Jun.25, 2010, Source: The Associated Press

MOSCOW — A court dropped criminal charges Thursday against an ailing former Yukos oil company executive, an apparent show of leniency in an epic legal saga seen as a symbol of Russia's flawed judiciary.

"The criminal case is to be closed" against Vasily Aleksanian, Moscow district court Judge Olga Nedelina announced at a hearing to determine the former Yukos vice-president's legal fate.

The judge said her decision was taken because the statute of limitations had expired for convicting Aleksanian, 37, on embezzlement and money-laundering charges.

The ruling, handed down after pleas from activists for the court to drop the case against Aleksanian, who suffers from cancer and AIDS, was seen as a rare instance of humane factors being considered in the Yukos proceedings.

Experts however said the decision was motivated more by a wish to deflect criticism of the Russian judicial system's handling of the Aleksanian case in particular and the Yukos case as a whole.

"It is a gesture, not a trend," said Nikolai Petrov of the Carnegie Foundation.

"We can expect this 'royal pardon' to be accompanied by changes for the worse in the system."

Yukos was Russia's leading oil company in the 1990s and its founder and former chief executive, Mikhail Khodorkovsky, was for a time Russia's richest man.

Khodorkovsky was arrested in 2003 and charged with financial crimes ranging from massive fraud to tax evasion and money laundering. He was later convicted and sentenced to eight years in prison where he remains.

The Yukos oil empire he built, backed by many Western investors and seen as a model of corporate transparency at the time, was also dismantled and its pieces sold to state or Kremlin-friendly companies.

Critics have described the entire Yukos case as a political vendetta led by president-turned-prime minister Vladimir Putin against a potential rival. The authorities have said the affair is a strictly legal matter.

A second Khodorkovsky trial currently in progress was marked this week by the appearance of two high-profile witnesses -- Trade and Industry Minister Viktor Khristenko and former economics minister German Gref.

Both gave a boost to the defence, saying they were not aware of an alleged theft of millions of tonnes of oil even though due to their positions in the government they likely would have had that information had the alleged theft occurred.

Aleksanian was not present when the judge's decision was read to the court on Thursday. He did however attend the hearing earlier in the day, wearing a medical mask that he removed when he spoke and coughing frequently.

"I am a licensed lawyer. I fully understand the consequences of closing the case," Aleksanian said at the earlier session.

"I have no objections."

In practice, Thursday's ruling means that while the state is dropping the case against Aleksanian it will not apologize for keeping him behind bars earlier and he won't be able to claim moral compensation.

A former vice president at Yukos, Aleksanian was arrested in April 2006 amid a legal assault by prosecutors that bankrupted the company and resulted in Khodorkovsky's imprisonment.

Aleksanian was released from detention in 2008 after his case evoked sympathy around the world and prompted a human-rights campaign because his lawyers said Russia's prison service had denied him proper treatment for more than a year.

Aleksanian's lawyers say he is almost blind and suffering from lymphatic cancer and AIDS.