The Kirovles Case. Court Video Recording. Session 19. Pronouncement of the Verdict

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>> Judgment in the name of the Russian Federation dated

July 18, 2013, city of Kirov, Leninsky

District Court of the city of Kirov, composed of

presiding judge, with the participation of

the state prosecutors, including the head

of the department of public prosecution

and appeals of the Kirov Region Prosecutor's Office

Bogdanov, prosecutor of the department

of public prosecution and appeals

of the Kirov Region Prosecutor's Office

Cheremesinov, representative of the injured party

..., and his representative, attorney

Blinov, defendant Navalny, and his

defense counsel, attorneys Mikhailova,

Kobzeva, Kobelev, defendant

Ofitserov, and his defense counsel, attorney

Davydova, press secretary Korshinova,

having considered in an open court hearing

the materials of the criminal case against

Alexei Anatolyevich Navalny, born June 4

1976, native of Butyn

of the Odintsovo District, Moscow Region

ethnic Russian, citizen of Russia, with higher

education, married, having as dependents

two minor children, attorney

of the Moscow Bar Association, interregional

liable for military service, registered

residing at: Moscow, Lyublinskaya Street

building 170/75, apartment 15

with no prior convictions, accused of committing

the offense under Part 3 of Article

33 and Part 4 of Article 160

of the Criminal Code of the Russian Federation; Pyotr Yuryevich Ofitserov, born May 4, 1975

native of the city of Frunze

Kyrgyz SSR (now Bishkek, Kyrgyzstan), ethnic Russian, citizen of Russia, with

higher education, married, having as dependents

four minor children

general director of LLC Real

Work Management, not liable for military service

registered and residing at

the address: Moscow, Ozyornaya Street, building 15

Block 1, apartment 95, with no prior convictions

accused under Part 5 of Article

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

found: "Navalny organized

the commission of the crime and directed

the execution of the embezzlement, that is, the theft

of another's property entrusted to the guilty party

on an especially large scale".

Ofitserov aided and abetted

the commission of embezzlement and theft of another's

property entrusted to the guilty party, on an especially

large scale, by providing

information and means for committing

the crime. The crime was committed under

the following circumstances. Approximately in

late December 2008 and early January

2009, in the building of the government

of Kirov Region, the governor of Kirov

Region, Belykh, at a meeting with the heads

of major enterprises of the region, among

whom was the general director of KOGUP

Kirovles, Opalev, introduced his

future unpaid advisers

including Navalny,

officially appointed to the said

position by order of the governor

of Kirov Region No. 25 dated May 21

2009, No. 60-k. In accordance

with the temporary regulations, advisers and assistants

to the governor of Kirov Region serving on

a voluntary basis, approved

by order of the governor of Kirov

Region No. 887 dated July 14, 2000,

an unpaid adviser to the governor, in exercising his

powers,

provides the governor with

advisory assistance free of charge

on the basis of an official identification card of the established

form, and is also vested with authority to

participate in working meetings with

the governor and sectoral committees

of the regional administration with advisory

voice, and to cooperate with bodies

of legislative and executive power; in

the preparation of draft legislative and

regulatory acts of the region; participation in

the development of programs for

the socio-economic development

of the region and in the formation and implementation

of the regional procurement order in strategically

important areas of the region's vital support

and in the development of programs for

the restructuring and reorganization

of inefficiently operating enterprises of

various forms of ownership. Approximately in

January-February 2009, Navalny

having knowingly learned of the possibility

of influencing the activities

of 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. Navalny,

acting out of selfish motives and as

the organizer of the crime,

while also planning to direct its

execution together with his acquaintance

Ofitserov, recruited as

an accomplice, developed

a criminal plan for stealing

the property of KOGUP Kirovles by means of its

embezzlement in favor of newly created

organizations under their control, which

Ofitserov was to establish and head. In

accordance with the order of the governor

of Kirov Region No. 492 dated November 12, 2007

the Kirov Regional State

Institution, Kirov Forestry Administration,

was transformed into

the Kirov Regional State

Unitary Enterprise, established on the right

of economic management, Kirovles.

By order of the director of the department

of state property of Kirov

Region No. 07-158 dated December 7, 2007

year, as well as in accordance with the employment

contract dated December 12, 2007, Opolev

was appointed to the position of General

Director of KOGUP Kirovles on December 12, 2007

year. In accordance with Clause 52

of the Charter of Gubkerov Les, approved

by the Director of the Department of State

Property of Kirov Region on December 6

2007, and agreed on December 6

2007 by the Head of the Forestry Department

of Kirov Region, the General Director

of the enterprise acts on behalf of

that enterprise without a power of attorney,

represents its interests in good faith and reasonably

within the territory of the Russian

Federation and abroad, acts on the basis of

sole authority, and bears

responsibility for the consequences of his

actions in accordance with federal

laws and other regulatory legal acts

of the Russian Federation and Kirov Region,

the Charter, and the employment contract concluded with him.

By virtue of his official

duties, employment relations with

the Department of State

Property of Kirov Region, and the Charter

of the enterprise, General Director Opolev

from December 12, 2007, continuously

performed organizational and administrative

and administrative-economic functions,

that is, he performed managerial functions

in the unitary enterprise and exercised

authority over the use, management,

and disposal of the property of KOGUP Kirovles.

On November 10, 2008, by the Forestry Department

of Kirov Region, with KOGUP Kirovles

represented by General Director Opolev,

lease agreements No. 1-23 were concluded

for forest plots located in

federal ownership for a term of 15

years, under which KOGUP Kirovles

accepted for temporary use

forest plots located in

state ownership

situated in the territory of Kirov

Region. In accordance with Article 606

of the Civil Code of the Russian

Federation, the fruits, products, and income

received by the lessee as a result of

using the leased

property in accordance with the contract

are its property. Moreover, in

2009, by the Forestry Department

of Kirov Region, KOGUP Kirovles

represented by General Director

Opolev, state contracts were concluded

for the performance of work on the protection,

defense, and regeneration of forests

located on forest fund lands

that are in state

ownership within the relevant

forestries in the territory of Kirov

Region and not assigned to persons

using the forests, with the simultaneous

sale of forest stands for timber harvesting,

under the terms of which

the timber paid for and harvested under

the said contract was the property

of KOGUP Kirovles. While preparing

for the forthcoming theft,

for example, in February 2009, Navalny

while effectively carrying out the above-mentioned

powers of an adviser to the governor on

a voluntary basis, acting on

the instructions of the leadership of Kirov Region,

which was unaware of the committed

crime and the crime being committed,

together with Ofitserov, allegedly for the purpose

of studying and analyzing the efficiency

of KOGUP Kirovles' operations, arrived at

the said enterprise located at

the address: Kirov Region, the city of Kirov,

Avtotransportny Lane, building 4. After that,

Navalny introduced Ofitserov to

General Director Opolev and instructed him

to provide Ofitserov with information

about the structure of KOGUP Kirovles,

the range of harvested and processed

timber products, as well as other necessary

data, which Opolev did. Approximately in

February-March 2009, Navalny,

continuing to carry out his criminal

intent aimed at the property of Kirovles,

being guided by

and directing the commission of the crime,

while at the premises of the Government of

Kirov Region, located at the address:

the city of Kirov, Karl Liebknecht Street, building 64,

informed Opolev about the impending creation

by Ofitserov of an enterprise to provide

intermediary services for the sale of harvested and

processed Kirovles timber products

for the purpose of subsequently committing embezzlement

of the property entrusted to Opolev. Under

these circumstances, Opolev

understood that as a result of creating

this enterprise and further work

with it, KOGUP Kirovles would suffer

property damage, but took no actions

aimed at preventing the unlawful

actions of Navalny and

agreed to the latter's proposal, thereby

entering with Navalny and Ofitserov into

a prior criminal conspiracy

aimed at the embezzlement of property entrusted to Opolev,

namely the property of KOGUP Kirovles, on an especially large

scale. For the purpose of implementing the criminal

plan, acting jointly with Navalny,

and in agreement with him, in March 2009

he ensured the establishment and state

registration in the territory of Kirov

Region of a company controlled by him and Navalny,

a limited liability company

Vyatka Timber Company, hereinafter VLK, as well as

the opening of a settlement account, thereby

facilitating the commission

of the crime by providing

information and the means for its commission. 18

In March 2009, by the Inspectorate of the Federal

Tax Service for the city of Kirov,

state registration was carried out

of VVLK, and its sole participant and

general director was

Ofitserov, who also opened on March 25

2009 a settlement account for OVLK at JSCB

"Vyatka Bank." The LLC's registered office

is located at the address: Kirov Region,

city of Kirov, Chapaeva Street, building

7. At approximately in March, the first half

of April 2009, in the city of Kirov,

Kirov Region, Ofitserov, acting

on the instructions of the organizer of the crime,

Navalny, continuing to provide

assistance in the commission of embezzlement,

organized the preparation of a knowingly

for KOGUP Kirovles of a disadvantageous contract draft

for the benefit of LLC VLK and signed it on behalf

of VVLK. According to this contract,

KOGUP Kirovles assumed obligations

to supply timber products exclusively

at its own expense to consignees,

legal entities and individuals, including

those who in fact were

actual purchasers of timber products

from KOGUP Kirovles, as a result of which refusal

to conclude direct supply contracts

had no economic sense and

entailed causing damage to

KOGUP Kirovles. In addition, in the said

contract there were initially no

details on the value of the products that

would correspond to and equivalently compensate

VLK for the market value

of the timber products supplied by KOGUP Kirovles.

Then Ofitserov passed

the said contract to Opaev for signature,

who, on April 15, 2009, while in

the KOGUP Kirovles building at the address:

Kirov Region, city of Kirov,

Transportny Lane, building 4, acting

intentionally and in concert with Navalny

and Ofitserov, being the general

director of KOGUP Kirovles, using

his official position, signed

the said supply contract No. 01/2009

with LLC VLK, providing for the conclusion

of appendices to it defining the main

terms of timber supply, including

its price. At the same time, Opaev,

having received regarding the said draft contract

for supply an oral negative

opinion from employees

of KOGUP Kirovles responsible for product sales,

fully understood

the socially dangerous nature of the actions and

the inevitability of socially dangerous

consequences resulting from the conclusion

of the supply contract with VLK in the form of embezzlement

of the timber products entrusted to him of Kirovles

for the benefit of 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 concluded

contract, KOGUP Kirovles undertook

to supply timber products

to the consignees specified in the appendix

to this contract, and VLK was to pay for

these goods. At the same time, Navalny, Opaev,

and Ofitserov reliably knew that VLK

would pay for the goods on terms

established by the contract and its appendices

at a knowingly understated price compared

with that which could have been received by

KOGUP Kirovles from buyers without

using the intermediary services of OVLK.

And the said contract was aimed

exclusively at creating the appearance

of KOGUP Kirovles incurring

civil-law obligations

to VLK, allegedly on a compensated

basis, to transfer products

to consignees. In reality,

these goods would be transferred without

equivalent and proper

compensation from VLK. In the period from April 15

to July 13, 2009, in the city of

Kirov, in execution of their joint

criminal intent, Opaev used

his official position as general

director of KOGUP Kirovles, and also

the general director of LLC VLK, Ofitserova,

acted intentionally and in coordination

in complicity with Navalny, who organized

the commission of the said crime and

directed its execution, signed

36 appendices to supply contract No.

01/29 dated April 15, 2009, which

specified the type of timber products,

the volumes and terms of supply, as well as the price,

which, without any

economic necessity, was

deliberately reduced by all

participants in the crime compared with

the price at which KOGUP Kirovles products

could be sold directly

to counterparties

of LLC VLK. In turn, Ofitserov, during

the said period, acting on behalf

of VLK, concluded supply contracts

for timber products produced by KOGUP Kirovles

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

single-handedly to supply and sell

the timber products produced by KOGUP Kirovles.

Opaev, acting on the instructions

of Navalny, intentionally and in coordination with

him and Ofitserov, using his

official position as general

director, issued Order No. 76 on

establishing the procedure for the sale

of KOGUP Kirovles timber products dated May 19,

2009, which introduced a ban

for forestry branches of KOGUP Kirovles on

the independent conclusion of contracts

for the supply and sale of timber products with

legal entities, individuals, as well as

individual entrepreneurs. At the same time,

Navalny and Ofitserov were aware

that Oplev was unlawfully depriving Kirovles

of the opportunity to independently

sell the timber products it produced

at market prices, thereby placing

these timber products at the disposal of

OOO VLK without corresponding

equivalent compensation for their market

value. During the period from April 15 to

September 30, 2009, in the city of Kirov

Opolev, using his

official position, and Ofitserov acted

deliberately, in coordination with Navalny and on

his instructions, ensured the performance of

the terms of supply contract No. 01/29 and

dated April 15, 2009, and the appendix to

it, as a result of which Kirovles

shipped timber products worth

16,165,826

rubles 65 kopecks to the following

counterparties of VLK: OAO Domostroitel, volume

1.96

65 cubic meters, with delivery to

the address: Kirov Region, settlement of Krasnaya

Polyana, Druzhba Street, Building 1; OAVS, volume

62.972

cubic meters, with delivery to the address

Kirov Region, the city of Kotelnich,

Sovetskaya Street, 43/25; OOO Lesgorod, volume

988.66

cubic meters, with delivery to the address: city of

Kirov, Lenin Street, Building 92; OKMDK

volume 796

754 cubic meters, with delivery to

the address: city of Kirov, street

Lesozavodskaya, Building 10a; OAO Volga. Volume

38.29

cubic meters, with delivery to the address

Nizhny Novgorod Region, the city of Balakhna,

Gorky Street, Building 1; OOO Vlada. Volume

698.35

cubic meters, with delivery to the address: city of

Kirov, Pogachyova Street, 32/7; OOO Montazhnik

volume 310.20

cubic meters, with delivery to the address: city of

Kirov; Kirov Region, the city of

Sovetsk, Engels Street, Building 10a; OOO

Sefrispil, volume 59.90 cubic meters, with

delivery to the address: Komi Republic,

the city of Syktyvkar, Lesnaya Street 2/4; and

Podgorny, volume 221.351

cubic meters, with delivery to the address

Krasnodar Krai, city of

Novorossiysk, Tsemdolina settlement, street

Svobody, Building 1a. Mariysky TsOBK, volume

771.44

cubic meters, with delivery to the address

republic, city of Volzhsk, street

Karlomarskaya, Building 10. ZAO Krasny Yakor

volume 265.42

cubic meters, with delivery to the address

Kirov Region, city of Slobodskoy, street

Sovetskaya, Building 132. OOO Match Factory

Pobeda, volume 176.36

cubic meters, with delivery to the address

Penza Region, Nizhnelomovsky

District, village of Verkhny Lomov, street

Moskovskaya, Building 1. OOO Ufimskie Spichki, volume

288.94

cubic meters, with delivery to the address

Republic of Bashkortostan, city of Ufa,

Novozhyonova Street, Building 88. OOO Krymskaya

Zarya, volume 161.

190 cubic meters, with delivery to

the address: Krasnodar Krai, city of

Krymsk, Stroiteley Street, Building 65

ZAO Plitspishcheprom, volume 13.08

cubic meters, with delivery to the address: Kaluga

Region, city of Balabanovo

50 Let Oktyabrya Square, Building 3; Zaimon

volume 115.72 cubic meters, with delivery to

the address: republic, city of Kazmino, street

Tovarova 5. As a result, the total volume

of timber products supplied by Kirovles

to VLK’s counterparties amounted to 10,842.77

cubic meters. During the period from April 15 to December 2009,

for the specified volume of timber products, into

the settlement account of the company controlled by

Navalny and Ofitserov, VLK, opened at AKB

Vyatka Bank,

funds were received in the total

amount of 16,

303,880 rubles 28 kopecks. Specifically, from the settlement account

of OAO Domostroitel in the amount of

375,494

rubles 50 kopecks; from the settlement account of ABS AVS

in the amount of 40,950

rubles; from the settlement account of Lesgaran in

the amount of 1,525,166

rubles 8 kopecks. From the settlement account of KMDK

in the amount of 1,325,919

rubles 75 kopecks. From the settlement account of

Volga in the amount of 257,239

rubles 75 kopecks. From the settlement account of Vlada

in the amount of 3,136,904

rubles 5 kopecks. From OOO Montazhnik in the amount of

100,000 rubles; from the settlement account of OOO

Seflispil in the amount of 99,669

rubles 70 kopecks. From the settlement account of individual entrepreneur

Podgorny in the amount of 1,151,025

rubles 20 kopecks. From the settlement account of OOK MTsBK

in the amount of 545,783

rubles 20 kopecks. From the settlement account of ZAO

Krasny Yakor in the amount of 200,093

rubles. From the settlement account of OOO Match Factory

Pobeda in the amount of 291,357

rubles. From the settlement account of Ufimskaya in the amount of

282,686 rubles

rubles. From the settlement account of OOO Krymskaya Zarya

in the amount of 513,486

rubles. From the settlement account of ZAOKlitspishch

prom in the amount of 177,945

rubles 60 kopecks. From the settlement account of ZAO Uimat

in the amount of 350,160 rubles. Thus, he

were acting jointly with the Navalnys,

who organized and directed

the commission of the crime, and Officer with

the use of his official

position as general director

of KOGUP Kirovles, out of selfish motives

unlawfully embezzled property under

his control that belonged to another, namely

Kirovles timber products in the amount of 10,084.27

cubic meters, worth 16,165,826

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

scale, in favor of third parties

through an entity controlled by a participant in the crime

namely VLK, thereby causing property

damage to the owner of this property,

KOGUP Kirovles. From the verdict of the Leninsky

District Court of the city of Kirov, dated 24

December 2012, it follows that Opalev

was found guilty of committing embezzlement

of the property of KOGUP Kirovles entrusted

to Opalev, using his official

position, on an especially large scale

committed jointly with him, that is,

the commission of a crime provided for in Part

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

At the court hearing, the defendant

Navalny admitted his guilt in committing the

crime and testified that he

arrived in Kirov Region in January

2009 to work as an

adviser at the invitation of Belykh,

whose candidacy for the position of

governor had been submitted for approval to the

Legislative Assembly. At meetings

with representatives of large companies,

Kirovles director Opalev reported

the enterprise's difficult financial situation.

The enterprise asked for help with the sale of

timber products. Belykh instructed him

to find out what was really

happening at KOGUP Kirovles. For this

purpose, he studied the company's documentation

and met with counterparties.

He and Belykh traveled to the city of Solikamsk to

help expand the sales market for

KOGUP Kirovles. At the beginning of 2009, he

received a call from his acquaintance Ofitserov, who

said that he wanted to go into the sale of

timber products in Kirov Region.

Ofitserov knew of his status as an adviser

to the governor and therefore considered him his

superior. He introduced Ofitserov to Opalev

himself and informed him

that he intended to conclude a contract and sent him

the supply agreement for review with Kirovles,

to which he never responded.

Later, Ofitserov complained to him that

KOGUP was not selling him timber products. He

merely used his acquaintance with Ofitserov

to find out the true state

of affairs at KOGUP Kirovles. In this way he obtained

information and demanded that KOGUP Kirovles

carry out product sales

in a centralized manner, that is, through a single

account. He came into conflict with Opalev

after accusing him, Ostrygina,

and Bura of corruption. He was also preparing

a response to the audit report, for which

he used information received

from Ofitserov, who attended

meetings at his request in order to

confirm his conclusions, believing that

Opalev was giving false testimony against him

and that the findings of the audit

of KOGUP Kirovles had been fabricated.

At the court hearing, defendant Ofitserov

did not admit his guilt in committing the

crime. He testified that he arrived in the city of

Kirov in February 2009 to create a

new business. He decided to engage in the sale of

timber products. For this purpose, he got acquainted

with KOGUP Kirovles director Opalev, to whom

he offered help with the sale of

timber products. The latter agreed. Having received

Opalev's consent, in March 2009 he

created VLK, after which he continued

negotiations with Opalev. If Opalev had not

agreed to sell timber products

through the legal entity he was creating,

he would have abandoned the creation of VLK.

Bura, an employee of Kirovles, sent him

a draft supply agreement. He merely

expressed a wish that the contract should

include provisions on liability for

failure to perform obligations. At the same time,

none of the VLK employees knew how

the supply agreement was concluded, and all

negotiations were conducted by him personally. He signed

the contract. Navalny took no part whatsoever in

the conclusion of the supply agreement

They communicated as acquaintances,

only occasionally meeting and speaking by phone.

He sent Navalny the draft supply agreement

but Navalny did not reply to his

letter. At Opalev's invitation, he

took part in a meeting with the directors of

the forestry enterprises, but he did not promise to sell all

of KOGUP Kirovles's products. In

performing the contract, OOO VLK employees

searched for customers. Orders

were sent to KOGUP Kirovles, which

itself decided whether to make deliveries to

those counterparties or not. The price

of deliveries was also always agreed upon by

KOGUP Kirovles. In April-May of that year,

KOGUP Kirovles sent inflated prices for

timber products, but after his objections

the prices were corrected to market-average levels. KOGUP Kirovles

found it more profitable to sell

timber products through the forestry enterprises. He needed Bura

in order to understand

the forestry sector. Therefore, at Opalev's suggestion,

she was hired to work at

VLK. Without any request from him, she also organized

the renewal of the contract with the former

counterparties of KOGUP Kirovles. The price of

timber products for those counterparties did not

change, but the difference in price for Bura

with VLK's document workflow.

Cooperation with KOGUP Kirovles

continued until the governor demanded

that the supply contract be terminated,

but in fact, by that time no shipments were being made under the contract

any longer. Despite the fact that

the defendant did not admit guilt in

committing the crime under the circumstances

set out above, the court finds that

their guilt is proven by the testimony of the following

witnesses. Thus, from the testimony

of Opolev, who was questioned at the court hearing

as a witness, as well as from

his prior statements that were read out and fully

confirmed by him, given during

the preliminary investigation

as an accused person in the presence of

defense counsel, it follows that in the position of

general director of KOGUP Kirovles he

worked from late 2007 until 16

December 2010. The principal activity

of the enterprise he headed

consisted of forestry management,

logging operations, and timber processing

in the territory of Kirov Region

(an administrative region of Russia). His duties included overall

management of the enterprise and its

branches, which were the leskhozes (state forestry units).

The latter were not legal entities,

but their directors had

powers of attorney authorizing them to independently

enter into supply contracts for

forest products. On the part of the government

of Kirov Region, the activities of KOGUP

Kirovles were overseen by Deputy Chairman

Cherchukov. Each year, KOGUP

Kirovles entered into state contracts

for carrying out forestry management activities

with the simultaneous purchase

and sale of standing timber, which

was harvested by the enterprise and then

sold to the buyer. All

forest products produced

from timber acquired under state

contracts were the property

of KOGUP Kirovles and were

entrusted to him as the enterprise's general director.

In addition, KOGUP Kirovles

leased forest plots in the territory

of Kirov Region, on which

logging and

forestry management

work were carried out. Forest products made from

timber growing on

leased forest plots also

were the property of KOGUP Kirovles and

were entrusted to him as the head

of the enterprise. Around the end of December

2008, Belykh arrived in Kirov Region

— the future governor of Kirov Region.

During that same period,

he held a meeting attended, among others, by

the heads of enterprises

in the region's forestry sector, at which

he introduced members of his team,

including Navalny, Shcherchkov, and others, who

according to Belykh, were to join

the government of Kirov Region. After that,

he repeatedly saw

Navalny in the government building

of Kirov Region, where he had his own

office. As early as the beginning of 2009,

Navalny began taking an interest in

the activities of KOGUP Kirovles, requesting

documents relating to the enterprise's business

operations. On one day

in February 2009, the government

of Kirov Region informed him of

an upcoming visit to KOGUP Kirovles by

the Kirov Region governor's unpaid aide

Navalny, for the purpose of

familiarizing himself with the structure and

operations of the enterprise. That same day,

Navalny arrived at his office at the enterprise,

together with Ofitserov,

who, according to Navalny, would

assist KOGUP Kirovles in

organizing the sale of forest products.

Following Navalny's instruction, he

told Ofitserov about the state enterprise

he headed, and a few days later

arranged for him

to take an ознакомительная trip around the region's leskhozes

in the region. Then, around February-March

2009, after one of the meetings

held by Shcherchkov, at which

the problems of developing KOGUP Kirovles

were discussed, Navalny invited him to an office

in the regional government building. In the

conversation, Navalny suggested that he, together

with the heads of other large

logging and

wood-processing enterprises, create

an open joint-stock company to

organize the sale of forest products, which, according

to Navalny, would make it possible to solve

KOGUP Kirovles' problems with selling its

forest products. In March 2009, after

another meeting with Shcherchkov,

Navalny told him that instead of

the previously discussed arrangement for selling the forest products produced by

KOGUP Kirovles, the sales would be

handled by a private company created by his acquaintance

Ofitserov, an LLC, which, as

later became clear, was VLK LLC. He

agreed to this proposal because

it came from an adviser to

the governor of Kirov Region. At the same time,

he learned that Navalny was a close friend

of the regional governor. In March 2009,

Ofitserov came to the enterprise,

and told him that on Navalny's instructions

he, as founder,

had created VLK, which, according to Navalny's plan,

would handle

the sale of the forest products held by KOGUP Kirovles.

He was supposed to assist in this

matter in every way, so that

to jointly organize substantial

sales volumes through VLK. He understood that

an intermediary was appearing in the sale of finished products for Kogubkerov Les,

but since

Ofitserov was acting on the instructions of the governor's adviser

Navalny, he agreed to

this proposal and told Ofitserov to

prepare a contract between Kogubterovles and

OVLK, giving assurances that he would fully

support OVLK's activities. After

some time, Ofitserov presented

a draft contract between Kogubkerov Les and

VLK for the supply of timber products,

which did not contain information on the prices of

the timber products to be sold. Ofitserov

said that all of this would

be established in separate appendices

and that this issue had been agreed

directly with Navalny. Ofitserov

also said that he and Navalny

needed him to take steps toward

renegotiating previously concluded

contracts with the regular and

major clients for the new VLK, since

Navalny and Ofitserov had no clients of their own.

Information about these clients of Kogubkerov Les

became known to Ofitserov from Navalny,

who had studied the financial documents received from Kogubkerov

Les indicating that

the turnover of the state enterprise he headed

in 2008

amounted to approximately 1 billion rubles. He

delayed signing the supply contract

with VLK, including on the

recommendation of his subordinate

staff, because he understood that

the organization in question was merely

an intermediary, and that this

cooperation and contract could result in

property damage to

Kogubkirov Les, since the price difference,

that is, the profit earned, could

remain with VVLK rather than with Kogubkerov

Les.

It would remain with VVLK, and not

with Ugubkerov Les. Ofitserov and Navalny

repeatedly asked him about the reasons why

he was not concluding the contract

with VLK, and he explained that the terms

of the contract were unclear and disadvantageous

for Gubkerov Les. Despite this, Ofitserov

maintained that this working arrangement

with VLK had been approved by Navalny. Ofitserov

also made threats, saying that if

he did not sign the contract, there would be

negative consequences from the regional government.

At meetings, Navalny also

insisted on the prompt conclusion of the

supply contract, saying that all

issues should be discussed with

Ofitserov, who was acting on his

instructions. At the same time,

Navalny promised to assist him in

increasing budget funding for

Gugubkerov Les. However, he understood that

this promise was connected only with

their interest in selling

timber products through OOVLK and obtaining from

its activities profits for Ofitserov and

Navalny, who maintained

friendly relations. In addition,

Ofitserov, referring to Navalny,

promised that after Kogubkerov

Les provided VVK with significant

volumes of timber product supplies, his

personal interest in receiving part of the

profit from OOVLK's activities would also

be taken into account. The text of the contract was prepared on behalf of

OOV VLK by Ofitserov for Avkagu Gubkirov Les.

He reviewed the contract with lawyers and

economists, including Makavy, Buram,

and Bastrygina, who recommended that he not

sign it, because it was

disadvantageous for Kagub, since all

responsibility for non-delivery, breaches

of deadlines, and product quality was placed

on Kagub Keroflet, which accordingly

entailed the imposition of penalties.

At the same time, OVLK's liability was not

specified. The contract also

did not state what percentage

OOVLK would receive for its intermediary services,

since payment from OOVLK for the supplied

products was to be made

after delivery of the timber products and their payment

by the end buyers. At the same time, VLK did not

provide for any advance payment, nor

any liability for delayed payment, and

the enterprise was required to supply

products based on VLK's orders. He also

understood that as a result of signing

this contract, the price difference, that is,

the profit that should have gone

as a result of the sale of property purchased

by Rofles directly to the

enterprise, would instead be transferred to Volka,

that is, to Ofitserov, who would dispose of

it at his own discretion. As a result, after

all the meetings with Navalny and Ofitserov, in

April 2009, on behalf of Kogubkerov

Les, he signed supply contract No.

01/29

with VLK. After that, as insisted upon by

Ofitserov and Navalny, he arranged

the renegotiation of contracts that had previously

been concluded with major clients of

Kogubkerov Les. These matters, in

the interests of Volka and at his request,

were handled by the head of the commercial

department of Kogubkerov Lesbur, who also

took a position at VLK, where she received

a salary. He also provided

assistance before one of the contracts was

concluded, personally calling with the stated

request to the head of UAKMDK. After

the contract was concluded, at a meeting with

the directors of the forestry enterprises, at which

Ofitserov was present, he announced that

the sale of timber products will be carried out

through VVLK. In May 2009, Ofitserov and

Navalny, for the sale of the products,

insisted that sales be conducted only through VLK and had issued

an order to Kirovles. It prohibited

the directors of the forestry units from independently

entering into supply contracts

for timber products, which he did. In

performance of the supply contract concluded with VLK,

he, until September 2009,

signed appendices to the said

contract. In fact, VLK did not perform any

real work in marketing the produced

timber products of Kirovles,

doing nothing more than sending its

employees requests indicating

the consignees to whom

timber products were to be supplied at reduced

prices, while OVLK simultaneously profited

from this by adding to those reduced

prices its own margin of 5% to 30%. This

matter was personally supervised by Ofitserov.

Thus, Kirovles, by working

with VLK, received less revenue

than it would have received if it had worked

directly with its own clients and new

buyers. Such sales

of timber products through VLK were also

loss-making for the enterprise’s branches

and forestry units, which had previously mainly

sold timber products locally

to local buyers, since they had neither

their own transport nor the ability

to deliver. And when working with Volka,

they incurred costs for

loading and unloading operations,

transport services, and did not receive money directly.

In connection with numerous

complaints from forestry directors, Fondoval

gave oral consent to ignore

requests for timber deliveries to

Volka’s clients. This led to

complaints by Ofitserov to Navalny, who

began reproaching him for

his inability to organize deliveries

through Volka and demanded an increase in the volume

of sales through that company. From

the moment the contract between the KOGUP

Kirovles and OVLK was concluded, as well as after

the appendices to it were signed, KGUP

Kirovles carried out shipments of timber products

in the volume specified in the letters

from OVLK, which periodically arrived

bearing Ofitserov’s signature. In total, KOGUP Kirovles

shipped more than 10,000 cubic meters

of timber. At the same time, OVLK often

specified either impossible volumes or

impossible delivery deadlines. And in the event

of a breach of the delivery terms and deadlines

set out in the letters, OVLK imposed on

KOGUP penalty sanctions. If

all requests had been fulfilled, this

would have led to even more negative

consequences for the enterprise. He decided

not to cause further harm to the enterprise and

stopped carrying out Navalny’s

orders. In the summer of 2009, an audit

of KOGUP Kirovles was conducted,

which established that the supply contract

with Volka was disadvantageous for KOGUP Kirovles. Based on

the results of that audit, a meeting was held

with the Governor of Kirov Region

at which, among others,

Navalny and Ofitserov were present. Following

the meeting, he was removed from

his post, and the contract with Volka was terminated.

In assessing Opolev’s testimony given

both during the preliminary investigation and

in court, the court finds it credible,

since it is consistent,

is corroborated by other evidence collected in

the case, and is also

admissible, since it was obtained

in compliance with the requirements of the law.

The victim’s representative testified to the court

that since July 2011 he has been

the director of the Department

of State Property of Kirov Region

. In 2009, he was

the deputy director. With respect to

state-owned enterprises, the department exercises

the rights of the property owner and serves

as their founder. This includes being

the founder of Kirovles, which in

2009 was engaged in harvesting

timber on forest plots leased to it,

marketing those timber products,

and performing state functions for the protection

and regeneration of forests.

He became aware of OOVLK’s activities

in 2009 at one of the meetings

held at the department at the initiative

of Bastrygina, who at that time

was acting as head of

KOGUP Kirovles. Bastrygina expressed

concern that Navalny, after

Opolev’s dismissal from the post of general

director of the enterprise, was trying to direct

the actions of KOGUP Kirovles. According to her,

the enterprise’s employees were intimidated. On

the instructions of the head of the department,

Arzamastsev, he traveled to KOGUP Kirovles,

assembled the management, department heads,

and administrative staff, and explained that Navalny

did not have any official powers

to manage

the enterprise. This was because

he was an unpaid adviser to the governor

and no such functions

had been assigned to him. He learned about the contract

concluded between OVLK and KOGUP Kirovles

at that same

meeting. The issue raised was that

the contract had been imposed on KOGUP Kirovles, was

extremely disadvantageous and impractical for

the enterprise’s operations, because

it provided only for one-sided

liability of KOGUP to VLK, while

The contract did not formally specify the issues of

pricing and delivery terms. At the department’s initiative,

an audit was conducted

which reached the same

conclusions: that the contract between VLK and

Kirovles was economically impractical

for the enterprises and led, at a minimum, to

lost income, since

there was a difference between the sale price of

timber products sold by the enterprise itself and the price

at which VVK sold them to, among others, the same

counterparties. In the opinion of

the department’s management, the business relationship

between Kogubkera... and VLK was disadvantageous for

the enterprise; accordingly, damage was caused

to the enterprise. If the enterprise had

itself made deliveries to those same

counterparties, then, given the difference in

price, it could have earned greater income.

Witness Bastrygina testified that in 2009

she was the deputy

general director of Kogubkerovles,

and was responsible for drafting and implementing

the production and financial plan,

as well as distributing cash flows within

the enterprise. She also set and

sent to the forestry units of the Kogubkerov

Les branch the minimum sale prices for

timber products that covered

their production cost.

The general director was Opolev,

who was her direct

supervisor. At the beginning of 2009, after

a meeting in the building of the administration

of the Kirov Region government,

which Navalny attended, Opolev

said that they needed to go to

Navalny’s office, as he had promised to help

resolve Kogubkerov Les’s problems. Later

Navalny

Later, Navalny was introduced to her as

an adviser to the governor. She gave

Navalny an oral overview of the problems

of Kavukerov Les, in particular informing him about

the disadvantageous state contract and lease

that the enterprise had taken on. Later

she prepared information for

Navalny in writing. After

some time, at a meeting with

Deputy Governor Shchechkov,

Navalny stated the need for

terminating the concluded

state contract, as well as for

creating a single trading platform for

the Kirov Region for the sale of

timber products on the basis of Kirovles.

It was envisaged that all products from all

enterprises in the Kirov Region, including

low-grade timber, would be

sold under commission agreements

through this platform, a commercial

organization. Later, at the Kogubkerov

Les premises, she repeatedly saw Opol...

Officerov. Navalny also repeatedly

visited Kagubki Kirovles, including

arriving with Officerov, whom he introduced

to her as the director of UVLK. At the same time, at a

meeting held with the participation of

the directors of the forestry enterprises, it was announced that

VVK was being created, through which

Alkagub Kirovles would sell

all of its products. A few days later

after that meeting, she began to be approached by

the directors of the Kumyonsky,

Orlovsky, Urechsky, and Slobodskoy

forestry enterprises, who reported that it was

unprofitable for them to work under the supply contract for their

timber, because payment was not being received

for shipped products, or

was being received in smaller amounts. Then Opolev

let her review the contract

concluded with VLK. It turned out that this was

not the commission agreement that had earlier

been discussed, but a supply contract under which

Kagub Kirovles bore full

responsibility, while VLK merely received

the money. This contract did not

specify either the volumes or the types

of products, nor the place of sale. She

expressed to Opolev her opinion about

the disadvantageous and one-sided nature

of the contract, including because

the contract did not

provide for any advance payment;

the money for sold timber products

went into VLK’s account first,

and only after that was it transferred to

Kogubkerov Les. Previously, Kogubkerov Les

had supplied timber products only after

buyers made advance payments of 50

to 100%. Kogubkerov Les also could not

control whether payment for

timber products had reached OVLK’s account. A

meeting was held with the participation of Opolev,

Bur, and Makavee...,

but no changes to the contract

of supply were made. Under the

deliveries made, OOV VLK

paid with delays. At the same time, to

OOV VLK, contracts were reassigned

with about ten large and

regular counterparties of Kogobkerovles,

for whom the purchase price of

timber products remained the same, while

less money was coming into Kogobkerovles,

because VLK kept a certain

percentage for itself. In addition, Kogub Kirovle had previously

entered into contracts for the supply of the

volume actually available. OOVLK, however,

entered into contracts with counterparties for

larger volumes than Kogubkerofle could

deliver, than Kogubkerafle was able to

deliver. As a result, it became necessary to

concentrate products in one place,

which led to additional

transportation costs, which

were paid by the forestry enterprises, and increased

the cost of timber products. As a result,

in the first half of 2009, Kogubkerov Les

reported to the Department of State Property on

the reasons for the enterprise’s losses, and

in connection with this, an audit was ordered

regarding the sale of the company’s products

by Kogubkerov Les. The audit established

that it was disadvantageous to sell timber products

through VLK. This conclusion was

discussed at a meeting with the director

of the Department of State

Property, Arzamassov, who

agreed with the auditors’ findings. Later

the audit was discussed

with the regional governor in

the presence of Navalny, Ofitserov, Sheshkov,

Arzamassov, and the auditor. At this

meeting, Navalny and Ofitserov defended

VLK’s interests and stated that the audit

had been conducted incorrectly. At other

meetings, Navalny and Ofitserov also

were always together and expressed the same

point of view. As a result of the discussion,

Opolev was removed from his position. As his

general director, the following was appointed:

Tyshli, who ordered her to prepare

documents for Navalny, who would be

inspecting the enterprise, and to clear

an office for him. She refused

to provide financial documents

to Navalny without an appropriate letter

from the regional government. Despite

Navalny’s promise, he never did provide

such a letter. The contract with VVLK was

terminated, but after that

Kogubkerov Les received invoices from OOO VVLK for

the payment of penalties. From the testimony of witness

Burak in court, as well as from the testimony she gave

during the preliminary investigation and

which was read out at the court hearing, and which

the witness fully confirmed, it follows that

from 2006 through June 2010, she

worked at Kagubka Kiraples, including

in the position of head of the commercial

department. Her official

duties included organizing the sale

of produced timber products and the search

for new buyers. Her immediate

supervisor was the general

director, Opolev. Before April 2009, Kogubkerov Les

had concluded supply contracts

for timber products

with the following buyers: Kirov

Furniture and Woodworking Combine,

a plywood combine, Krasny Yakor ("Red Anchor"),

ZAO Vestliprom, ZAO Slikam, Bumprom,

Domostroitel, Oles Garan, Firma Vlada,

a match factory, Belka, Favorit, and

others. At the negotiation stage

were contracts with ZAO Mariysky

Pulp and Paper Mill and the company Imont.

The forestry enterprises, which were branches of Kogubkerov

Les, could also independently

sell the products they had on hand.

Around February–March 2009, from

Topolev, she learned of an upcoming

visit to Kagubka Kirovles by a representative

of the Kirov Region government, who

was supposed to analyze the enterprise’s

operations. Some time later

Opolev introduced her to Ofitserov,

who explained that he was acting on

the instructions of Governor Belykh

and Navalny. Then, in February–March 2009,

Ofitserov reported that

the supply of timber products produced by

Kogubkerov Les needed to be

organized through a commercial enterprise being created

at the initiative of the Kirov Region

government,

which Ofitserov himself headed. In the

course of their interactions, she fully

familiarized Ofitserov with the work

of the commercial department and provided him with

the necessary documentation. Around

February, approximately March 2009,

Ofitserov sent her by email

a draft supply contract between

Kagubka Kirovles and OOO VLK, under which

Kogub was to supply

timber products to VLK. The contract did not contain

prices or terms, which were supposed to be

set out in appendices. The contract

contained one-sided liability

for Kagubka Kirovles in favor of VLK. She,

Makaveev, the commercial department, the lawyer,

and the accounting department of Kagubka Kirovles discussed

the draft contract. She asked Ofitserov

to make changes to the contract in the part concerning

Kagubka Kirovles’s liability. However,

Ofitserov said that the contract

had to be signed without any changes.

Ofitserov constantly pressed her

to conclude this contract, asserting

that the regional government insisted on its conclusion

and on starting timber product deliveries through VLK,

and he referred

to Governor’s adviser Navalny.

Later, Ofitserov began demanding

that the contract be concluded in an ultimatum-like

manner, claiming that if they refused

to conclude it, Opolev, she, and the directors

of the forestry enterprises would be fired. As a result, on 15

April 2009, Opolev signed a contract with

VVLK. Then, at Kogubkerov Les, there was

a meeting with the participation of the directors

of the forestry enterprises, at which

Ofitserov and Navalny were also present.

Another meeting was also held, at which

the directors of the forestry enterprises were informed

that shipments of timber products had to be

centralized. All products were to

be sold through VLK. A corresponding

order was issued. After the conclusion

of the contract with OOO VLK, Ofitserov informed her

of the need to re-execute with OOO VLK

the contracts previously concluded by

Kogubkerov Les with buyers of timber products.

For this purpose, Ofitserov prepared

a special script that she was supposed

to deliver when visiting each

Kirovles client in order to persuade

them of the need to re-sign

their contracts with VLK, allegedly as the official

dealer of Kirovles. All contracts

that had previously been concluded by

Kirovles with its counterparties were

re-signed in the name of OVLK. For deliveries to

these counterparties, the price of forest

products in the appendix to the supply contract

between the state unitary enterprise and OOO VLK

was reduced by 7%. Ofitserov explained that

this was a standard percentage. In addition,

because she had connections with buyers of

timber products and experience working in that

field, Ofitserov offered her the position of

commercial director at the LLC

VLK. She agreed to take a second job at

OOVLK on a part-time basis, and therefore

an employment contract was concluded with her.

Her workplace still remained at

Kirovles. As a result, during the

period of performance of the above-mentioned

contract between Kirovles and VLK,

approximately 36 appendices to the

contract were concluded. At the same time, about 12 of the

consignee companies listed in them had previously

worked with Kirovles. In the course of

performing the supply contract, the directors of the

forestry enterprises spoke out against the contract,

because timber products were being sold

at a lower price. The

forestry enterprises also had to bear transportation

costs, as well as packaging, drying,

timber processing, and the like. At the same

time, there were constant problems with the buyers of timber products

found by VLK, constantly

arising in relation to

the required quality of the timber products and

the delivery deadlines, which, due to

objective circumstances, Kirovles

could not meet, and therefore in

some cases it refused

to make deliveries. In September 2009, the supply contract

with VLK was terminated.

After Opalev had already been removed from

the post of general director, the following arrived at the

enterprise: Navalny and Ofitserov.

Navalny demanded that all

documents relating to the sale of timber products be produced,

to which she replied with a refusal, since he did not

have an order from the government of

Kirov Oblast (a region of Russia) authorizing an inspection

of Kirovles. Witness

Makaveeva testified to the court that from April until

June 11, 2009, he worked as

deputy general director of

Kirovles for production and

commercial operations, overseeing

issues of production and sales of

timber products.

The enterprise’s general director

was Opalev. The enterprise

independently handled the sale of

its products, choosing those

counterparties with whom transactions were

profitable. The main buyers of

Kirovles products were

Solikamskbumprom, Domostroitel, Vyatsky

Plywood Plant, Krasny Yakor, and

others. A contract with

Volga was being prepared for signing, but it was never signed because

VLK appeared and it

concluded the contract instead. Kirovles had 36

forestry branch units in districts across the region,

headed by directors

subordinate to the general director. Since

2008, after the enterprise was transformed from the Kirov

Rural Forest Administration into a

state unitary enterprise, each

branch manager could independently

look for buyers and sell

timber products. But by 2009, management

had succeeded in organizing timber sales

centrally through Kirovles. At the same time, the

minimum prices were set by the

administration. Prices could vary

because the branches were located in

different districts and the sale of timber products was not

equally convenient everywhere. He was introduced to Ofitserov by

Opalev, who said that

Ofitserov would help with the sale of

timber products. During a conversation that

took place in the Kirovles building, he

told Ofitserov about the structure of the

enterprise, about the products it

produced, about which timber products

had the highest added value, and about

how those timber products were sold.

Then OOO VLK was created, with Ofitserov as its director.

Opalev

told him that OVLK would

sell the timber products that

Kirovles produced. He

asked Opalev why it was necessary

to sell timber products through OOVLK if

the sales could be handled

independently. Opalev replied that

OVLK had been created with the support of the

regional government. He saw the contract between

Kirovles and OVLK on the day it was

signed. Under the terms of the contract,

OVLK merely earned money, in that

it did not itself supply anything, while Kirovles and VLK

received its percentage from each transaction. He

recommended not agreeing to the terms of the

contract, because Kirovles could not

fulfill them. In response to his objections, Opalev

said they would simply have to accept it. He did not deal with the performance of

this contract. When

VLK appeared, he effectively lost

the powers of commercial director

and was later laid off.

Witness Zmeya testified to the court that in 2009

he held the position of deputy

general director of Kirovles under

Opalev, responsible for general matters.

of the security department of the enterprise KOGUP Kirovles

was engaged, among other things, in selling its own

timber products to buyers. The largest

counterparties of KOGUP Kirovles

were KMDK and the Krasny Yakor plywood plant

("Red Anchor"). In the spring of 2009, Opalev told

him that, with the approval of the government

of Kirov Region, at Navalny’s personal initiative,

a company called VLK would be created. All

sales of products produced by

KOGUP Kirovles would be carried out through

this company, which would act as an

intermediary. A contract was concluded between KOGUP Kirovles and LLC

VLK, the draft of which

had been provided by LLC VLK.

At one of the meetings, the directors of the forestry enterprises

were informed, at which

the director of LLC VLK, Ofitserov, was present,

that all sales would be conducted through

this company. It was assumed that VLK

would help sell several grades of

KOGUP Kirovles products. In the end,

it turned out that VLK purchased only

high-grade timber. Then

virtually all forestry enterprise directors, including

personally to him, began reporting that

because of cooperation with LLC VLK, Kirovles

and the forestry enterprises had begun operating at a loss, since

they were supplying their timber products at

an understated price dictated by VLK,

whereas on site the products could have been sold

for much more. In addition, contracts with KOGUP Kirovles’s former

counterparties were reassigned to LLC VLK,

with whom

LLC VLK sold at market prices,

having purchased from KOGUP at a lower price.

After complaints from the forestry enterprise directors, he

together with the financial and economic department

conducted an analysis of the contract appendices

that had been concluded between KOGUP Kirovles

and VLK. The analysis showed that

KOGUP Kirovles was losing about 700 rubles

per cubic meter of timber. Opalev said that VLK

itself determined the prices for timber products.

Navalny took an interest in the activities of

KOGUP Kirovles. He came to

a meeting at KOGUP after

Opalev had been removed, and came with

Ofitserov for the purpose of reviewing

the documentation. They spoke with employees,

and demanded reports on the activities of

each department. Later, the contract with VLK

was terminated, but VLK did not settle accounts with

KOGUP Kirovles in full.

Witness Zagoskina testified

to the court that she was an auditor at

the Vyatka-Audit Center for Political Consulting

(Vyatka is a historical name associated with Kirov). In the summer of 2009, she

and auditor Shulyat were given by the enterprise director

terms of reference from the

Department of State

Property of Kirov Region for

conducting an audit of

KOGUP Kirovles within 5 days. Given

such a short audit period, and in agreement

with the client, it was decided

to review contracts only for

the second quarter of 2009. The audit

established that one of the main buyers

of timber products

from KOGUP Kirovles was LLC VLK. The other

companies and individual

entrepreneurs purchased

timber products in small quantities

through the forestry enterprise branches of KOGUP Kirovles.

Supply contracts previously concluded by KOGUP Kirovles

with a number of companies were

terminated and then concluded again, but this time

with VLK. At the same time, the price for the same

timber products under the same delivery terms

was reduced. That is,

KOGUP Kirovles received smaller amounts, which

indicated that the relationship with VLK was economically

disadvantageous. In addition,

payment deadlines for timber products were delayed.

Mainly high-grade timber was shipped to VLK.

High-grade timber.

An increase of 13% in low-grade timber inventories

was established. The management of

KOGUP Kirovles stated that they had been forced

to sell products through LLC VLK. After

the audit report had been prepared,

she was invited to a meeting with

the governor of Kirov Region,

where, among others,

Navalny was present and expressed his

disagreement with the audit conducted in relation to

LLC VLK. Market price is the price at which

a product can be sold.

Witness Minin testified to the court that in 2009

he worked as

regional manager for Kirov Region

at ZAO Invest Lesprom. On January 11,

2009, a supply contract was concluded between ZAO Invest Lesprom and

KOGUP Kirovles

for timber products. In May 2009,

the head of the commercial department of KOGUP Kirovles

and

Ofitserov, who introduced himself as

the general director of LLC VLK, came to the company. It was

stated that LLC VLK was the trader for

KOGUP Kirovles. In other words, counterparties

were told that supplies of timber products

from KOGUP Kirovles would be made through

LLC VLK on the same terms for ZAO

Invest Lesprom as under the contract

with KOGUP Kirovles. Opalev also said

that the sale of KOGUP Kirovles timber products

would be handled by LLC VLK. In this connection,

on May 20, 2009, a supply contract was concluded between LLC VLK and

ZAO Invest Lesprom.

Witness Chernik testified in court

that he was the general director

of OAO Kirov Furniture

and Woodworking Combine. Before the beginning

of 2009, one of the suppliers

of timber products to the enterprise he headed

was KOGUP Kirovles.

He then learned from his employees that

supplies produced by Kirovles

of timber products would be carried out

through OOO VLK without any change to the terms

or prices of delivery. For this purpose, a representative came to KMDK

from Kirovles. On this matter

he also spoke with

Kirovles director Opolev, who

confirmed that the sale of timber products

by Kirovles would be conducted through OOO

VVLK. After that, a supply contract was concluded

with OOO VVLK.

From the testimony given in court by witness Kursovoy

as well as from the testimony read out

that he had given during

the preliminary investigation, which he

confirmed, it follows that from February 2009

he worked at the Kirov Furniture

and Woodworking Combine in the position

of head of the timber supply department. At

that time, KMDK already had

a timber supply contract concluded

with Kirovles. In April 2009, he

received a call from Kirovles employees, who

asked him to arrange a working meeting with

the management of OAO KMDK, to which

the head of the commercial department arrived

from Kirovles, Bura, and the general director

of VLK, Ofitserov. The latter held

negotiations with the general director

of OAO KMDK, after which they informed him that

the supply of timber products to the

enterprise would be carried out by OOO VLK at

the same prices as those previously supplied by

Kirovles. In May 2009, between KMDK

and OVLK a contract was concluded under which

timber products were supplied.

Witness Vchinnik testified in court that

he was the director of OOO Vlada,

whose principal line of business

was the sale of sawn timber. In 2009,

one of the suppliers of high-grade

timber for Vlada was

Kirovles. Later he learned

that Kirovles had begun

selling timber products through OOO VLK,

in connection with which he concluded a

timber supply contract with OOO VLK,

cooperation with which was not

ultimately long-lasting. Witness

Fedotov testified in court that in 2009

he was the director for timber supply

at OOO Solikamsk Bumprom, which purchased

timber, including from Kirovles.

At the beginning of May 2009, a conversation took place

with the participation of its general director

of OOO Solikamsk Bumprom, Baranov, and the governor

of Kirov Region, Belykh (former governor of Kirov Region), during which

the issue of increasing supplies

of timber products from Kirov Region was discussed, but

no proposals regarding work with

specific enterprises in Kirov

Region were made by Belykh. At the end of

May 2009, Solikamsk Bumprom received

a letter signed by the adviser

to the governor of Kirov Region, Navalny

regarding timber supplies, which was

informational in nature. There is testimony

from witness Kiselyov given in court, as well as

from the testimony read out that he gave during

the preliminary investigation, which he

confirmed, showing that in 2009 he

served as acting director

of the Kotelnich forestry transport branch

of Kirovles, headed by

General Director Opolev. As

branch director, he had the authority

to independently conclude contracts

for the supply of timber products due to

the absence of centralized transport services.

Timber products were dispatched

directly from the forestry unit. In spring 2009,

a meeting was held at Kirovles with

the participation of forestry directors, at which

Opolev introduced the general director

of OVLK, Ofitserov, and instructed them

to carry out the sale of produced

timber products through OOO VLK. Thereafter,

the forestry unit headed by him

supplied sawn timber to OOO VLK.

At the same time, the expenses associated with delivering

the sawn timber from the cutting site to the

railway dead-end siding were paid by

the Kotelnich forestry unit. In this connection,

supplying timber products through VLK was

unprofitable.

Witness Krylatov testified in court that

in 2009 he was the director

of the Kirov forestry branch of Kirov

Kirovles, headed by Opolev. As

director of the forestry unit, under a power of attorney he had

the right to conclude supply contracts

for timber products; in particular, the forestry unit

made deliveries to

Kirovles counterparties, including Krasny

Yakor, KMDK, and others. He knows that

a supply contract was concluded between Kirovles and VVK,

under which, on the basis

of applications from Kirovles, the forestry unit

supplied timber products to OAO KMDK,

ZAO Plitprom, and ZAO Krasny Yakor.

Witness Kozlov testified in court that in

2009 he worked as director

of the Murygino forestry branch of Kirovles,

headed by General Director

Opolev. In accordance with the power of attorney

he had from Opolev, he had

the right to conclude supply contracts

for timber products produced by the forestry unit.

At a meeting at Kirovles, it was

announced that OVLK had been created, with its director

being Ofitserov, and that this

company would purchase timber products from

Kirovles. By order of

Kirovles, the forestry units, including the forestry unit producing

the products, shipped them to VVLK. At the same time,

the forestry unit incurred costs, including expenses for

sawing and delivering the timber products.

However, the forestry enterprise had previously sold similar

timber products at the same price without

the stated expenses. Witness Osapov

testified in court that in 2009 he worked

as director of the specialized forestry enterprise

branch of Kogubkerov Les, headed by

General Director Opolev. The forestry enterprise

had the right to independently sell

timber products and made shipments, including

to OAO Domostroitel (a house-building company).

After a supply contract was concluded between

Kogubkerov Les and OOO VLK, the forestry enterprise under his management

also supplied timber products

to Domostroitel, now as a client of VLK,

as a result of which the sale price of the timber

products for the forestry enterprise decreased.

Witness Zentsov testified in court that in

2009 he worked as

director of the Malmyzh forestry enterprise

branch of Kogubkerov Les, headed by

General Director O. Opolev. He

had the authority to conclude

timber supply contracts. At a meeting

of forestry enterprise directors, Opolev, in the

presence of OOO VLK representative Ofitserov,

announced the need to organize

timber product supplies through OOO VLK.

Witness Sergeyev testified in court that in

2009 he worked as

director of the Zuyevka forestry enterprise, a branch of

Kogubkerov Les. At one of the meetings with

the participation of forestry enterprise directors, the general

director of Kogubkerov Les, Opolev, reported the

need to market timber products

through OOO VLK. But since the forestry enterprise

sold timber products directly from the logging site

and had no ability to deliver

the timber products as required by VLK,

the forestry enterprise made no deliveries to VLK

at all. Witness Panteleyev testified in court

that in 2009 he was

director of the Unino forestry enterprise, a branch of

Kogubkerov Les, which was headed by

General Director Opolev.

The forestry enterprise he headed had the right

to independently conclude contracts for the

supply of timber products. At one of the

meetings attended by forestry enterprise directors,

Opolev stated that a decision had been made

to create OOO VLK, through which it was necessary

to organize the sale of timber products produced by the forestry enterprises

Also introduced was

Ofitserov, who was

the general director of OOO VLK. After

that, on the instructions of Kogubkerov Les, the forestry enterprise

made timber product deliveries under

the contract concluded between Kogubkerov

Les and OOO VLK, but at prices that were

lower than those charged for supplies to

other counterparties. According to the head of

the commercial department of Kogubkerov Les,

the prices for the supplied products were set

by OOO VLK. Deliveries to

OOO VLK, with Opolev's consent, were stopped by the forestry enterprise

in August of that year because there were

delays in payment for the delivered

products. Witness Sadreyev stated

that in 2009 he worked as director

of the Dorovsk forestry enterprise, a branch of Kogubkerov

Les, which was headed by General

Director Opolev. In accordance with

the power of attorney issued to him, he had the right

to independently conclude

timber supply contracts. In accordance with

an order issued by the general director

of Kogubkerov Les prohibiting the independent

sale of timber products from May 2009

onward, the forestry enterprise he headed

supplied the timber products it produced

to OOO VLK and to the latter's consignees,

including to

Domostroitel. At the same time, the forestry enterprise, at its own

expense and using road transport,

delivered the timber products to

the railway station. These expenses of the forestry enterprise

were not reimbursed, since

payment was provided only for timber products loaded

into railcars. Witness Buzmaka

testified in court that in 2009 he

was the director of the Kumyot forestry enterprise

branch of Kogubkirov Les. His

immediate supervisor was

Kogubka's General Director Opolev. In

that same year, Kogubkerov Les concluded a

centralized contract for the supply of

timber products with OOO VLK. At the same time, the forestry enterprises

were prohibited from independently

selling timber products. At the request of

Kogubkerov Les, the forestry enterprise made a delivery of

timber products to OOO KMDK, which

was a counterparty of OOO VLK. However, the price

of the supply was lower than before, when

the forestry enterprise shipped timber products to

OOO KMDK without OOO VLK acting as an intermediary.

Witness Kuzyakin testified in court that in

2009 he was the director of

the Kirovo-Chepetsk forestry enterprise, a branch of

Kagubkirovles. The general director of

Kogubkirovles, Opolev, issued him

a power of attorney, including the right

to independently

conclude contracts for the supply of

timber products. In the spring of 2009, at a

meeting attended by directors of

forestry enterprises, Opolev introduced the general

director of VLK, Ofitserov, who

urged them to make supplies of

timber products to the company. After

that, by order of Kogubkerov Les,

the forestry enterprise made deliveries to

VLK's counterparty KMDK on the condition of delivery

to the city of Kirov. Previously, the forestry enterprise had also

made deliveries to KMDK and

other counterparties such as Kirovles, but

the price of the timber products was higher than

under otherwise similar delivery conditions

when supplied through OOO VLK. He told Opolev about

the unprofitability of cooperation with OOO VLK.

Nashtopolev told him that VLK, which

is headed by Ofitserov, is overseen

by the regional government and personally by Navalny,

who require that products be shipped

through OOVLK, and therefore Ofitserov sets

the prices for the timber products being shipped.

Witness Beloglazov testified in court that in

2009 he held the position of director

of the Luzsky forestry enterprise, a branch of Kogubkerov Les.

In carrying out his duties, he

had the authority independently

to conclude supply contracts for

timber products. At a meeting of Kogubkerov Les,

the forestry enterprise directors were introduced to

Ofitserov as the director of VLK, through

which the timber products produced

by the forestry enterprises would be sold.

After that, the forestry enterprise received

specifications and shipment schedules from Iskogubkerov Les

for timber products, which

the forestry enterprise carried out. At the same time, the forestry enterprise

bore the costs of delivering timber products from

the logging sites to the railway station,

which were included in the cost price.

Witness Karityuk testified in court that in

2009 she worked as director

of the Podosinovsky forestry enterprise, a branch

of Kogubkerovles. Her immediate

supervisor was the general

director of Kagubkerov Les, Opolev, who

issued her a power of attorney granting her the right

to conclude supply contracts for

timber products. In the spring of 2009, at

a meeting at Kogubkerovles, she was introduced to

Ofitserov as the director of OVLK, to whose address

timber products had to be sent.

At one of the meetings in

Kagub, she also saw Navalny. Previously,

the forestry enterprise had not experienced any problems with sales.

There was an existing contract with Volga.

After the supply contract was concluded between

Kogubkerov Les and VLK, the forestry enterprise sent

the timber products it produced

to the consignees. Previously, however,

timber products sent to Volga

had been sold at a higher price

than through OOVLK. Witness Sideli Posnov testified to the court

that in 2009 he worked

as director of the Omutninsky forestry enterprise, a branch

of Kogubkerov Les. Under a power of attorney

issued by the general director

of Kogubkerov Les, Opolev, he had the right

to conclude supply contracts for

timber products produced by the forestry enterprise. At

one of the meetings at Kagubkerov Les,

VVK was presented as a major buyer

of timber products. It was proposed that timber products be shipped

to OVK. However,

making shipments to the address of

OVLK was unprofitable for the forestry enterprise, including

because the shipments had to be

carried out centrally in

railway cars. In this connection,

Opolev allowed him not to make

shipments of timber products to Ogolk.

Witness Baldin testified in court that in

2009 he was the director

of the Iransky forestry enterprise, a branch of Kogubkerov

Les, where the general

director was Opolev. He had the right

to independently conclude contracts

for the supply of produced timber products. At

one of the meetings attended by the directors

of the forestry enterprises, held in the spring-summer of 2009,

Olev stated that it was necessary

to supply timber products under

a centralized supply contract

concluded between Kogubkerovles and OVLK.

The meeting was attended by the director of VVLK,

Ofitserov. After that, at the request of

Kogubkerov Les, the forestry enterprise made

several shipments of timber products to

OVLK’s counterparties, including to

the Mari pulp and paper mill, to which even before the conclusion

of the contract with OVLK the forestry enterprise had sent

timber products. At the same time, the forestry enterprise was

forced, at its own expense, to hire freight

transport to send the timber products to

the place where they would be loaded onto rail

transport. In addition, the price for

timber products supplied to VLK

was lower than the price for timber products at which

they were sold in the district.

Witness Kolchin testified in court that in

2009,

please turn off your phone.

Witness Kolchen testified in court that in 2009

he worked as director of the Tuzhinsky

forestry enterprise, a branch of Kagubkerakh Les,

headed by Opolev. He had the right

to independently conclude contracts for

the supply of produced timber products. At

one of the meetings in April-May 2009,

Opolev told the forestry enterprise directors

that it was necessary to sell timber products

through OOVLK. Also present at that meeting

was OVLK director Ofitserov,

who tried to persuade the forestry enterprise directors

of the benefits of cooperating with his VLK.

The forestry enterprise made a shipment

of timber products to VLK counterparty

Domostroitel. At the same time, the costs of

delivering the timber products to

the railway station were borne by the forestry enterprise.

This was unprofitable, so the forestry enterprise

stopped making shipments to

OVLK. Opolyav also told him that

VLK received 5-7% of the transaction amount.

Witness Smerten testified in court that in

2009 he worked as director

of the Sovetsky forestry enterprise, a branch

of Kagubkerovles, headed by Opolev.

In the spring of 2009, at a meeting

of forestry enterprise directors, Opolev introduced

VLK director Ofitserov, stating that in

the future, sales of the timber products produced

would need to be carried out

through VLK. Before that, the forestry enterprise had no problems with

there were no problems with selling timber products because of

the availability of convenient transport links

the forestry enterprise’s prices for timber products were also

high, according to the requests from Kogubkerovles

the forestry enterprise supplied sawn timber

to various consignees of OVLK

these timber product shipments were for the forestry enterprise

unprofitable, since they were carried out to

the railway station in the town of

Kotelnich at the forestry enterprise’s own expense

which was not reimbursed to the forestry enterprise

the forestry enterprise could more profitably sell similar

products in the town of Sovetsk. After

an appeal to Kopolev, he allowed them to stop

making further shipments to OVLK.

Witness Litvinenko testified in court that

in 2009 he worked as

director of the Yurya forestry enterprise, a branch of

Kogubkerovles. His immediate

supervisor was the general

director of Kogubkerovles, Opolev, from whom

he had

a power of attorney granting him the right

to independently conclude supply contracts for

timber products. In April–May

2009, the forestry enterprises were instructed to

sell timber products to OVLK.

In compliance with that instruction, the forestry enterprise carried out

shipments of timber products to OVLK.

At the same time, the price for the timber products was

lower than the price at which the forestry enterprise sold

timber products from its warehouse to other

counterparties. Witness Sukhikh testified to the court

that in 2009 he worked as

director of the Urzhum forestry enterprise, a branch of

Kogubkerovles. His immediate

supervisor was the general

director, Opolev. He had the right to

independently conclude contracts for the

supply of produced timber products.

In spring 2009, at a meeting of forestry enterprise directors,

Opolev announced that a centralized contract had been concluded for the

centralized supply

of timber products with OVLK and the need

to sell timber products through that

company. Although there was no need to

sell timber products through OVLK

at all. After that, the forestry enterprise headed by him

carried out a number of

shipments of round timber to

OVLK’s consignee, on terms and at prices

set by Kogubkerovles and OVLK.

But the forestry enterprise itself bore

the transportation costs. Not all

of OVLK’s requests could be fulfilled by the forestry enterprise. A number

of forestry enterprise directors also voiced

complaints about the unprofitability of

making shipments to OVLK.

They stated that it was more profitable for them to

sell the products independently.

From the testimony of witness Bulatov given

to the court, as well as from the testimony read out

that he had given during the preliminary investigation,

which he confirmed, it followed that in

2009 he held the position of director of

the Lebyazhye forestry enterprise, a branch of Kogubkirov

les. On April 15, 2009, Kogubkerovles

entered into a timber product supply agreement with

OVLK. On the instructions of Kogubkerovles, the forestry enterprise

made shipments to

OVLK’s counterparties, including ZAO

Krasny Yakor (Red Anchor). At the same time, the forestry enterprise at its own

expense arranged the delivery of the timber products.

The price of the shipped timber products was

also lower than the price for products

that the forestry enterprise had previously sold

independently. Because after the

shipment the forestry enterprise received only 50% of

the value of the timber products, no further

shipments to OVLK’s counterparties were made by the forestry enterprise

thereafter. From the testimony of witness

Grebneva given to the court, as well as

from the testimony read out that she had given

during the preliminary investigation, which

she fully confirmed, it followed that in

2009 she worked as

director of the Slobodskoy forestry enterprise, a branch of

Kogubkirovles, and was directly

subordinate to its general director,

Opolev. Around spring 2009, at

one of the meetings of forestry enterprise directors,

Opolev introduced the general director of

OVLK, Ofitserov, stating the need

to sell timber products through that

company. She later learned about

the conclusion on April 15, 2009, by Kagubke

Kirovlets and OVLK of a supply agreement. In

performance of that agreement,

the Slobodskoy forestry enterprise was required to

arrange shipments to ZAO Krasny Yakor (Red Anchor),

to which the forestry enterprise had previously

made shipments without OVLK’s involvement,

but at a higher price. In response to her

complaints, Opolev said that if

Kirovles refused to make shipments under the contract

with OVLK, there would be negative

consequences for Kogub.

Witness Glazyrin testified to the court that in

2009 he worked as director of

the Nagorsk forestry enterprise, a branch of

Kogubkerovles, whose general director

was Opolev. At a meeting at Kogubkerovles

all

forestry enterprise directors were informed of the

need to cooperate with

OVLK. After that, the Nagorsk forestry enterprise

made a number of timber product shipments to

OVLK’s consignees, including

the same ones to whom it had previously

independently sold

timber products. The transportation costs for

delivery to the railway station were borne by

the forestry enterprise. From the testimony of witness Knyazev

given to the court, as well as from the testimony read out

that he had given during the preliminary

investigation, which the witness confirmed,

it follows that in 2009 he was

director of the Belokholunitsky forestry enterprise, a branch of

Kagub Kirovles had the right

to independently enter into contracts

for the supply of timber products. In the spring of 2009,

at one of the meetings of the directors

of the forestry enterprises, management introduced

OVK director Ofitserov and the company

with which Kagubkerovles had concluded a contract

for the supply of timber products. In performing

that contract, the Belokholunitsa

forestry enterprise made deliveries of timber products to OVLK consignees

including deliveries of timber products, among them

poles. Previously, poles had not been shipped to

other counterparties, because

their preparation and sorting by diameter

required additional expense. The forestry enterprise also

incurred costs for loading the truck.

Witness Barantsev testified to the court that in

2009 he worked as deputy director

of the Servizh forestry enterprise

a branch of Gubkerovles, and had the right

to independently conclude a contract

for the supply of the timber products it produced.

Pursuant to the contract concluded by Gubkerovles

with its OVLK counterpart

the forestry enterprise organized deliveries

of timber products to Montazhnik LLC.

From the testimony given by witness Kuznetsov

to the court, as well as the testimony given during

the preliminary investigation and read out

at the court hearings, which the witness

confirmed, it follows that in 2009 he

worked as director of the Shabalino forestry enterprise

a branch of Kagubkerovles under the management of

General Director Opolev. From

the latter he had

a power of attorney authorizing him to conclude

contracts for the supply of timber products produced by the forestry enterprise.

In the spring of 2009, at one

meeting attended by the directors

of the forestry enterprises, Opolev announced the need

to sell timber products through OVLK, with which

Kogubkerovles had concluded

a centralized supply contract. The same

was stated by the general director

of OVLK, Ofitserov, who at some

meetings sat on the presidium. In

accordance with the supply contract concluded on April 15,

2009 between Kogubkerovles and OVLK,

the Shabalino forestry enterprise

was forced to organize, at its own expense,

deliveries of timber products to

OVLK consignees. As a result, the expenses

for transporting the products were borne by the forestry enterprise.

Loading and unloading costs amounted to

approximately 160,000 rubles (about US$5,000 at the 2009 exchange rate). In this connection,

selling products to OVLK

was unprofitable for the forestry enterprises and for Kogubkerovles

as a whole. In addition, OVLK delayed

payment for the products sold, and therefore

with Opolev's consent, he

refused to make further deliveries to

OVLK. From the testimony of witness

Shutova given by her to the court, as well as

from the testimony she gave

during the preliminary investigation and which

she confirmed, it follows that in 2009

she worked as director of the Orlov forestry enterprise

a branch of Kagubkerovles under

the management of General Director

Opolev. From him she had

a power of attorney authorizing her to independently

conclude supply contracts

for timber products produced by the forestry enterprise.

In addition, the forestry enterprise carried out

centralized supply contracts

concluded with buyers directly

by Kogubkerovles. In the spring of 2009, Opolev

gathered all the directors of the forestry enterprises for

a meeting where he introduced the general director

of VLK, Ofitserov, and the company

to which the forestry enterprises were to supply

timber products. It is known that on April 15

2009, between Kogubkerov

Les and VLK, a contract was concluded

for supply, under which

the Ordovsky forestry enterprise, at its own expense,

organized deliveries of sawn timber to

VLK consignees and incurred

transportation costs, including delivery to

the railway station. Because of this,

deliveries to VVK were unprofitable for the forestry enterprises and

for Kogubkerovles as a whole.

Witness Belykh testified in court that on January 15

2009 he became

as of January 15, 2009, he was

the governor of Kirov Region (a federal subject of Russia). While forming

his staff of advisers, he proposed

that Navalny take that position; he had known him

since 2005 through their joint

political activities. Officially, to

that position Navalny was

appointed in May 2009. However, even before

that date, he took part in

various meetings and sessions, including

when being introduced to the heads

of state enterprises. Navalny was

presented as a member of his new team.

His position was indicated in press releases.

In the first half of 2009,

he instructed Navalny to analyze

the financial condition of Kakbkerovles. Based on

the results of the analysis conducted by Navalny,

an internal memorandum was prepared,

which

a memorandum according to which

the enterprise had serious debts,

problems selling timber products, and

also needed reorganization. They set

the goal of improving the situation in

the timber industry sector. He

together with Navalny visited OOS or

KamAMZ Bumprom, where issues were addressed

concerning increasing supplies

of timber products from Kirov Region.

He gave Navalny no instructions

to prepare a written proposal to

the said enterprise, and he did not

give any such directions. They also did not discuss issues concerning

the creation of a special enterprise for

the sale of timber products. He did not personally know Ofitserov

personally. He saw him at a meeting in

the administration of Kirov Region

following the results of an audit

of Kirovles. He had not invited Ofitserov to

that meeting, but he also spoke there

about

the contract that had been concluded. Following

the meeting, a decision was made

to terminate the supply contract concluded between KOGUP

Kirovles and VLK, and

to remove Opalev from the position of

general director of KOGUP. One of

the reasons for this decision

was that, in addition to KOGUP Kirovles, Opalev's daughter

also worked at VLK, that is,

at one of KOGUP's counterparty enterprises,

which could indicate

an interest on Opalev's part.

Witness Shcherchkov testified in court that from

January 2009, by appointment of

Kirov Region Governor Belykh, he

served as head

of the group of advisers within the governor's

secretariat; in March 2009 he

was appointed deputy

chairman of the government of Kirov

Region. His official powers included

oversight of, among other things, the Department

of Forestry. At that time, an unpaid adviser to the governor

of Kirov Region

was Navalny,

who had his own office in

the regional government building. He knows that

the governor instructed Navalny to assess

the effectiveness of

KOGUP Kirovles. In this connection, together

with Navalny, he visited Kirovles to

familiarize himself with the operations of this

enterprise. Navalny also introduced

him to Ofitserov, the director of OOO VLK,

which was engaged in the sale of timber products.

At Navalny's invitation, Ofitserov

repeatedly took part in working

meetings concerning the activities of

Kirovles. He first learned of OOO VLK

from the general director of Kirovles,

Opalev, who said that the regional government

had recommended that he

work with this company on the sale of products.

Later, the director

of the Property Department, Arzamasov,

told him that as a result of

the contract concluded between KOGUP and OOO VLK,

KOGUP was suffering losses. At first Navalny

spoke positively about the work of

Opalev, but later, including on the basis of

the audit results, this

assessment changed in a negative direction.

Navalny proposed removing Opalev from

his post. Witness Votina testified in court

that in April 2009 he was

appointed adviser to the governor

of Kirov Region and oversaw issues

in the economic sphere. Beginning in the winter of

2009, he familiarized himself with the activities of

Kirovles and, together with KOGUP's general

director Opalev, visited

forestry enterprises. Ofitserov also took part

in these trips, and he also met him

later in the Kirov Region government building,

including together with Navalny.

Witness Gaidar testified in court that in

2009 she, like Navalny, was

an unpaid adviser to the governor of Kirov Region.

She lived in

the same residence as Belykh, Navalny,

and Shcherchkov, and therefore communicated with them daily.

From conversations with them, she knows

that the governor instructed Navalny

to assist Kirovles, including

with the sale of its products. Navalny

also expressed his view on

the need to provide assistance in marketing

timber products, and later spoke in favor of

removing Opalev from office. In this

Navalny's position differed from

that of Arzamasov, who

equated Navalny's work with the interests of

VLK. She also knew Ofitserov, who

came to Kirov Region in order

to engage in the sale of timber products. Ofitserov and

Navalny had friendly

relations. When characterizing the activities of

Kirovles, Navalny referred to

Ofitserov.

Witness Merkusheva testified in court that from

early April through August 2009 she

worked in the commercial department of OOO VLK.

After being hired, she was sent for

training at Kirovles, where she

became familiar with the paperwork for

shipping timber products under the supervision of

Bura. At the same time, the parties were negotiating

a supply contract between VLK and

Kirovles. Bura worked on the draft

and proposed supplementing

it, since a long-term relationship was being proposed;

she suggested

shipping products on a prepayment basis.

Ofitserov had proposed concluding a general

contract within the law. Bura did not

consult with her about concluding the contract, and

she does not know who initially drafted

the contract. Relations

between Ofitserov and Bura were

amicable. Before the supply contract was concluded,

OOO VLK had no other suppliers besides Kirovles.

The profit of

OOO VLK consisted of the fact that the products supplied by

Kirovles were sold by VLK

at a markup. She left OOO VLK

when supplies from Kirovles

ceased. She characterized Ofitserov

exclusively positively. Witness

Ovsyannikova testified in court that from May 2009

she worked as an accountant at OOO VLK,

whose business consisted of

the wholesale trade of timber products. The largest

supplier to OVK was

Kogubkerovles, with which a supply agreement had been concluded

and subsequent appendices were executed.

Delays in payment

for timber products owed to Kogubkerovles were

connected only with the fact that Kogubkerovles

prepared documents improperly, or

counterparties failed to settle accounts on time

with VLK. Witness Officer D.Yu. testified

that in October 2009 he became the general director

of OVLK, where, on

his brother's suggestion, from June 1, 2009

he had worked as a manager. His task was

to find other suppliers of timber products

besides Kagubkerovles. The activities of his

OVLK consisted of purchasing and

reselling timber products. He characterized

his brother in exclusively positive terms.

Witness Ratova testified that she is

an auditor at ZAO KFK Analitik. In 2010

she, on the instructions of the Department

of State Property of Kirov Region

conducted an audit

of Kirovles for 2008-2009. According to the

results of the audit, Kirovles was

found to be a loss-making enterprise, the main

reason for which was the conclusion of

the state contract and the lease agreement

for forest plots. The transaction between Kogubkerov

les and OVLK was not

given attention during the audit. At the same time, during

the audit, prices were analyzed

for timber products for the third quarter of 2009.

Market price is the price that

has formed at a given time in the market

for goods and services.

In assessing the testimony of the above-mentioned

witnesses in the part set out above, the court

finds it consistent with

reality and considers it credible,

since it is consistent, logical, and

confirmed by written

evidence and by the court's examination

at the hearing, as well as by physical

evidence. Thus, from the charter of Kogubkerovles

approved by the Director

Department of State

Property of Kirov Region on December 6,

2007, and agreed on December 6,

2007 by the head of the Department

of Forestry of Kirov Region,

it follows that the owner of the enterprise

is the regional government,

and the general director of the enterprise

acts on behalf of the enterprise

without a power of attorney, in good faith and

reasonably, represents its interests within

the territory of the Russian Federation and beyond its

borders, acts on the principle of sole

authority, and bears responsibility for

the consequences of his actions in

accordance with federal laws and

other regulatory legal acts.

of the Russian Federation and Kirov Region,

the charter, and the employment contract concluded with him.

From the order of the

Department of State

Property of Kirov Region dated December 7,

2007 No. 07-158, it follows

that Opolev was appointed general

director of Kagubkerovles as of December 12,

2007. From the employment contract between

the Department of State

Property of Kirov Region and

Opolev dated December 12, 2007,

it followed that Opolev was appointed

general director of Kagubkirovles with

the duty to conscientiously and

reasonably, in accordance with the requirements of

current legislation, manage

the enterprise and exercise the powers

assigned by law, the charter

of the enterprise, and the employment contract to his

competence. From the state

contracts Nos. 4, 5, 6, 7, 8, 9 dated March 30,

2009, and Nos. 92, 93, 94, 95, 96 dated August 12,

2009 for the performance of work on

the protection, safeguarding, and regeneration of forests

located on forest fund lands

that are in state ownership

within the boundaries of the relevant forest districts

in the territory of Kirov Region

not assigned to persons using forests, with

the simultaneous sale of forest stands

for timber harvesting, concluded

between the Department of Forestry

of Kirov Region and Kogub Kirovles, represented by

General Director Opolev,

it follows that Kogub Kirovles acquired

forest stands in local

forestries of Kirov Region for

timber harvesting, and that the timber, which under

clause 6 of the

state contracts, after its

payment becomes the property of Kogub

Kirovles.

From

the lease agreements for forest plots

in federal ownership,

Nos. 1, 2, and 3 dated November 10, 2008,

concluded between the Department of Forestry

of Kirov Region and Kogub

Kirovles, represented by General Director

Opolev, it follows that Kogubkerovles was

granted forest plots for temporary use

that are in state

ownership and located in

the territory of Kirov Region for a term of

15 years. From supply agreement No. 31 dated August 22,

2008 between Prroflets and OKMDK,

with appendices; from agreement No. 124 dated

March 4, 2009 between Kagub Kerflem

and Stroitel, with appendices; from the agreement for

the supply of timber products No. 33/09

dated December 25, 2008 between Pkerovles

and ZAO Krasny Yakor (Red Anchor), with appendices, it follows

Supply contract No. 13/09 KO dated 27 February 2009.

In 2009, Kagubkerov Les and its Lesgarant.

with appendices to the supply contract.

No. 4/09 KO dated 27 January 2009.

between Gubkerovle and Vlada, with appendices.

It follows that Kagubkerov Les had, before

the above-mentioned legal entities,

obligations to supply timber products.

From the order of Kogubkerov Les dated 19 May

2009, No. 76, on establishing

the procedure for the sale of timber products by

Kogubkerovle, it follows that from 20 May 2009

a ban was introduced for forestry enterprises

and branches of Gubkerovles on independently

entering into supply contracts,

purchase and sale contracts for timber products with

legal entities, individuals, as well as

individual entrepreneurs. From

the order of the Governor of Kirov Region

dated 21 May 2009, No. 60-k,

it follows that Navalny was appointed adviser

to the Governor of Kirov Region

on a voluntary basis from 20 May 2009.

From the temporary regulations on the adviser/assistant

to the Governor of Kirov Region

serving on a voluntary basis, approved by

the order of the Governor of Kirov Region

dated 14 July 2000, No.

887, it follows that an adviser to the governor serving

on a voluntary basis, in carrying out

his powers, provides the governor with

consultative assistance free of charge,

does not have an official ID card

of the prescribed form, and is also vested

with the authority to participate in working

meetings under the governor, in sectoral

committees within the regional administration, with

an advisory vote, and to cooperate with

legislative and executive authorities

in preparing draft

laws and regulatory acts

of the region.

Participation in developing programs

for the socio-economic development

of the region, the formation and implementation

of regional procurement in strategically

important areas of the region’s essential services,

and in developing programs for

the restructuring and reorganization

of inefficiently operating enterprises

of various forms of ownership. From the response of

OOK KMDK, it follows that on 22 August 2008

between Kagubkerov Les, represented by

General Director Opolev, and OKMDK, represented by

General Director Chernik,

Contract No. 31 KO was concluded for the supply of

timber products, with the right to conclude

appendices to it. On 12 March 2009,

between the said enterprises, Appendix No. 7 was signed

to the supply contract

dated 22 August 2008, No. 31 KO,

under which Kirovles undertakes

to deliver by road transport and at

its own expense veneer logs

with a diameter of 24–48 cm at a price of 2,000 rubles per

1 cubic meter. On 25 March 2009, between

the said enterprises, an appendix was signed

to the supply contract of 22

August 2008, No. 31 KO, under which

Kirovles undertakes

to deliver by road transport, at

its own expense, coniferous sawlogs

with a diameter of 18–48 cm at a price of 1,800–1,700 rubles.

per 1 cubic meter. On 5 May 2009, between VLK

represented by General Director Ofitserov

and OOKMDK, represented by General Director

Uchenik, Contract No. 04/29/58 was concluded

for the supply of timber products, with the right

to conclude appendices to it. On that same

day, between the said

enterprises, Appendix No.

5 to the supply contract was signed, under

which OVLK undertook to supply

by road transport, at its own expense,

pine coniferous sawlogs with a diameter of

16–18 cm at a price of 1,200 rubles per 1 cubic meter,

and pine coniferous sawlogs with a diameter of

20–46 cm, first and second grade, at a price of

1,550 rubles per 1 cubic meter, as well as

Appendix No. 4, under which

VLK undertakes to deliver by road transport,

at its own expense, veneer logs

with a diameter of 24–48 cm at a price of 2,000 rubles per

1 cubic meter. On 1 July 2009, between

the said enterprises, there was signed

Appendix No. 12 to the supply contract of 22

August 2008, according to which

Kogubkerovlyas undertakes to supply

by road transport, at its own expense,

pine coniferous sawlogs with a diameter of

16–18 cm, first and second grade, at a price of 1,750

rubles per 1 cubic meter; coniferous sawlogs

of pine with a diameter of 20–46 mm, first

three grades, at a price of 1,850 rubles per 1

cubic meter. From Vlada’s response, it follows that

the following documents were submitted, namely:

contracts No. 19/0308,

dated 17 March 2009; No. 21/0309

dated 30 March 2009; No. 22/04

ti09 dated 10 April 2009, concluded

between Kogubkirovles, represented by the directors

of the forestry enterprises, and Vlada, represented by Director

Ovchinnikov, for the supply of sawn timber;

Contract No. 25/0509

dated 21 May 2009, concluded between VLK, represented by

its General Director,

Ofitserov, and Vlada, represented by Director

Ovchinnikov, for the supply of sawn timber.

According to the specifications to the contracts

No. 25/0509

dated 21 May 2009, concluded by OOO VLK,

the cost of timber products in the form of

100% freshly sawn timber from freshly harvested wood,

with cross-sections of 50 x 150, 180, 225, and 250 mm,

amounted to 4,400 rubles, which fully

corresponded to the cost of similar

timber products specified in the specification to

Contract No. 19/038 dated 17 March 2009.

According to the response, a contract was concluded with Skogubkerov Les.

It followed from the builder’s statement that on January 20

2009, between Stroiteli and Kogubkerov Les

represented by Director Bolyansky

of the forestry enterprise, Asapov, contract No.

29 was concluded for delivery by rail

by railway and road

transport, free to the buyer’s warehouse

birch sawlogs at a price of 1,800 rubles per cubic meter

(per 1 cubic meter). Pine sawlogs at

a price of 2,000 rubles per cubic meter. Pulpwood

at a price of 800 rubles per cubic meter. Firewood at

a price of 48 rubles per cubic meter. On March 4, 2009,

between Stroiteley and Pogubkov Les,

represented by the director of the Vyatsko-Polyansky forestry enterprise

Asapov, contract No. 124 was concluded for

delivery by rail and

road transport, free to

the buyer’s warehouse, of pine sawlogs at

a price of 2,000 rubles per cubic meter. Pulpwood

at a price of 300 rubles per cubic meter. Firewood at

a price of 50 rubles per cubic meter. On May 4, 2009,

a contract was concluded between Domostroitel and VLK

No. 219 for delivery by rail

and road transport, free to the warehouse

of the buyer, of pine sawlogs at a price of

2,100 rubles per cubic meter, pulpwood at

a price of 300 rubles per cubic meter, and at a price of 50

rubles per cubic meter. From the response

of the Kirovo-Chepetsk forestry enterprise, a branch of Kagubki

Kirovles, it follows that in accordance with

the register of supply contracts concluded

in 2009, it was established that in April

2009, the Kirovo-Chepetsk forestry enterprise, to

OKMDK, sold sawlogs of

coniferous species with diameters from 16 to 17 cm.

First and second grade, 6 m long, diameter 20 to

24 cm. First and second grade, 6 m long, diameter from

24 to 46 cm. First and second grade, 6 m long.

Diameter from 16 to 18 cm. Third grade, 6

m. Diameter from 20 to 24 cm, and 46 cm.

Diameter from 26 to 46 cm, third grade, 6 m.

were sold at prices of 1,400, 1,600, 1,750,

1,500, 1,600, and 1,750 rubles, respectively.

In May 2009, the sale

by the Kirovo-Chepetsk forestry enterprise of a similar

assortment of timber products to Volka

under equal delivery terms

was carried out at prices of 1,330, 1,520, and 1,660

rubles, respectively.

That is, cheaper by 70–90 rubles, and in one

case by 170 rubles.

In July 2009, after the refusal of deliveries

to VLK, sales by the Kirovo-

Chepetsk forestry enterprise of the above-mentioned

assortment of timber products to

VOKMDK were carried out at prices of 1,750,

1,850, 1,850, 1,650, 1,650, and 1,650 rubles.

Respectively,

from the seizure record dated June 8, 2011,

it follows that from the General Director of Volka

Officerov, contract No. 01/29 dated

April 15, 2009, between Kogubkerov

Les and VLK for the supply of timber products

and appendices thereto, VVLK contracts with

counterparties, primary accounting

documents

primary accounting documents of VLK

relating to the purchase and sale of timber products

from Ukokerov Les, its payment, invoices

waybills, invoices, shipping

customs declarations, payment orders

bank account statements, as well as

documents relating to the employment of

Bur as commercial director

and the accrual of salary.

From

the seizure record dated August 9, 2012,

it follows that from KBV of Kabankovo there was seized

the legal file of OOV VLK, containing

among other documents copies of certificates

from the tax authority on state

registration and tax registration

of VVLK, as well as Officerov’s application for

opening a settlement account for OVLK and

the agreement on opening a bank account,

as well as statements of transactions on the accounts

of OOVK at VCB Vyatkabank OJSC for the period from April 15