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Last Updated: Thursday, 3 July, 2003, 18:02 GMT 19:02 UK
Russian billionaire arrest hits market

By Alexander Koliandre
BBC Russian service

Platon Lebedev
Platon Lebedev's arrest has taken Russia by surprise
Russia's Prosecutor General has arrested one of the country's richest men, the billionaire Platon Lebedev - a move being interpreted as a sign that the Kremlin is warning so-called 'oligarchs' to stay out of politics.

Mr Lebedev was detained by prosecution service officers at the hospital where he was receiving treatment.

He forms part of a the country's super-rich elite - the oligarchs who made their fortunes in the early days of Russia's wild privatisation - and is suspected of embezzling more than $280m worth of stock in a state-owned maker of fertilisers back in 1994.

Mr Lebedev, with an estimated wealth of $1.3bn, is chairman of Menatep, the finance group which controls 61% of the country's largest company, oil giant Yukos.

His close ally, Yukos chief executive Mikhail Khodorkovsky and Russia's richest man, has now also summoned to the prosecutor's office on Thursday evening in connection with Mr Lebedev's arrest.

Yukos under fire?

At the same time as the news of the arrest reached the wires, the Prosecutor General's office announced that two more top men of Yukos are wanted.

Mikhail Khodorkovsky
I do not plan to leave Russia in the near future. I should have travelled to London today, but I decided to stay
Mikhail Khodorkovsky, CEO of Yukos

One of them, a head of the firm's security department is accused of murder; another, a company subsidiary's manager, is suspected of embezzling of funds during the privatisation.

Mr Khodorkovsky called Mr Lebedev's arrest illegal and promised to protest officially.

"I do not plan to leave Russia in the near future. I should have travelled to London today, but I decided to stay. The only place I might travel is to Tomsk, for a meeting of the Yukos executive board," he said.

He added that the planned merger with Subneft - a Russian oil company belonging to the new Chelsea football club's owner Roman Abramovich - would go ahead as planned.

The combined company would be the largest oil firm in Russia, producing a third of the country's 8.4 m barrels per day oil output.

Political warning

The arrest has taken Russia by surprise.

This is a political move and a reaction to Khodorkovsky's and his allies' political ambitions
Oleg Sysuyev, Alfa bank
While the state controlled TV stations played down the news, Russia's more independent newspapers questioned the real reasons behind the arrest.

They regard the news as a warning to Mr Khdorkovsky for the support he his allies showed the liberal opposition.

Earlier this year, Mr Khdorkovsky expressed his willingness to support the two leading liberal parties, Yabloko and SPS, who are going to compete with pro-Kremlin parties in parliamentary elections due in December.

"This is a political move and a reaction to Khodorkovsky's and his allies' political ambitions," said the Alfa bank's deputy chairman Oleg Sysuyev.

Fighting the oligarchs

Mikhail Khodorkovsky
Mr.Khodorkovsky supported liberal opposition
Russia's president Vladimir Putin has been demonstrating his willingness to curb the country's oligarchs since his first day at the office.

The move is widely supported in Russia, where the majority of the people regard the oligarchs as mere crooks.

Mr. Putin's first victims were the media moguls Vladimir Gusinsky and Boris Berezovsky.

For some time everything was quiet on the oligarch front.

This news is a cold shower for investors. The detention reminds them how many different risks exist in Russia, although people had recently started to ignore them
Steven Dashevsky, Aton brokerage
This was regarded as an unspoken agreement that the Kremlin will tolerate oligarchs making money providing they do not meddle in politics. Now, Russian media is suggesting the Kremlin decided to show trespassers would be prosecuted.

Despite Mr Putin's insistence on his policy of distancing oligarchs from the Kremlin, Russian analysts used to think that some moguls are more distant than others.

Market hit

Russia's stock market, which is soaring for the fourth year, was also taken by surprise by new of the arrests.

Yukos is regarded as one of the best-managed companies in Russia, where transparency and corporate governance set the example to all the country's businesses.

Yukos shares fell 6% down, knocking $2bn off the company's market value.

The losses were limited as only a tiny part of the company's shares are openly traded. But the RTS, Russia's stock market index, also lost almost 2% on Thursday.

"This news is a cold shower for investors. The detention reminds them how many different risks exist in Russia, although people had recently started to ignore them," said Steven Dashevsky, head of research at Aton brokerage.


SEE ALSO:
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