[A-List] Russia: Putin tightens grip

["Michael Keaney" <michael.keaney@xxxxxx>]

Russian oil baron jailed on tax charge

Washington suggests arrest by armed police of country's richest man could be
politically motivated

Nick Paton Walsh in Moscow
Monday October 27, 2003
The Guardian

Washington expressed its concern at the arrest of Russia's richest man,
Mikhail Khodorkovsky, last night, voicing the first international
condemnation of the detention of the billionaire, the day after his private
jet was surrounded on a Siberian runway by armed police who arrested him for
tax evasion.

The US ambassador to Moscow, Alexander Vershbow, said the arrest could
"negatively affect" foreign investment in Russia, and suggested the law may
be being "used selectively".

Mr Khodorkovsky is head of Yukos, the largest Russian oil company, and has
used part of his estimated $11bn wealth to fund political parties opposing
the president, Vladimir Putin.

Mr Khodorkovsky spent his first night in a Russian jail yesterday. He has
been given a space in the Matrosskaya Tishina pre-trial detention facility,
with five other inmates in his cell. The jail, one of Russia's crowded
remand centres, is intended to hold 2,500 prisoners, yet often holds 3,500.

Mr Khodorkovsky's lawyer said yesterday that he had no information on his
client's condition, as they had not been able to meet.

Ordinary Russians, many of whom believe oligarchs such as Mr Khodorkovsky
got rich at their expense through snapping up state resources at curiously
low prices, may snigger at the billionaire's overnight stay in overcrowded
cells rife with tuberculosis.

A court on Saturday night agreed that Mr Khodorkovsky could be held for up
to two months before trial for a myriad of charges, from personal and
corporate tax evasion, to embezzlement which had allegedly cost the state a
billion dollars - a tenth of his estimated personal wealth. Further charges
are expected to follow, prosecutors said.

The billionaire was detained by the troops of the Russian security service,
the FSB, on the runway of Novosibirsk airport at 5am on Saturday.
Prosecutors said he had ignored a court summons, which he denied.

Many were surprised at the forcible nature of the arrest, the billionaire
having pledged not to flee the country, and challenging prosecutors to lay
out their accusations in a court of law. Since June, police have
interrogated Yukos associates and employees - one allegedly with drugs - and
raided everything from their offices to a nursery and political party they
financed. Two senior associates of Mr Khodorkovsky have also been arrested,
one charged with tax evasion.

A statement from Yukos called the charges against its chief executive
"absurd" and said the firm "does not doubt for a moment that the entire
investigation is politically motivated".

"The judicial measures used against Khodorkovsky are totally excessive,"
Boris Nemtsov, leader of the pro-business Union of Right-Wing Forces (SPS),
told Ekho Moskvy radio.

"This is intimidation, to show everyone that having independent views is
dangerous, politically and socially."

Mr Khodorkovsky has backed the SPS and the liberal party Yabloko. Both are
struggling to secure the 5% support needed to win seats in December's vote.
Meanwhile, analysts awaited Monday's reopening of stockmarkets with
trepidation. "There will be a dramatic stock decline, not just a
correction," Bulat Karmov, of Aton Brokerage, told Associated Press. "This
company is responsible for 30% of market turnover."

Anatoly Chubais, mastermind of Russia's chaotic 1990s privatisations and now
head of the power grid, said anxious businessmen were waiting for a lead
from Mr Putin.

"There are serious dangers linked to the escalation of the action against
business by law enforcement agencies," he said.