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Last Updated: Friday, 11 July, 2003, 22:05 GMT 23:05 UK
Police raid Russian oil giant
Prosecutors and bodyguards at Yukos headquarters
Armed men entered the company's office around noon
Armed police in Moscow have been searching the offices of the largest Russian oil company Yukos, which is being investigated for tax fraud and embezzlement.

The raid came as a leading business association said it was planning to petition President Vladimir Putin to "uphold stability" in the country, which it says is being undermined by such high-profile investigations.

The Union of Industrialists and Entrepreneurs says it is worried by the recent spate of police and tax office inquiries.

It drafted a letter which was read out to Mr Putin on Friday at a meeting of parliamentary faction leaders.

Its leader, Arkady Volsky, told reporters that political stability must not be shattered ahead of elections or the country would be destroyed.

Mr Putin on Friday held talks at the Kremlin on how to overcome tensions between the authorities and the country's business elite.

He appealed to politicians and public figures to unite to achieve the strategic goals of prosperity and modernisation.

But he did not mention the business community as a key player in Russia's development and avoided any direct reference to current police investigations into major companies.

Only one businessman was present at the talks.

Loud bangs

Yukos lawyer Albert Mkrtuchev told reporters that a group of armed men, some of them wearing masks and carrying guns, entered the company's office in central Moscow around noon and started searching its archives.

The lawyer believes the men came from the Prosecutor-General's Office, although he did not see any warrants.

Loud bangs were reported from inside the building.

Vladimir Putin and Arkady Volsky
Volsky (r) said the Yukos case was triggering a chain reaction
The lawyer said the investigators were searching for records relating to an embezzlement case dating back to 1994.

The probe into Yukos started after one of its key shareholders was arrested and charged with theft of state property during Russia's controversial privatisation of state assets nine years ago.

But most businessmen and observers suspect the case is politically motivated.

They are linking it to the moves by the head of Yukos, the richest man in Russia, Mikhail Khodorkovsky, to bankroll political opposition in Russia.

'Crossfire'

The BBC's Nikolai Gorshkov in Moscow says relations between the Kremlin and the super-wealthy Russian oligarchs have deteriorated sharply.

Three years ago, they struck a deal that kept the business elite out of politics in exchange for its right to enjoy the fruits of Russia's murky privatisation schemes.

The deal helped to bring about much-needed stability after all the upheavals of the post-Soviet era.

Mr Volsky said the high-profile case of Yukos was triggering a chain reaction in the provinces, where local elites were only too happy to review the privatisation deals.

The speaker of the Russian parliament has inflamed things further by demanding that all Russian oligarchs be investigated for fraud and embezzlement.

And the country's chief auditor has made public his displeasure with Roman Abramovich for his purchase of Chelsea Football Club, which has outraged many Russian politicians who would rather the money was invested in Russia.

Our correspondent says Mr Putin has pointedly stayed away from business scandals. Observers believe he is caught in the crossfire of a power struggle in the Kremlin.


SEE ALSO:
Russia's 'most hated' tycoons
08 Apr 03  |  Business
Russia's influential businessmen
02 Jul 03  |  Europe
Tycoon shrugs off Putin rift
07 Jul 03  |  Business
Timeline: Russia
08 Jul 03  |  Country profiles


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