The Hindu : Oil tycoon's arrest splits Kremlin

Online edition of India's National Newspaper
Tuesday, Oct 28, 2003

International

International

Oil tycoon's arrest splits Kremlin

By Vladimir Radyuhin

MOSCOW OCT. 27. The arrest on Saturday of Russia's richest oil tycoon has triggered off the first major political crisis in Russia since the President, Vladimir Putin, came to power three-and-a-half years ago.

The head of Russia's biggest oil company, Yukos, and the country's wealthiest man, Mikhail Khodorkovsky, was arrested here on charges of massive fraud and tax evasion. The move has generated a serious split in the Russian leadership, with an anonymous government source denouncing the arrest as an act of "destroying Russian financial markets and torpedoing efforts to build the image of Russia as an investment-attractive country." The Prime Minister, Mikhail Kasyanov, earlier also voiced concern over the practice of detention of big businessmen.

This provoked an angry rebuff from Mr. Putin. Addressing a cabinet meeting today he backed Mr. Khodorkovsky's arrest and told the Ministers "to stop all speculation and hysterics" and "not to get drawn into the debate" on this issue.

Mr. Putin also turned down a request for an urgent meeting from the Russian Union of Industrialists and Entrepreneurs to discuss the tycoon's arrest. In a statement approved on Saturday Russia's main lobby group for big business said the arrest had "ruined the business community's trust in the authorities" and warned that "companies are being forced to reassess investment strategies and give up on projects important for the country."

"There will be no meetings and no bargaining regarding the activity of law enforcement bodies," Mr. Putin replied.

Analysts believe the arrest of Mr. Khodorkovsky is a politically-motivated attack. Mr. Khodorkovsky, a 40-year-old former functionary of the Young Communist League, made his fortune estimated at $8 billions through the acquisition of state oil assets at throwaway prices in murky privatisation deals of the 1990s. Following the merger with another oil major, Sibneft, earlier this year Yukos has grown to become the world's fourth-largest oil exporting company. Most charges filed against Mr. Khodorkovsky relate to the period of semi-criminal sell off of government property and can be made against almost any big businessman.

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