Khodorkovsky found guilty in second trial Reuters

A court in Moscow today found the oil tycoon, Mikhail Khodorkovsky, guilty of theft and money laundering in a politically tinged trial that is seen as a weathervane for Russia's future course.

Viktor Danilkin, the trial judge, told the packed court that Khodorkovsky, 47, and his business partner, Platon Lebedev, 54, "carried out the embezzlement of property entrusted to the defendants".

Khodorkovsky, wearing a black jacket, and Lebedev, in a white tracksuit, whispered to each other inside the enclosed dock and ignored the judge as the verdict was announced.

Outside the court, several hundred protesters gathered, shouting "freedom" and "Russia without Putin".

Police arrested about 20 people, dragging them out of the crowd and crushing their placards.

Supporters of Khodorkovsky, who part-owned the Yukos oil company and was once Russia's richest man, say the Kremlin singled him out for punishment because he funded opposition politicians.

The two men have been in jail since they were arrested on fraud charges in 2003. A court sentenced them to eight years in prison two years later, but a new trial on fresh charges of embezzling $25bn (£16bn) began last year.

Analysts say the length of the sentence, which is expected later, will show which of two Kremlin clans – the siloviki (security and military veterans) associated with Vladimir Putin, the prime minister, and the liberals grouped mainly around the president, Dmitry Medvedev – has gained supremacy in the country.

Prosecutors want the men to stay in prison until 2017, and Putin said this month that "a thief should be in jail" when he was asked about the trial. Medvedev, however, has distanced himself from the case and said on Friday that government officials should not comment on it before the end of the trial.

Khodorkovsky's lead lawyer, Vadim Klyuvgant, said today: "The trial was a charade of justice, the charges were absolutely false, but I fear the sentencing will be very real."

Andrei Illarionov, a former economic adviser to Putin, told the Guardian outside the court: "This prosecution is the result of a coup.

In 2003, the siloviki became afraid that Khodorkovsky and the political forces surrounding him were becoming too powerful, so they decided to arrest him.

"These people are still dominant in the country and for them it would be a defeat if Khodorkovsky was released."

Vladimir Ryzhkov, a former MP and opposition politician who was also outside the court, said: "There has been open pressure on the judge from Putin who consistently expresses his hatred for Khodorkovsky and says publicly that he is guilty of theft."

Ryzhkov added: "I believe they want to keep him in prison for another three or four years at least, so he is not released until well after the next presidential elections in 2012." He dismissed suggestions that Medvedev might ensure a softer sentence. "There is never any action behind Medvedev's rhetoric," he said.

One protester among the crowd standing on a snowy bank opposite the court was Vladimir Yurovsky, 54, the manager of a small Moscow-based financial services company.

"I've seen the indictments and they are absurd," he said, adding. "I once worked for a company that competed with Khodorkovsky's business and he took away our clients. But it was done in a gentlemanly way that only demanded respect."

The decision comes as leaked US embassy cables reveal that US diplomats believe attempts by the Russian government to demonstrate due process in the trial are "lipstick on a political pig".

Chris Bryant, the chairman of the all-party Russia group in the UK parliament, said in a statement: "Having visited the trial and seen for myself the farcical way in which it was being conducted, with ludicrous trumped up charges and a petulant martinet of a prosecutor, it is entirely predictable that [Khodorkovsky] has been found guilty."

He added: "This is not fair, open and transparent justice. It is the pursuit of a political agenda via a pretend judicial process."