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Prime minister says Yukos probe hurts Russia's international image
July 24, 2003

MOSCOW - Prime Minister Mikhail Kasyanov on Thursday said the probe into Russia's largest oil company, Yukos, is hurting Russia's image abroad and scaring away investors, the Interfax news agency reported.

"The situation has continued for a long time already and still there is no resolution," he was quoted as saying during a visit to the Novosibirsk region.

It "doesn't support the national image and is negatively influencing the mood of investors," Kasyanov said.

The probe into Yukos, which many analysts believe is politically motivated, began with the July 2 arrest of Platon Lebedev. Lebedev, a close associate of Russia's richest man, Yukos chief executive Mikhail Khodorkovsky, is the billionaire chairman of the board of the Menatap group, the holding company that owns 61 percent of Yukos.

Prosecutors have charged Lebedev with defrauding the state of US$283 million in the 1994 privatization of the Apatit fertilizer company. His arrest was followed by a 16-hour search at Yukos offices and criminal investigations into its alleged tax evasion and role in several murders of officials and businessmen.

On Wednesday, a Moscow court ordered Lebedev to remain in jail while the investigation continues, sending shares of Yukos and other Russian companies even lower. Russia's fledgling stock market has already suffered a sharp downfall since the Yukos probe began.

Khodorkovsky, who has defied the Kremlin on some key policy issues, has dismissed the accusations against his company, and blamed a power struggle within the Kremlin.

Russia's business leaders have urged President Vladimir Putin to stop what they have called a campaign of intimidation against business. Putin has issued conflicting signals, saying without naming Yukos that he was against "arm-twisting and jail cells" in dealing with economic crimes, but adding that they must be fought.

Kasyanov said Thursday that "no matter what kind of investigation is underway, a suspected economic crime should not be a reason for arrest, or taking someone into custody."

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