

containing one-sided liability for

the supplier. He also drafted an appendix to

under this contract, on knowingly unfavorable

pricing and transportation terms. Taking advantage of

Navalny's support, he persuaded Opalev

to sign the said documents.

He facilitated the employment of VLK,

Opalev's adopted daughter, and facilitated

the renewal of contracts with the former

counterparties of Kirovles, a state unitary enterprise, through LLC "VLK,

presenting himself as the official

representative of the state enterprise.

Thus, Ofitserov, acting

at Navalny's initiative and on his instructions,

committed acts that facilitated

the embezzlement of the state enterprise's property.

According to the verdict of the Leninsky

District Court of December 24, 2012,

which entered into legal force, the direct perpetrator of the

crime, Opalev, used his

official position while serving as

general director of Kirovles, the state enterprise, and at

Navalny's initiative concluded with VLK

a contract for the supply of timber products that was knowingly disadvantageous to the enterprise,

and later, in

the period from April to September

2009, entered into supplementary

agreements to it, under which

timber products were supplied to VLK

at a knowingly

reduced price, lower than the price at which

the company subsequently

resold them to Kirovles' former buyers.

Thus, Opalev, possessing

the right to dispose of the property of

Kirovles entrusted to him as general director,

deliberately committed acts

aimed at embezzling timber products at

below-market prices.

As for the defense's arguments regarding

the absence of signs of theft in the actions of

Navalny and Ofitserov, under the meaning of the law

embezzlement is understood as unlawful

actions by a person who, for selfish purposes,

expended entrusted property against

the will of the owner by consuming

that property, spending it, or

transferring it to other persons. The selfish purpose in

this case consists in the fact that the person

seeks to turn another's property to

his own benefit or the benefit of others.

The evidence examined during the court hearing

reliably established and confirmed

including, among other things,

by numerous financial documents,

that the property of Kirovles was

embezzled for the benefit of third parties, namely

LLC VLK, created at Navalny's instruction

by his acquaintance Ofitserov.

The defense believes that Ofitserov's actions

should be considered within the framework of

contractual relations between the state enterprise and LLC

VLK, that is, as the actions of a person

engaged in entrepreneurial

activity in accordance with the law.

However, these arguments are also unfounded.

Under current civil

legislation, the conclusion of a contract

must be preceded by the free and voluntary

expression of will by both parties. An analysis of the conditions

under which the supply contract and

its appendices were concluded shows

that the issues of the sale price

of timber products, delivery volumes,

product assortment, and the terms of its

transportation were decided not by both

parties freely, but solely by

LLC VLK, specially created and

acting on Navalny's instructions.

In fact, there was no genuine agreement

between the parties on the price of the goods in the sense

given to it by law. And the

contract itself and its appendices were

concluded solely in the interests of LLC

VLK. Thus, the contract and its appendices,

under which the state enterprise sold its

timber products to LLC VLK, were transactions

in form only.

In view of these circumstances, it follows

that the supply contract and its appendices

recorded the fact, as well as the time and place,

of the transfer of another's property for the benefit of LLC

VLK and at the same time concealed the true

meaning of what had occurred and its legal

consequences for Kirovles, which

was ultimately excluded from the sphere of legal relations

connected with the sale of its own products,

thereby causing the enterprise direct

actual damage.

All of this confirms the presence in the actions of the

convicted persons—excuse me,

the defendants—of such features inherent in

any theft as selfish intent,

unlawfulness, gratuitousness,

and causing damage to the owner. Therefore,

the relations between the state enterprise and LLC "VLK

based on civil

law cannot be described as such".

This relationship is criminally

punishable and is classified as embezzlement.

The defense also disputes the amount of damage

caused to Kirovles by the actions of

Ofitserov and Navalny, arguing that its

obligations for the supplied timber

products were fulfilled by VLK when it transferred

funds to the settlement account of

the state enterprise. These arguments are also

unfounded. According to the evidence examined

during the court hearing, including payment

documents between the state enterprise and VLK,

forensic accounting examinations, and bank statements

on the movement of funds, it was reliably

established that as a result of the actions of

Navalny and Ofitserov, Kirovles suffered

damage in the amount of 16,165,826

rubles and 65 kopecks, in the form of embezzled timber

in the volume of 10,842.7 cubic meters

(10,842.7 m³), which, under paragraph 4 of the

note to Article 158 of the Criminal Code of the Russian Federation, exceeds 1

million rubles and constitutes an especially large amount.

scale. Moreover, based on the overall

meaning of the note to Article 158 of the Criminal Code of the Russian Federation,

gratuitousness means that

the appropriation for one’s own benefit or for the benefit

of another person of someone else’s property is not

accompanied by the simultaneous

provision to the owner

of equivalent compensation, and thereafter

the offender does not intend voluntarily

to return the stolen property or provide

equivalent compensation in its place. From

the clarification contained in paragraph

25 of the Resolution of the Plenum

of the Supreme Court of the Russian Federation dated 27

December 2007 No. 51, it follows that

when determining the amount in which

the misappropriation of property was committed, it is necessary

to proceed from the full value

of the misappropriated property without taking into account a less

valuable substitute, which has been taken into account,

and reflected in the charges brought against the defendants

.

At the request of the defense. The following was

added to the case file and examined:

specialist’s opinion No. 3S-13/592

on the issue of the formation of market prices in

Kirov Region during the period under consideration

and the deviation of procurement prices from them

of OOO VLK and KOGUP Kirovles.

The specialist’s conclusions indicate that in

most cases, the purchase prices

for timber products by OOO VLK from KOGUP Kirovles either

corresponded to average market prices

in Kirov Region, or

were higher than them.

At the same time, in analyzing and evaluating this

evidence, one must proceed from the fact

that the source materials for

this study were not

all the materials of the criminal case, but only

contract No. 01/2009 with its appendix and

the corresponding waybills. And

there are no documents showing,

for example, the work of KOGUP with

counterparties that subsequently

moved to OOO VLK,

and therefore the conclusions of the opinion are

generalized in nature, without connection

to the specific circumstances of the performance

of contract No. 01/2009 in their totality

with the other materials of the criminal case.

In fact, the case materials establish,

and this follows, among other things, from the testimony

of auditors Zagoskina and Ratova, that

a market price is the price at which

a given product can be sold at

a specific time by one business entity

to another. There is no regulatory

regulation of market prices for

the type of activity under consideration

in existence. These statistics on

average market prices for timber products

are advisory in nature.

Thus, the examination during

the trial

and the evidence have reliably

confirmed that Navalny and Ofitserov,

by organizing and facilitating the conclusion

of transactions between KOGUP Kirovles and OOO

VLK, diverted timber products from

the state enterprise for the benefit

of the Vyatka Timber Company, that is,

they committed theft by one of the

independent methods

provided for by law.

Based on the foregoing, we believe

that the legal classification of Navalny’s actions under

Part 3 of Article 33

and Part 4 of Article 160 of the Criminal Code of the Russian Federation, that is,

organizing the commission of the crime

and directing the commission of embezzlement, that is,

the theft of another person’s property,

entrusted to the offender, on an especially large scale,

as well as the classification of the actions

of Ofitserov under Part 5 of Article 33

and Part 4 of Article 160, that is,

the commission of aiding and abetting as

assistance in the commission of embezzlement, that is,

the theft of another person’s property, entrusted

to the offender, on an especially large scale, by

providing information and means

for committing the crime, is correct,

their guilt has been proven and has been fully

confirmed.

During the court hearing, the following were

examined: the case materials,

materials characterizing the defendants, as well as

circumstances mitigating and aggravating

punishment. Defendant Navalny has not previously

been convicted. At his place of residence, he

is characterized positively. He is not registered

with a psychiatrist or narcologist,

and is involved in raising his children.

He has repeatedly been held liable for

administrative offenses.

Defendant Ofitserov also has no prior convictions. He has not

been held liable for administrative

offenses. At his place of residence, he

is characterized neutrally, and also

takes part in raising his children. No aggravating

circumstances provided for by Article

63 of the Criminal Code of the Russian Federation, with respect to

either defendant in this case have been established.

In accordance with Article 62

of the Criminal Code of the Russian Federation, the prosecution considers it possible

to treat as mitigating circumstances

the fact that both defendants have dependent

minor and young children.

Turning to the question of the type and extent

of punishment for the crime committed,

it should be noted that the sanction of Part

4 of Article 160 of the Criminal Code of the Russian Federation provides

only for the following principal punishment:

imprisonment for a term of up to 10 years.

Taking into account the factual

circumstances of the case, the nature and degree

of the social danger of the crime,

and the role of each defendant in its

in the commission of the offense and their attitude toward what was done.

We believe that there are no grounds for applying

the provisions of Part 6 of Article 15 of the Criminal Code of the Russian Federation

on changing the category of the crime to

the application to the imposed sentence of

the provisions of Article 73 of the Criminal Code of the Russian Federation, concerning

a suspended sentence, as well as Article 64 of the Criminal Code of the Russian Federation, that is,

the imposition of a sentence below the statutory minimum

or of another type of punishment, do not

exist.

The prosecution takes into account

that during the investigation of the criminal

case and its judicial examination,

the defendants did not violate public

order, appeared at court hearings,

and did not change their place of residence, and therefore

finds no grounds for imposing on them

the additional punishment

provided for by the sanction in Part 4

of Article 160 of the Criminal Code of the Russian Federation in the form of restriction of

freedom. At the same time, taking into account that

the damage caused to the state-owned

enterprise by the defendants has not, on a voluntary

basis and in full, been compensated,

we consider it necessary to impose on

the defendants an additional

punishment in the form of a fine, provided for by

the sanction in Part 4 of Article 160 of the Criminal Code of the Russian Federation.

In order to ensure enforcement of the judgment,

the seized property must be

turned over to the state.

There are no procedural costs in the case.

None.

In view of the foregoing, I ask the court to find

Alexei Anatolyevich Navalny guilty

of committing the crime provided for

by 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 7

March 2011, and sentence him to

6 years of imprisonment without

restriction of freedom, with a fine of

1 million rubles. The principal punishment of

imprisonment, in accordance with paragraph

"b" of Part 1 of Article 58

of the Criminal Code of the Russian Federation, shall be served in a correctional

colony of the general regime; the additional

punishment in the form of a fine, in accordance with

the requirements of Article 46 of the Criminal Code of the Russian Federation, shall be

executed independently by its

payment to the state.

to find Pyotr Yuryevich Ofitserov guilty

of committing the crime

provided for by Part 3 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 7 March 2011, and sentence him to

5 years of imprisonment

without restriction of freedom, with a fine of

1 million rubles. The principal punishment of

imprisonment, in accordance with

Part 1 of Article 58

of the Criminal Code of the Russian Federation, shall be served in a correctional

colony of the general regime; the additional

punishment in the form of a fine, in accordance

with the requirements of Article 46 of the Criminal Code of the Russian Federation,

shall be executed independently

by payment to the state.

to change the preventive measure for defendant Navalny and

Ofitserov from a recognizance not to leave

and proper conduct to detention in

custody, taking them into custody in the courtroom

and calculating the term of punishment from the moment of

their placement in custody. The physical evidence

in the case—the contract and

timber supply agreements, waybills,

invoices, payment

orders, registers of amounts, memorial order,

agreement, application for opening

a bank account, timesheets,

employment contract between VLK and Bura,

certificate of registration of Vyatskaya

Forest Company as a legal

entity, certificate of tax

registration of the company with the tax authority,

optical disc containing a copy of

audio recordings of telephone conversations,

optical disc containing a copy of

account statements of KOGUP Kirovles and its

branches, and information on telephone

connections—shall, in accordance with Part

3 of Article 81 of the Criminal Procedure Code of the Russian Federation,

be kept with the materials of the criminal case.

No civil claim has been filed in the case.

The representative of the victim has been informed of the right

to seek compensation for the damage caused. For

the purpose of ensuring execution

of the additional punishment in the form of a fine,

levy execution on the seized

property of Navalny and Ofitserov.

Your Honor, we believe that the punishment proposed

by the state prosecution

will be fair and proportionate

to the crime committed and to the amount

of damage caused to the state-owned

enterprise, and also corresponds to the aims

and objectives of criminal liability and

will serve as a lesson to others for the purpose of

preventing the commission of similar

crimes in the future. Written submissions

have been prepared with the wording of decisions on

the issues specified in points 1–6

of Part 1 of Article 299 of the Criminal Procedure Code of the Russian Federation. We ask

that they be added to the materials of the criminal case.

Thank you for your attention.

>> Do you have anything to add?

>> Your Honor, I fully share the position

regarding the evidence that was

analyzed by my colleague. I believe that

the prosecution has fully

proven that Navalny committed precisely

the crime provided for by Part

3 of Article 33 and Part

4 of Article 160 of the Criminal Code

of the Russian Federation. As for Ofitserov,

the crime provided for by Part 5

of Article 33 and Part 4

Article 160 of the Criminal Code of the Russian

Federation. In my view, this crime was reflected in

the analysis of the evidence that was

presented by the state prosecutors.

presented by the state prosecutors.

I believe that Navalny and Ofitserov committed

a crime, and therefore

it is necessary to follow the aims and objectives of

justice, namely the inevitability of

punishment for crimes committed.

I believe that the punishment proposed

for Navalny and the punishment proposed

for Ofitserov

by the state prosecutors is

proportionate and fair in relation to what was done.

Therefore, I also support the position

and ask that our statement be added

uh, to the materials of the criminal case. That is all

I have. Thank you.

>> The right to speak in the closing arguments

is granted

to the victim's representative.

>> Your Honor, as I already explained today,

I have familiarized myself with all

the materials

from the judicial investigation.

I can say that our position

has not changed in any way. We

fully support the side of the

prosecution.

And since earlier in this court

in my testimony and in what I previously stated

regarding the accusation, I have nothing of principle

to add; that is all I would like

to say.

>> Thank you.

Defense counsel, please.

>> Your Honor, there is essentially nothing

to add. I believe that an objective assessment

of the evidence examined during the hearing

speaks for itself for us.

>> Is the defense side ready...

...Your Honor, we have a request; in connection

with our other commitments, we ask to be excused if the parties

do not object.

>> Does the prosecution have any objection?

>> No, Your Honor, none.

>> Defense side?

>> No objection.

>> No objection.

>> No objection.

>> No objection.

>> You are free to go.

Is the defense side ready?

>> Certainly, Your Honor.

>> Let's take a short recess.

>> Before hearing the defense side,

a recess is declared until 11:15.

Please be seated.

The hearing continues with the arguments. If

the defense side is ready, I suggest

beginning the statements.

Yes, we are ready.

>> Please, who will begin first?

>> If possible, my counsel will begin, and I... Yes,

of course.

>> And then

>> I understand, please proceed. So, the objections

have been prepared in writing; I will now

read them out

as my statement.

The consideration of this criminal case in

the Leninsky District Court of the city of Kirov

has clearly confirmed that the charges brought

against Navalny are

contrary to the norms of current

law and unclear both to the

defense and to the prosecution.

The nature of the charges brought,

the prosecution's lack of genuine

evidence, and the court's refusal to grant

virtually all

defense motions indicate that

these proceedings do not serve the purposes of

justice, but pursue only one aim:

guided by political motives,

to publicly discredit and subject to

criminal punishment a well-known

public and political figure.

Navalny is accused of committing

an offense under Part

3 of Article 33 and Part

4 of Article 160 of the Criminal Code

of the Russian Federation, namely

organizing the embezzlement of timber products

from KOGUP Kirovles in an especially large amount.

At the same time, the prosecution has not

presented any specific

evidence as to where, when, and under what

circumstances Navalny entered into

a criminal conspiracy with Opalev and

Ofitserov, allegedly joining together in advance

to commit a crime.

Nor has any specific

confirmed factual information been presented as to

what exactly Navalny's role

as the organizer of the

crime consisted of, namely where, when, to whom,

in what form, and under what

circumstances, and what specific

instructions he gave to commit criminal

acts. No evidence of the events

of the crime imputed to Navalny

has been presented by the prosecution.

On the contrary, the evidence examined during

the trial

shows that the act did not

take place.

Thus, during the trial there was not

a single piece of evidence presented

to support the state prosecution's position

that Navalny organized

the embezzlement. All of Navalny's actions

that were examined during the

trial are not

criminally punishable,

and do not contradict the authority that

Navalny possessed while serving as an adviser.

the Governor of Kirov Region.

In essence, Navalny is being accused of the fact that

he took an interest in the work

of the state-owned enterprise

KOGUP Kirovles, proposed ideas and principles

for its development, and spoke out against

the company’s financial, sales, and personnel policies

that were leading the enterprise

toward an inevitable collapse.

As evidence for the prosecution,

an interim regulation on the

adviser to the Governor of Kirov Region was submitted.

The interim regulation defines the status

of the adviser as serving on a voluntary basis and

grants the adviser the right to provide

consultative assistance to the governor.

The adviser’s duties also included

participation in drafting programs for

the restructuring and reorganization

of inefficiently operating enterprises

of various forms of ownership.

In addition, the adviser’s duties

to the governor included participation in working

meetings under the governor and in sectoral

committees, directorates, and departmental

bodies of the Kirov Region administration. These were precisely

the duties Navalny carried out during

his time in Kirov.

This document attests to

the lawful nature of all of Navalny’s

actions, as, while serving as an adviser

to the governor, he acted strictly within

the scope of the authority granted to him.

Moreover, he carried out his duties responsibly,

making efforts

to understand the operations of the loss-making

enterprise KOGUP Kirovles and proposing

ways to reorganize it.

The court examined the minutes of meetings

of the interagency commission on

efficient forest use in Kirov Region,

as well as the minutes of meetings of the working

group on assessing the effectiveness

of KOGUP Kirovles, in which

Navalny took part throughout 2009.

Navalny.

Questioned at the court hearing as

a prosecution witness, the Governor

of Kirov Region, Belykh, testified that

Navalny had the right to give advice,

take part in meetings,

commission sessions, and working groups

held by the regional government,

and express his views. At the same time,

he had no official powers.

He had no managerial authority whatsoever

with respect to civil servants

or employees of budget-funded and

other enterprises. Among

the assignments given to Navalny

by the governor was a set of issues concerning

state property management,

as well as matters related to the operations of

KOGUP Kirovles. The witness also

stated that Navalny prepared

documents concerning the reorganization

of the enterprise’s operations.

Moreover, recommendations of this kind

were made not only by Navalny, but also by many

other people, including experts from

the relevant departments.

The witness also noted that the enterprise

was in severe financial

difficulty and had a large amount

of debt, both in rent payments and

taxes, and could not continue its

operations for long, which required

its reorganization, both overall and

in certain specific areas, including those

related to sales and procurement

activities, management functions,

and staffing.

Questioned at the court hearing as

a prosecution witness, the Deputy

Chairman of the Government of Kirov

Region, Cherchkov, who oversaw in 2009

the forestry department,

also testified that Navalny was not

a public official and therefore had no

supervisory or administrative functions.

The witness also noted that the financial

condition of KOGUP Kirovles was severe.

The governor instructed Navalny to deal with

Kirovles, and he put forward his ideas

regarding the operations of this

enterprise,

in particular, about conducting a comprehensive

audit of the enterprise by one of the world’s

leading auditors in order to understand what

was happening with Kirovles. In addition,

the witness stated that Navalny had

put forward the idea of organizing a timber exchange

in Kirov Region, where

forest products could be sold.

This was because in 2009, for all

enterprises in Kirov Region, the sale

of products was the main problem due

to the global financial crisis.

The witness also reported a conflict

between Navalny and Opelev in connection with

Navalny’s demands to reduce

the enterprise’s own costs and

to conduct an audit of the enterprise,

which Opelev refused to do.

In addition, the witness testified that

the losses of KOGUP Kirovles as of

mid-2009 amounted to around 200

million rubles (about US$6.3 million at the 2009 exchange rate). The witness also explained

that the arrears in rent payments

could not simply be written off, and all

enterprise directors knew this.

Despite the fact that today in court

the representative of the state

prosecution said that Cherchkov acknowledged

the damage, in fact everyone who was

present at that hearing during the questioning

knows that Cherchkov said no such

thing. And in essence, the state

the testimony cited by the prosecution was reviewed.

The witness. Questioned in court

as a defense witness,

former adviser to the governor of Kirov

Region and deputy chair of the

government of Kirov Region, Maria

Gaidar, testified that Navalny and the

governor had been given assignments to work on

various loss-making

enterprises as part of anti-corruption

efforts.

The witness explained that Navalny and

the governor were repeatedly given

assignments related to the operations of the

forestry sector: the regional state enterprise

Kirovles, its reorganization, and

the organization of its sales. The witness noted

that Kirovles’s problems were constantly

being discussed, including by members of the

regional government, who voiced the idea that

the enterprise could be saved by helping it

sell its products.

Later, ideas emerged about centralizing sales

and subsequently, mainly about removing

Opalev from his post and reorganizing the

enterprise. Navalny, moreover,

spoke about Kirovles’s management

in his characteristically blunt manner: “Crooks,

thieves, they should all be removed.” He said

they should be held accountable and

that they were all ineffective. In the court

hearing, the minutes were examined

from meetings of the working group on assessing

the effectiveness of the regional state enterprise

Kirovles, chaired by the deputy

chair of the government of Kirov

Region, Shcherchkov, which show that

Navalny, adviser to the governor of Kirov

Region, was instructed

to finalize the tender for selecting an

audit firm by October 26,

2009. On December 2, 2009, during a

similar meeting, Navalny,

Opalev, and Vakulin were instructed, by

December 9, 2009, to hold negotiations

with the audit firm Deloitte & Touche CIS and,

if its proposal complied with

the terms of reference for the provision of

audit services approved by the working

group, and if the quoted price remained

unchanged, to conclude

a contract between the regional state enterprise Kirovles and Deloitte

& Touche for audit services.

At a meeting on February 4, 2010,

Navalny stated that no

economic calculations had been made for the

reorganization project of the regional state enterprise Kirovles. Contrary

to the working group’s decision, no audit had been conducted

of the enterprise’s activities.

It is entirely obvious that, in order to organize

an embezzlement scheme, as the prosecution is trying

to portray Navalny as having done, it would be extremely strange and

illogical to make such statements,

let alone insist on carrying out an

audit.

of the enterprise whose products he allegedly

arranged to embezzle.

Moreover, they cannot prove

the commission of a crime, namely Navalny’s actions

aimed at

reorganizing the work of a loss-making

enterprise, or his dissatisfaction with Opalev,

whose work in the position of

general director of the largest

forestry enterprise led to

that enterprise’s bankruptcy.

Navalny’s acquaintance with Ofitserov,

which was never concealed, also cannot

prove the commission of a

crime.

As evidence that Navalny committed

a crime, the prosecution

cites the testimony of the former

general director of the regional state enterprise Kirovles,

Opalev, the former deputy

general director of the enterprise, Bastrygina,

the former head of the

commercial department of Kirovles, and

Bura, the daughter of Opalev’s common-law wife,

as well as Zagoskina, an auditor at the Center for Management

Consulting “Vyatka Academy Audit”,

and the directors of forestry branch offices

of the regional enterprise. In addition, among the

evidence used are recordings

of telephone conversations between Navalny and

Ofitserov, their email correspondence, and

also the judgment handed down under a special procedure

by the Leninsky District Court of the city of

Kirov on December 24, 2012, in relation

to Opalev.

It is entirely obvious that Opalev,

Bastrygina, and Bura, who were

officials of the regional state enterprise Kirovles,

whose management’s activities

Navalny criticized, had grounds

to falsely incriminate him.

In particular, Opalev has a personal

interest in giving testimony favorable to the prosecution

regarding Navalny’s allegedly unlawful

actions, because in

recent times he has constantly been under

the threat of criminal prosecution for

actions that led to the bankruptcy

of the largest state-owned enterprise

in Kirov Region. It is entirely obvious

that, in trying to avoid criminal

punishment, the former director of the regional state enterprise

Kirovles is prepared to give any testimony.

Earlier, during the investigation of the criminal

case opened against

Navalny under Article 165 of the Criminal

Code of the Russian Federation, and

later discontinued, Opalev

claimed that he had been the victim of deception and

abuse of his trust. However, at

present a new version has been put forward:

that Opalev was not deceived by Navalny and

Ofitserov, but had joined forces with them in advance.

for the embezzlement of timber products entrusted to him

Kogubkerovles.

In addition, the general director of Kogub

Kirovle, Sopolev, was implicated in

several criminal cases initiated in

connection with his activities in the position of

general director of Kogub Kirovles,

without any connection to Navalny, concerning

entirely different episodes related

to the establishment and operation of LLC

Kirovlesproekt, as well as the conviction of

the governor’s adviser Votinov. In addition,

there is no doubt that the actions of

Opolev caused especially large-scale damage

to Gubke Ryfles and led to the bankruptcy of

the largest state-owned enterprise

in the Kirov Region. However, proper

criminal-law qualification of these

actions has not been given to this day.

In addition, the Kirov Region officials questioned during the trial

during the proceedings, the leaders of the Kirov

Region, gave a clearly negative

assessment of Opolev. In particular,

the governor of the Kirov Region, Belykh,

stated that in 2010, from the

government and administration of the Kirov

Region, a number of statements were sent to

the law enforcement bodies of the Ministry of Internal Affairs,

and the prosecutor’s office, requesting that they conduct

inquiries and initiate criminal cases against

Opolev and other officials of

Kogubkirovles.

I would especially note that no one other than Opolev

confirms the prosecution’s assertion

that Opolev was among the persons

to whom Navalny could have been introduced in

late December 2008 or early January

2009 by the governor as

an adviser. Thus, the governor of the Kirov Region, questioned in court

as a prosecution witness,

testified that

Navalny was introduced to members

of the regional government, but was not

introduced to enterprise directors.

Accordingly, Opliv’s assertion that

in late December 2008 or early January

2009, that is, before Navalny’s official appointment

in May 2009 to the position of

volunteer adviser to the governor

Navalny was introduced to him

precisely in that capacity and could

influence decision-making is

false.

Nor does the testimony

of witness Zagoskina, an auditor of Vyatka

Akadem, prove the charges, since this witness is clearly

interested in the outcome of this case. She

prepared a report so unreliable

that even the prosecution,

despite the fact that this report is included

in the materials of this criminal case, did not

seek to read out or rely on this document

during the trial.

Moreover, witness Zagoskina,

while asserting in court that

OOVLK purchased products from Kogub

Kirovles at understated prices, different

from the prices of companies comparable to Kirovles,

not only failed to provide supporting

documents, but did not even name the

company whose sale prices she allegedly

examined. At the same time, the witness

claimed that, in her assessment, the difference

between the purchase price of timber products

paid by Ryfles and average market prices

amounted to 700 rubles per cubic meter.

Nor does the testimony prove that there occurred

the act imputed to Navalny; the testimony of

those questioned as prosecution

witnesses, namely the directors of the forestry enterprises, does not. Not one

of them confirmed that he was acquainted with

Navalny. Moreover, not a single director

of a forestry enterprise confirmed that

timber products from the enterprises they headed

had been stolen.

The recordings of telephone conversations do not prove that Navalny committed

a crime; the recordings of telephone

conversations between Navalny and

Ofitserov. These recordings were

made during the period from August 2009

to October 2010, that is, long

after the conclusion of the contract between OVLK and

Kogubkerafres.

Moreover, neither the recordings of telephone

conversations nor the email correspondence

contain any information that could

indicate criminal

intent on the part of Navalny or Ofitserov. Nor

can the judgment rendered against

have legal significance, the verdict issued with respect to

Opolev, because it was

issued without the participation of Navalny and Ofitserov

in violation of the principle of the presumption

of innocence and, in accordance with Article

74 of the Russian Criminal Procedure Code, is not evidence in a

criminal case; it was issued under the procedure

provided for by Articles 316 and 317

of the Russian Criminal Procedure Code, without holding a trial

and without examining or evaluating

the evidence collected in the case, due to

Opliv’s conclusion of a pre-trial

cooperation agreement and his consent

to the charges brought, about which

the defense подробно repeatedly pointed out

in its motions during the

trial.

Thus, in this case it has not been

proven that a criminal act

actually occurred or that Navalny committed

a crime.

The absence in Navalny’s actions of

the elements of the offense provided for in

Part 3 of Article 33 and

Part 4 of Article 160 of the Criminal

Code is confirmed by the following.

The essence of the charge against Navalny comes down to

the claim that, acting in complicity

with Sopolev and Ofitserov, he took part in

the signing of three appendices to the contract

supply contract No. 01/2009

dated April 15, 2009, between OOVLK and

Kagub Kirovles,

in which the stated price, without any

economic necessity,

was deliberately understated by all

participants in the alleged crime compared with

the price at which the products

of Kogubkirovles could have been directly

sold by VLK’s counterparty. At the same time,

the prosecution claims that the Navalnys and Ofitserov understood that

Opalev, by unlawfully depriving Kogub

of the opportunity to sell timber products at market prices, thereby

transferred those timber products into

VLK’s control without corresponding

equivalent compensation for their market

value. On this basis, the prosecution

concludes that Navalny

organized the embezzlement of timber products belonging to

Kogubkerovles in the amount of 10,84,277 84,277

cubic meters, worth 16,165,826

rubles and 65 kopecks. That is, on an especially large

scale, including for his own benefit, thereby

causing property damage to

the owner of that property, Kogubke

Kerovles.

This accusation is entirely

groundless, because it contradicts

the provisions of current Russian

law.

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, that is, the theft

of another person’s property entrusted to the offender.

In accordance with Note 1 to

Article 158 of the Criminal Code of the Russian

Federation, theft is understood as

the unlawful, gratuitous seizure and/or

appropriation of another person’s property

for the benefit of the offender or other persons,

committed for selfish purposes and causing

damage to the owner or other lawful possessor

of that property.

Thus, under criminal

law, for the lawful

bringing of a person to criminal

liability under Article

160 of the Criminal Code of the Russian

Federation, and for the proper classification of

the acts of the accused under this article,

it is necessary to establish all elements

of theft. The defendants’ actions must be

unlawful. The owner’s property

must have been taken without compensation. Another person’s

property must have been appropriated for the benefit of

the offender or other persons. The owner

must have suffered actual damage.

A similar approach to defining

the elements of the offense provided for in

Article 160 is reflected in paragraphs 19 and 20

of the Resolution of the Plenum of the Supreme Court dated

December 27, 2007, No. 51, on judicial

practice in cases of fraud,

misappropriation, and embezzlement, and in the ruling

of the Constitutional Court dated July 2, 2009,

No. 1037, which in particular

notes that Article 160 of the Criminal

Code of the Russian Federation

does not provide for the possibility of

bringing to criminal liability

persons who enter into lawful

civil-law transactions.

However, in this criminal case

there is no evidence whatsoever

confirming the existence of the above-mentioned

elements of theft of property. Moreover,

the evidence in the case

confirms the lawful, rather than

unlawful, nature of the actions of all

defendants in this criminal case.

Thus, the absence in the defendants’ actions

of such a mandatory element of theft

as unlawfulness is confirmed by

the presence in the criminal case file of

contract No. 0129

dated April 15, 2009, signed

by the parties, as well as supplementary

agreements to that contract. These

documents confirm that between

Kogubkerov Les and OVLK there arose genuine

civil-law obligations for one

party to deliver, and for the other

party to pay for timber products.

The fact that business activities were carried out

and that the mutual rights and obligations under

this contract were actually performed

is confirmed by accounting

records, transport waybills, invoices, tax

invoices, and bank statements,

payment orders, and documents of

Kogubkirov Les, OOVLK, and OOVLK’s buyers.

Moreover, this contract was not challenged by the parties

through civil proceedings and, from the standpoint

of civil law, it is

valid. Nevertheless, the prosecution

attributes a criminal character to

a transaction governed exclusively

by the operation of civil

legislation, in particular Article

1 of the Civil Code,

which guarantees recognition of the equality

of participants in civil relations,

freedom of contract, and the inadmissibility

of arbitrary interference by anyone in

private affairs, as well as Articles 421-42

of the Civil Code, which guarantee

freedom of contract. However, the prosecution

ignores the fact that the contract between

Kogubkerov Les and OVLK was concluded in

strict compliance with the provisions of the

Civil Code. In addition, it has not been

proven that the timber products of the owner,

Kogubkerykh Les, were taken by the defendants

without compensation. During the trial,

payment

payment orders and bank statements,

confirming the receipt of funds

for timber products and transportation

expenses from VLK’s account to the settlement account

of the Reflies state enterprise for a total amount of 14,785,

785.994

rubles and 66 kopecks. This indicates

the absence of any gratuitous transfer

of timber products and that Kogubkirov Les received

appropriate compensation from

OOVLK for the timber products supplied.

In addition to the fact that OVLK paid for

the timber and materials purchased from Kogubkerov Les, as well as

transportation services, OVLK also has

accounts payable to

Kogubkerov Les, the existence of which

is not disputed by either party. Moreover,

the fact that the parties concluded the contract

and the supplementary agreement to it shows

the compensated nature of the agreement concluded

by the parties, in accordance with

the requirements of Article 423 of the Civil

Code, under which

a contract under which a party is to

receive payment or other consideration

for the performance of its

obligations is a compensated contract.

A gratuitous contract, according to paragraph 2

of that article of the Civil Code,

is recognized as a contract under which one

party undertakes to provide something

to the other party without receiving from it

payment or other consideration.

The investigation has not

presented a single document

confirming the prosecution’s version of

the gratuitous seizure of the owner’s

property.

Thus, Kagut Kerovlest received, as

payment under Contract No. 0129

dated April 15, 2009, for the supplied

timber products, monetary funds, which

indicates the absence of any signs

of theft of timber products from the Reflies state enterprise.

Accordingly, the accusation of theft

of timber products from the Reflies state enterprise in the volume of

10,084.277

cubic meters, in the amount of 16,165,826

rubles and 65 kopecks,

is completely absurd.

In addition, the prosecution has not presented

a single piece of evidence of actual damage caused

by the actions of the defendants, Kaggubkerov Les,

to cause real losses. At the same time, it makes

an entirely unsupported conclusion that the price

of the contract

dated April 15, 2009, and the supplementary agreement to

it were deliberately understated by all

participants in the crime.

At present, within the territory

of the Russian Federation, there are legal provisions in force

guaranteeing freedom of

economic activity, freedom

of contract, and freedom to determine contract prices.

The price of a contract is regulated

exclusively by the provisions of

civil law legislation.

Part 1 of Article 8 of the Constitution

guarantees, throughout the territory of the Russian

Federation, freedom of economic

activity. Article 421 of the Civil

Code guarantees freedom of contract.

Article 424,

which governs the determination of the contract price,

provides that performance of a contract

is paid for at the price established

by agreement of the parties. In cases provided for

by law, the applicable prices,

tariffs, rates, fees, and the like

are those established or

regulated by authorized state

bodies. A change in price

after the conclusion of the contract

is permitted in the cases and under the conditions

provided for by the contract, by law, or

in the manner established by law. In

cases where, in a compensated contract,

the price is not specified and cannot be

determined from the terms of the contract,

performance of the contract must be paid for

at the price that, under comparable

circumstances, is usually charged for

similar goods, work, or services.

As was repeatedly stated during the court

hearings, timber products are not included in

the list of products

for industrial and technical use,

consumer goods, and services,

the prices and tariffs for which, on the domestic

market of the Russian Federation, are subject

to state regulation

by the Government of the Russian Federation,

federal executive authorities,

and executive authorities

of the constituent entities of the Russian Federation. Under

market economy conditions, the principles

of free enterprise,

freedom of contract, and freedom of pricing apply.

Thus, the price of timber products is not

set or regulated

by state authorities, and therefore,

the unsupported

assertion of an allegedly deliberate

understatement of the price of timber products is

plainly unlawful.

Moreover, the prosecution has not presented

any analysis of market prices for timber products.

No experts possessing

special financial and economic

knowledge in the field of pricing and

valuation were engaged. Obviously,

the necessary economic examinations

were not carried out either during

the investigation of this criminal case

or during the trial.

Despite the clear and obvious

need, indeed the necessity, to conduct

expert examinations in this criminal case,

who were supposed to analyze

comparable prices on the timber products market,

take into account the impact on the market in 2009

of various factors, including factors of

supply and demand, the influence of

the region’s geographic location,

and the seasonality of supply conditions

for timber products, and determine the cost price

of the timber products. No such expert examinations

were conducted, and their appointment and

performance were denied by the court.

The expert examinations reviewed at the court hearings,

held as part of the investigation

of the criminal case initiated on

suspicion of an offense under

Article 165 of the Criminal Code

of the Russian Federation, are incomplete

and contain answers to

an extremely limited range of questions.

The experts examined only questions

related to the value of the total volumes of

purchases and subsequent sale

of timber products by OVLK. At the same time, the experts

were neither asked nor did they examine

the most important issues for

the proceedings in this criminal case,

namely, issues related to examining prices

for timber products during specific time

periods. The actual value

of the timber products was not established, nor was there

any analysis of the movement and expenditure

of funds. I would especially note that

it was precisely the data obtained during

these expert examinations that made it possible for

the investigator to issue a ruling on

the termination of the criminal case and criminal

prosecution of Navalny and Ofitserov in

connection with the absence in their actions

of the elements of a crime.

It is entirely obvious that without carrying out

an assessment of the allegedly stolen timber products,

in the complete absence of information about

the market value of timber products as of

2009 in Kirov Region,

and without examining and analyzing the prices

set by OOV VLK in the appendices to

the contract and indicated in the shipping

invoices, compared with the prices

that were in effect during that period on

the timber products market in Kirov Region.

The prosecution’s use

of assertions employing the terms

“deliberately understated price,”

“non-equivalent price,” and “knowingly

inflated price” is entirely

unsupported and inadmissible in

criminal proceedings

classified by criminal law

as economic crimes.

It is entirely obvious that in the absence of

an expert opinion based on

an analysis of the prices prevailing on

the market at the time the alleged

offenses were supposedly committed, the prosecution’s claim of

price non-equivalence is clearly

contrived and unfounded, as is

the conclusion that there was a commission of

the crime provided for by Article

160.

Moreover, the defense submitted and

examined at the court hearing

specialist opinion No. 3s13/592,

which analyzes the prices for

timber products specified in contract No.

012009

dated April 15, 2009, and in the appendices to

the contract, as well as in the shipping invoices

of OOVK. According to the opinion, based

on statistical data from

the territorial office of the Federal

State Statistics Service for

Kirov Region, the average monthly prices

at which KOGUP Kirovles sold

timber products to OVLK, 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.