Billionaire foe of Putin arrested

"Khodorkovsky doesn't hide his interest in politics," says Alexei Kondaurov, a top Yukos executive who is running for parliament on the Communist Party ticket. "He knows that the future success of business depends upon the growth of democracy and civil society in Russia."

Khodorkovsky has said that his company is being persecuted by the Kremlin faction of siloviki - former secret police officers in Mr. Putin's entourage - who aim to curtail his political ambitions and seize his property.

Many experts agree that his arrest may trigger a political crisis. "There will be a huge impact from Khodorkovsky's detention," says Sergei Markov, director of the Center for Political Studies, a Kremlin-connected think tank. "Putin will have to take a clear stance on this conflict that is raging within the Russian bureaucracy," he says. "I expect major political events to follow very soon."

The legal offensive against Yukos began last July with the arrest of billionaire Platon Lebedev, a major Yukos shareholder and Khodorkovsky ally, who was charged with defrauding the state of $280 million in the 1994 privatization of Apatit, a fertilizer factory. Yukos security official Alexei Pichugin was jailed around the same time, charged as an accomplice to murder. Another billionaire Yukos shareholder, Leonid Nevzlin, fled to Israel last month. Last week, top company executive Vasily Shakhnovsky was charged with evading $1 million in taxes.

Putin has said little about the affair, leaving the reasons for the legal campaign against Yukos open to speculation. Some experts believe Kremlin security hard-liners are squeezing Khodorkovsky to block his plans to sell a share of his oil major to a foreign firm. Both ExxonMobil and ChevronTexaco have expressed interest in buying a 25 to 40 percent stake in Yukos - a deal that could be worth up to $20 billion.

Most observers, however, think Khodorkovsky's penchant for dabbling in politics was his undoing. In addition to backing opposition parties, he has funded human rights groups. He also recently purchased the weekly Moskovsky Novosti newspaper and appointed an outspoken Kremlin critic as its editor.

A former leader of the Soviet Young Communist League, Khodorkovsky is the wealthiest of the oligarchs who now control about 70 percent of Russia's economy. He is said to have acquired the Yukos empire at cut-rate prices through insider trading and fixed auctions during the lawless privatizations of the 1990s.

After Putin came to power, the Kremlin attacked the two most prominent opposition-minded tycoons, Boris Berezovsky and Vladimir Gusinsky, seizing much of their property, and driving them into exile.

The remaining oligarchs pledged to stay out of politics, and most have so far escaped any legal scrutiny of the means by which they originally acquired their vast wealth. But Khodorkovsky, who is widely believed to harbor presidential ambitions, has since seen almost every branch of his far-flung empire come under attack by prosecutors.

"Much more important than Khodorkovsky's fate in this crisis is the fate of Russia's legal system," says Ms. Zvigelskaya. "When prosecutors use illegal methods and apply laws selectively, they are not enforcing order but driving the country into a new stage of lawlessness."

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