Patriotic Justice

No one was very surprised last month when a Russian court convicted Mikhail Khodorkovsky, former head of the Yukos oil company, of embezzling $25 billion worth of oil.

But what made the verdict predictable wasn’t the strength of the charges against Khodorkovsky. In fact, the absurdity of some of the prosecutors’ arguments made even the judge laugh. The reason everyone knew what would happen was that the case was in a Russian court, and Russian courts tend to do what is best for Russia — or, more accurately, what is best for the former president, now prime minister, Vladimir Putin. In addition to being a prominent businessman before his imprisonment, Khodorkovsky was also a significant political threat and an important financier of the opposition movement.

Khodorkovsky was already serving a sentence for a previous conviction of tax evasion, which he would have completed in 2012. The new verdict means that he will remain in prison until at least 2017, 14 years after his initial arrest in 2003. The original set of charges and the more recent ones both rest on flimsy evidence.

But lack of evidence is no problem for Russian courts; they have other ways of arriving at decisions. Some unconfirmed reports allege that state security employees actually took the judge, Victor Danilkin, from his home days before he announced the verdict, to ensure that he understood the type of sentence the Kremlin wanted him to hand down.

Just days after Danilkin announced the exact sentence prosecutors had requested, Russia once again demonstrated its willingness to abuse its own legal system by arresting several prominent members of the opposition movement at an officially sanctioned protest. One of those arrested was Boris Y. Nemtsov. President Dmitry A. Medvedev recently referred to Nemtsov as a “well-known politician” who might help lead the country in the future. But Putin has insisted on classifying Nemtsov as a thief who is merely looking for more “money and power.” Nemtsov was sentenced to 15 days in jail.

The international community has, of course, expressed its disapproval over these events. But this sort of political manipulation of the legal system is not limited to countries such as Russia that are, to put it charitably, still in the early stages of figuring out democracy.

As the 20-month-long Khodorkovsky trial entered its final phase, France had its own kangaroo court in session. That court ruled that the crash of a French-owned, largely French-built, aircraft, which was being operated by a French crew at a French airport, was exclusively the fault of Americans.

The case concerned the crash, in 2000, of an Air France Concorde supersonic jet. One hundred thirteen people were killed when the jet burst into flames during take-off and subsequently hit a nearby hotel. According to investigators, the Concorde encountered debris on the runway, which punctured one of the jet’s tires. Pieces of rubber from the destroyed tire penetrated the gas tank, causing the plane to burst into flames. The object on the runway was a piece that had fallen off a recently departed Continental Airlines DC-10.

While the debris on the runway may have been the catalyst for the plane’s crash, it was not the only cause. Passenger jets are not supposed to burst into flames when a tire blows out. A judicial inquiry found that the Concorde’s fuel tanks lacked sufficient protection from shock. Moreover, according to the inquiry, officials knew about that problem for more than 20 years but did nothing to correct it.

Yet the court acquitted three former French officials, while Continental and one of its mechanics were convicted of manslaughter. The court decided that, while the French officials may have overlooked opportunities to improve the plane’s design, they could “be accused of no serious misconduct.” Continental was ordered to pay Air France $1.43 million for damage to the French carrier’s reputation.

France had a lot at stake in the trial. The Concorde was not just a plane; it was the nation’s aeronautical crown jewel, capable of flying at twice the speed of sound. It was a revered symbol of European technological prowess. And Air France was not just an airline based in France; it was, at the time, state-run.

While Air France had already paid $150 million to the families of the victims, the trial gave France a chance to salvage its reputation by belatedly sticking someone else with the blame. The scapegoats were Continental and mechanic John Taylor.

Just as the Russian court churned out the verdict favored by the Russian government, the French court delivered what Paris wanted. The ruling was, as Continental’s lawyer, Olivier Metzner, put it, “patriotic” in the worst sense. Metzner told the Associated Press, “This [verdict] has strayed far from truth, law and justice. This has privileged purely national interests.”

The United States is not immune to this breed of “patriotic” justice. When it comes to putting alleged terrorists on trial, impartiality has been displaced by old-fashioned calls to give the defendant a fair trial before we hang him.

One example came when White House Press Secretary Robert Gibbs promised that alleged 9/11 mastermind Khalid Sheikh Mohammed “is going to meet justice and he’s going to meet his maker” if he is transferred to a civilian court for trial. The soon-to-depart press secretary seems to think “justice” is best dispensed at trials that are merely a formality.

Gibbs thus appears to share the Russian view of patriotic justice. But trials are not where we celebrate patriotism. They are where we elevate rules and evidence above passions and politics. Courts that dispense prefabricated verdicts do not render justice at all.

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About Larry M. Elkin 564 Articles

Affiliation: Palisades Hudson Financial Group

Larry M. Elkin, CPA, CFP®, has provided personal financial and tax counseling to a sophisticated client base since 1986. After six years with Arthur Andersen, where he was a senior manager for personal financial planning and family wealth planning, he founded his own firm in Hastings on Hudson, New York in 1992. That firm grew steadily and became the Palisades Hudson organization, which moved to Scarsdale, New York in 2002. The firm expanded to Fort Lauderdale, Florida, in 2005, and to Atlanta, Georgia, in 2008.

Larry received his B.A. in journalism from the University of Montana in 1978, and his M.B.A. in accounting from New York University in 1986. Larry was a reporter and editor for The Associated Press from 1978 to 1986. He covered government, business and legal affairs for the wire service, with assignments in Helena, Montana; Albany, New York; Washington, D.C.; and New York City’s federal courts in Brooklyn and Manhattan.

Larry established the organization’s investment advisory business, which now manages more than $800 million, in 1997. As president of Palisades Hudson, Larry maintains individual professional relationships with many of the firm’s clients, who reside in more than 25 states from Maine to California as well as in several foreign countries. He is the author of Financial Self-Defense for Unmarried Couples (Currency Doubleday, 1995), which was the first comprehensive financial planning guide for unmarried couples. He also is the editor and publisher of Sentinel, a quarterly newsletter on personal financial planning.

Larry has written many Sentinel articles, including several that anticipated future events. In “The Economic Case Against Tobacco Stocks” (February 1995), he forecast that litigation losses would eventually undermine cigarette manufacturers’ financial position. He concluded in “Is This the Beginning Of The End?” (May 1998) that there was a better-than-even chance that estate taxes would be repealed by 2010, three years before Congress enacted legislation to repeal the tax in 2010. In “IRS Takes A Shot At Split-Dollar Life” (June 1996), Larry predicted that the IRS would be able to treat split dollar arrangements as below-market loans, which came to pass with new rules issued by the Service in 2001 and 2002.

More recently, Larry has addressed the causes and consequences of the “Panic of 2008″ in his Sentinel articles. In “Have We Learned Our Lending Lesson At Last” (October 2007) and “Mortgage Lending Lessons Remain Unlearned” (October 2008), Larry questioned whether or not America has learned any lessons from the savings and loan crisis of the 1980s. In addition, he offered some practical changes that should have been made to amend the situation. In “Take Advantage Of The Panic Of 2008” (January 2009), Larry offered ways to capitalize on the wealth of opportunity that the panic presented.

Larry served as president of the Estate Planning Council of New York City, Inc., in 2005-2006. In 2009 the Council presented Larry with its first-ever Lifetime Achievement Award, citing his service to the organization and “his tireless efforts in promoting our industry by word and by personal example as a consummate estate planning professional.” He is regularly interviewed by national and regional publications, and has made nearly 100 radio and television appearances.

Visit: Palisades Hudson

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