By Gabriela Baczynska
MOSCOW (Reuters) - Russia's Supreme Court cut former oil tycoon Mikhail Khodorkovsky's jail sentence by two months on Tuesday, allowing one of President Vladimir Putin's biggest critics to walk free in August 2014 after more than a decade behind bars.
The court upheld Khodorkovsky's 2010 conviction for money laundering and stealing oil, but trimmed his sentence after an appeal by his defence lawyers.
Khodorkovsky, who was also convicted of tax evasion and fraud in 2005, was Russia's richest man before he was arrested in 2003 after falling out with Putin. He is seen by some Kremlin critics as a potential opposition leader.
Some leading opposition figures doubt Putin will allow Khodorkovsky, 50, to go free until he is sure he is not a political threat, but his lawyers say his spirit has not been broken.
"Russian penal colonies never were, and are not, conducive to feeling better, especially after 10 years. But considering all that, his spirit is unbreakable," defence lawyer Vadim Klyuvgant said after the ruling in Moscow.
Khodorkovsky's business partner, Platon Lebedev, also had his sentence cut by two months and will be able to walk free next May.
Khodorkovsky addressed the Supreme Court in a video link from his prison colony near the Arctic Circle.
"In this case, the usual mantra that everything is legal and well-grounded just won't do," Khodorkovsky said, dressed in a black shirt and reading from notes clearly and calmly.
Describing his case as political, he said: "Faulty court rulings have already become a catalyst for the protest movement (against Putin). A growing part of society is demanding ... to be able to live and not be afraid."
BUSINESS EMPIRE BROKEN UP
Khodorkovsky's $40-billion business empire was broken up and sold off, mainly into state hands, after his arrest and subsequent sentencing in 2005.
He had fallen out with Putin by funding political parties other than the main pro-Kremlin party and suggesting some oil deals involving the state were corrupt.
Many foreign investors saw Khodorkovsky's jailing as a turning point in Putin's 2000-2008 presidency, giving hardliners the upper hand and ultimately increasing their control over the economy.
Investors said his release would be a positive sign but they are more now concerned about the treatment of opposition leader Alexei Navalny, who is appealing against a five-year jail term after being convicted in July of theft.
Navalny, 37, is now widely regarded as more likely to be able to challenge Putin politically than Khodorkovsky, who has continued to criticise the president from prison but has increasingly seemed out of touch with political events.
Putin remains Russia's most popular politician, opinion polls show. The polls suggest Navalny and Khodorkovsky would be unlikely to be able to mount a strong challenge to the president.
In their first trial, Khodorkovsky and Lebedev were sentenced to nine years in prison, later reduced to eight, for fraud and tax evasion. They both pleaded not guilty.
More charges were brought against them and, found guilty of money-laundering and theft in 2010, their sentences were extended until 2017. They were later reduced to 2016 on appeal and then to 2014.
Khodorkovsky had been due for release in October 2014, and Lebedev in July next year.
The European Court of Human Rights last month rejected suggestions that the case against Khodorkovsky had been politically motivated but found that the initial trial was unfair and the 2005 sentencing was unjustified.
(Writing by Timothy Heritage; Editing by Elizabeth Piper and Raissa Kasolowsky)