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YUKOS chief says tension with Kremlin rising
By Dmitry Zhdannikov

MOSCOW, July 24 (Reuters) - Russia's richest man, Mikhail Khodorkovsky, said the confrontation pitting his oil giant YUKOS against the Kremlin was becoming more acute and he feared more police action against his company was imminent.

"The tension is rising. We feel there could be more arrests and searches," Khodorkovsky told reporters late on Wednesday after a Moscow court refused to release a key business ally who is being investigated on charges of theft.

The court dismissed YUKOS lawyers' appeals for the release of billionaire Platon Lebedev, arrested three weeks ago on charges arising from a 1994 privatisation deal in an affair that has unnerved Russia's super-rich and foreign investors alike.

Khodorkovsky -- a multi-billionaire seen by many as the real target of the police action because of his suspected political ambitions -- says Lebedev's detention and a probe into YUKOS's affairs has been orchestrated by conservative forces in the Kremlin.

On Wednesday, he said the firm's lawyers had yet to decide on a new appeal to secure Lebedev's release, but added the court could not hold him in jail beyond two months without having formally to renew the arrest.

He said the 46-year-old Lebedev, arrested in hospital on July 2 and held in Moscow's high security Lefortovo prison, was in poor health.

"He is seriously ill. Lawyers tell me he needs a doctor. His face is puffy and red and he has dizziness even when sitting in a chair," said Khodorkovsky.

The affair has triggered a sharp fall in YUKOS shares, which have lost 20 percent of their value or $7 billion over the last three weeks, and has unsettled investors who had been enjoying a rare period of political calm and post-Soviet growth.

On Thursday, YUKOS shares opened at $11.35 per share, up 1.79 percent on Wednesday's close.


Business leaders have urged President Vladimir Putin to reassure investors, but the Kremlin leader has made little direct comment on the YUKOS case beyond describing the detention of suspects in economic crimes as excessive.

The tussle has raised prospects of police scrutiny of sell-offs during Russia's post-Soviet carve-up of state assets in the 1990s in which a handful of entrepreneurs made fabulous wealth overnight to become today's billionaire "oligarchs".

Many analysts say the action specifically targets Khodorkovsky, who supports the liberal opposition to Putin. The Kremlin leader is almost certain to stand for re-election in next year's presidential election.

Other analysts say the row reflects a power struggle in the Kremlin between a liberal faction of remaining allies of former president Boris Yeltsin and Putin's new backers with roots in the security forces.

Banking group Menatep, which is the major shareholder in YUKOS and headed by Lebedev, said in a statement on Wednesday that law enforcement agencies had put intense pressure on the court to secure Lebedev's detention.

"These actions also question whether these events are the precursor for a broader re-nationalisation campaign," it said.

YUKOS is due to acquire its smaller rival Sibneft by the end of 2003 to become Russia's largest and the world's fourth-biggest private oil producer.

Khodorkovsky said the deal would go ahead despite the detention of Lebedev, one of the driving forces behind the transaction. "If Lebedev's health is fine we will manage to cope with all the rest," he said. "And I have no plan to leave Russia whatever happens".

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