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Russia's YUKOS warns of more searches, arrests
By Dmitry Zhdannikov

MOSCOW, July 14 (Reuters) - Russian oil giant YUKOS warned on Monday of a new round of searches and arrests as a row between the firm and the Kremlin entered its third week.

"In this situation, we cannot rule out new searches, including at head office. Nothing can stop these people," said Dmitry Gololobov, deputy head of the YUKOS legal department, at a briefing.

He was speaking after masked, armed police had burst into the YUKOS archives and searched it for 16 hours on Friday, taking documents and computers.

"No lawyer could rule out further arrests... this is the beginning of an action to threaten the company. We consider this an escalation of illegal pressure on the company," Gololobov said, adding that lawyers had noted around 10 breaches of the law during the search.

The case has stirred controversy in Russsia, and both Prime Minister Mikhail Kasyanov and President Vladimir Putin have weighed in to say the arrest and the armed search appeared heavy-handed.

Many analysts, business leaders and opposition politicians, however, say the row has been inspired by the Kremlin, which is concerned about the political influence of YUKOS Chief Executive Mikhail Khodorkovsky, whose $11 billion fortune makes him Russia's richest man.

The CEO has stated his support for the liberal opposition which is set to challenge Putin, who is almost certain to run in next year's presidential elections.

The row erupted on July 2 when Platon Lebedev, a key YUKOS shareholder, was detained while in hospital, taken away in handcuffs and later charged with theft of state property over his part in the 1994 privatisation of a fertiliser company.

Shortly afterwards, Khodorkovsky was called in for questioning and later allowed to go.

Khodorkovsky is due back in Moscow after spending the weekend in the United States attending the Sun Valley conference of wealthy business figures.

Western diplomats told Reuters that many foreign investors had been calling to find out how the row might affect their businesses in Russia.

One said, on condition of anonymity, that the YUKOS case could be the biggest political challenge to face Putin in the last three years and a major threat to Russia's image overseas.

YUKOS shares were trading at $11.72 at 1115 GMT on Monday, a 0.6 percent rise from Friday's close. But they were still well down from a price of over $14 before Lebedev's detention.

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