Title: washingtonpost.com: Head of Russia's Yukos Oil Company Arrested
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washingtonpost.com

Head of Russia's Yukos Oil Company Arrested
Oligarch Charged With Tax Evasion, Fraud

By Deborah Seward
Associated Press Writer
Saturday, October 25, 2003; 1:17 PM

MOSCOW -- Camouflaged special forces arrested the head of Russia's largest oil producer, Mikhail Khodorkovsky, at a Siberian airport on Saturday, and he was ordered jailed on charges of tax evasion and fraud.

The dramatic arrest alarmed the country's business and political elite, with many analysts saying the actions against the oil company, Yukos, are a Kremlin-directed campaign to keep him out of politics.

For months, Russian prosecutors have been investigating officials at Yukos and its shareholders, looking for evidence of tax evasion and theft of state property.

Special forces dressed in camouflage and black uniforms detained Khodorkovsky at an airport in Siberia and investigators forced him to return to Moscow for questioning, a Yukos press spokesman said.

Hours later, the the Interfax news agency reported that the tycoon had been charged and ordered jailed.

"The head of Yukos is incriminated on committing a series of crimes, including theft by fraud on a large scale, the failure to pay taxes as an organization and as an individual," a representative of the prosecutor's office said, according to Interfax.

In addition, Khodorkovsky was charged with failure to abide by a court decision, fraud, forgery and embezzlement, Interfax said. A spokesman of the Prosecutor General's office told The Associated Press that charges had been filed, but could not specify what they were.

As pressure intensified against Yukos in the probe that began this summer, Khodorkovsky vowed that he would not be driven out of Russia like the tycoons Boris Berezovsky and Vladimir Gusinsky, who also allege the Kremlin targeted their companies for political reasons.

Businessmen fear that the probe will chill foreign investors' recent enthusiasm for Russia and impede the country's economic recovery.

Alexander Shadrin, press spokesman for Yukos, told The Associated Press that after Khodorkovsky's plane landed in Novosibirsk it was surrounded by trucks. Special forces in black uniform boarded the plane, shouting "FSB, put your weapons down or we'll shoot." The FSB is the acronym for the Federal Security Service, a successor of the Soviet-era KGB. A representative of the security forces then told Khodorkovsky to accompany them and he agreed.

"They used sort of special forces as if they were dealing with a terrorist," Shadrin said.

Khodorkovsky is one of the most prominent of the so-called Russian "oligarchs," men who made huge fortunes in a very short time after the collapse of the Soviet Union by acquiring state property at low prices. The oligarchs are greatly resented by large numbers of Russians who did not benefit from the privatization of state property.

Both parliamentary and presidential elections will be held in the coming months, and the standing of pro-Kremlin parties among ordinary Russians has been strengthened by the pressure being put on oligarchs by the authorities.

Russian business executives and leaders across the political spectrum expressed concern about Khodorkovsky's detention.

"The Russian business community believes that the legal system and its leaders have drastically worsened the situation. They have undermined the trust (of society) in business and the law enforcement bodies themselves," Anatoly Chubais, who oversaw the privatization of state assets in the 1990s," was quoted by Interfax as saying.

Earlier this week, Russian prosecutors searched a company looking for evidence in connection with the criminal probe into Yukos.

The Prosecutor General's Office said the company, Strategic Communications Agency, holds computer databases for companies controlled by the Russian oil giant. Yukos denied that it had any connection to the company.

A statement read by telephone to The Associated Press by the press service of the prosecutor's office said that Khodorkovsky had been summoned for questioning Friday in "the framework of investigation of a criminal case concerning theft and tax evasion by structures controlled by Yukos." The statement said that Khodorkovsky "deliberately ignored the summons" and that investigators decided he should be "forced to appear."

Shadrin told The AP that Yukos had received a summons, but that the company had replied in written form that Khodorkovsky was on a business trip and would be unable to appear. "This is a sheer lie," Shadrin said, referring to the prosecutor's statement.

The investigation began in July with the arrest of Platon Lebedev, a top Yukos shareholder and board chairman of Menatep Group, on charges of theft of state property during the 1994 privatization of a fertilizer plant. Lebedev has remained in jail awaiting trial. Last week, prosecutors also filed tax evasion charges against a Yukos manager, Vasily Shakhnovsky, who oversees day-to-day company operations and is responsible for customer relations and auditing.

Prosecutors have also carried out searches of Yukos-owned companies and the homes of Yukos shareholders.

Yukos recently completed its merger with its smaller rival Sibneft to create one of the world's top oil producers, and will formally become the new entity after a November shareholder meeting.

© 2003 The Associated Press

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