A Kremlin panel urged prosecutors yesterday to annul the second conviction of fallen tycoon and Vladimir Putin critic Mikhail Khodorkovsky that extended his stay in jail until 2016.

The now-disbanded Yukos oil company founder and his business partner Platon Lebedev were initially arrested in 2003 and found guilty of tax evasion when Putin was still President.

A second conviction last year on money laundering and embezzlement charges came just months before their release date and followed a warning from Putin – who now serves as Prime Minister and is eyeing his return to the Kremlin in 2012 – that a “thief must be in prison”.

An advisory Kremlin rights panel said in a 300-page report commissioned by President Dmitry Medvedev in February that the second conviction violated Russian criminal law.

“The expert panel in its majority ruled that the Russian criminal code does not provide the grounds for viewing what they did as a crime,” panel member Tamara Morshchakova was quoted as saying by Russian news agencies.

Mr Khodorkovsky was found guilty of embezzling almost all his own company’s oil profits over a set period. Yukos was responsible for one-fifth of Russia’s oil production in the years preceding its break-up by the state.

Yesterday’s non-binding ruling also concluded that the judge had violated Mr Khodorkovsky ’s right to presumption of innocence by dismissing most of the arguments and evidence brought by the defence.

Mr Khodorkovsky’s chief attorney said the decision should give the authorities an excuse to review a conviction that has weighed on Russia’s relations with the West for years.“This means our politicians and state officials – including the country’s most senior leaders – will no longer be able to stay silent, make excuses or lie,” attorney Vadim Klyuvgant told Moscow Echo radio.

But the Moscow court that sentenced the pair last December said in a statement to Interfax that it viewed the panel ’s ruling as the “premature conclusion of private individuals”.

Putin said last week that he would be prepared to review a request for clemency by Mr Khodorkovsky should he be elected to his third term as President in March elections.

Mr Khodorkovsky has always maintained his innocence on both sets of charges and refused to plead guilty even if it means staying in prison.