Russian court rejects Khodorkovsky parole

CHITA, Russia (Reuters) - A Russian court on Friday rejected a parole appeal by former tycoon Mikhail Khodorkovsky, a decision his lawyers said showed President Dmitry Medvedev's promises to reform the legal system were far from reality.

Khodorkovsky, who is serving an eight-year jail term for tax evasion and fraud, says he is the victim of corrupt officials under former President Vladimir Putin who wanted to carve up his business empire and who feared his political ambitions.

The judge in the Ingodinsky regional court in the eastern Siberian city of Chita said Khodorkovsky, once Russia's richest man, would not receive parole because he had not shown sufficient willingness to reform in prison.

"Since the prisoner Khodorkovsky had no connection with the professional educational program offered him in detention, he does not deserve conditional early release," said Judge Igor Faliliyev.

When the decision was read out Khodorkovsky, a 45-year-old chemistry graduate, wearing jeans and a brown coat, glanced at his lawyers from the cage where he was kept during the hearing but showed no emotion.

Armed guards then placed handcuffs on him and led the former boss of YUKOS, once Russia's biggest oil company, out of the courtroom.

Khodorkovsky's chief defence lawyer, Yuri Schmidt, told Reuters by telephone that an appeal would be filed but that they had expected the court to deny parole.

"Our hopes were based on the comments made by Russian President Medvedev and his statements about the judicial system being seriously ill, riddled with corruption and dependent on political power," Schmidt said.

"This is a test case and the decision today shows that the gulf between the intentions of the president and the realization of his intentions has not got any smaller -- the gulf remains very big," he said.

MARKET INTEREST

Russian markets see Khodorkovsky's treatment as a barometer of Kremlin's attitude to business.

They did not move on the court's decision, but shares on MICEX, Moscow's most liquid stock exchange, briefly rose when a Russian news agency erroneously reported the tycoon had been granted parole.

Khodorkovsky built YUKOS-MENATEP into one of the country's biggest business empires by buying state assets cheaply and trading commodities in the chaos following the fall of the Soviet Union.

His arrest in 2003 by FSB security service officers at a Siberian airport sent shockwaves through Russia's business community, who feared the Kremlin would try to regain control of key oil production assets sold off in the 1990s.

He was convicted in 2005 and is currently imprisoned in Chita, a remote town near the frontier with China, around 7,000 km east of Moscow.

"The judicial system will not be reformed quickly. This is something I have known for a long time," Khodorkovsky told reporters calmly as he was hustled from the courtroom by guards.

Supporters shouted that the guards were breaking the law by not giving him time to talk properly with reporters.

Russian officials say he was convicted for serious crimes and should serve his sentence. He denies his guilt.

Prosecutors filed new charges against Khodorkovsky in June, accusing him of embezzlement and laundering nearly $21 billion. His lawyers say those charges could give Russian authorities the chance to keep the former tycoon in jail for years to come.

(Writing by Guy Faulconbridge, editing by Richard Balmforth)