[A-List] Russia: Putin tightens grip

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

Putin backs arrest of oil tycoon despite market fears
JIM HEINTZ, Moscow
The Herald, October 28 2003

Shares in Russia's largest oil company plunged and dragged down the Moscow
stock market on the first day of trading since the company chairman was
arrested and jailed.

Vladimir Putin, the Russian president, defended the arrest of Mikhail
Khodorkovsky, who was seized by special forces at a Siberian airport at the
weekend, amid fears that the move could stall the economy.

"Capitalism with Stalin's face," read a headline in the daily Nezavisimaya
Gazeta. "The prosecutor general has been allowed to turn Russia into a VIP
jail," echoed Kommersant, the business daily, which warned of the
"KGB-isation of government".

Khodorkovsky's arrest was an escalation of the four-month inquiry into the
Yukos oil giant. Analysts and politicians have speculated it is political
revenge for the tycoon's funding of opposition parties.

Yukos, which this month set up a merger with Russia's Sibneft to become the
world's fourth-largest oil firm, has a huge influence in Russia's economy.
Its shares fell 15% and the RTS index of Russian stocks closed down 14%.
Trading halted for an hour after Yukos shares lost 20%.

"Everyone should be equal before the law, irrespective of how many billions
of dollars a person has in his personal or corporate account," Putin said at
the start of a cabinet session.

"Otherwise, we will never teach and force anyone to pay taxes . . . and
defeat organised crime and corruption," he said.

Putin said Khodorkovsky, whose fortune is estimated at £5bn, was in jail
charged with tax evasion, fraud and forgery, adding: "I proceed from the
assumption that the court had reason to do that."

Two other high-ranking Yukos associates are charged with theft or tax
evasion.

Russia's top three business associations urged Putin to rein in the
prosecutors. Liberal parties said democracy was in danger.

Putin shrugged off the pleas, saying that "there will be no meetings and no
bargaining in regard to the activities of the law enforcement structures".

At the same time, he sought to quell fears that the attack on Yukos could
trigger a review of the controversial privatisations of the 1990s, under
which tycoons such as Khodorkovsky snapped up lucrative state assets at
giveaway prices.

"I would like everyone to stop the speculation and hysteria on this issue
(privatisation)," Putin said. AP