Russia's richest man behind bars
Last Updated Mon, 27 Oct 2003 18:46:37
MOSCOW - The Russian stock market plunged Monday as investors tried to figure out the significance of the arrest of Russia's richest man.
Mikhail Kordorkovsky is head of Yukos, Russia's largest oil company. But the 40-year-old billionaire is now cooling his heels in a Moscow prison.
Kordorkovsky, according to Forbes Magazine, is worth $8 billion US. In the chaos that followed the collapse of the Soviet Union he was one of a handful of Communist officials who used their connections to scoop up large chunks of the Russian economy at bargain-basement prices.
During the Boris Yeltsin era these oligarchs, as these big businessmen came to be known, ran the government.
But when Vladimir Putin took over the presidency he offered the oligarchs a deal they dared not refuse. Stay out of politics, he said, and I won't have the police investigate how you got so rich so fast.
Masha Lipman, an analyst with Moscow's Carnegie Institute, says Kordorkovsky made the mistake of reneging on the deal. He started donating money to two small political parties that oppose Putin.
Lipman believes the decision to go after Kordorkovsky came from the Russian president himself. "I cannot imagine anybody daring to arrest a person as influential, as rich, as big as Kordorkovsky without endorsement from Putin himself."
So the billionaire businessman has been charged with forgery, tax evasion and fraud. A written statement from Yukos contends the arrest is a political act.
Putin has angrily denied the charge. "This is a matter for the courts," he said. "Russian law applies to everyone – an ordinary citizen or big businessman, without reference to how many billions of dollars there may be in his personal accounts."
In spite of reassurances from Putin that Kordorkovsky's arrest does not signal the start of a wholesale investigation of the privatizations of the 1990s, shares on the Russian stock markets fell 10 per cent in a matter of hours.
Al Breach, an analyst with the investment bank Brunswick UBS, says the arrest will raise doubts among foreign investors about Putin's commitment to reforming the ex-Soviet state he inherited. But in the short-term, he says, it plays well with the Russian electorate.
"The vast majority of the population seem to support that view that the oligarchs are essentially criminals, nicked property from the state and benefited ridiculously while everybody else has had a rather rough time of it," he said.
On the other hand, Breach and many other analysts say by throwing Russia's biggest big businessman in jail, Putin risks undoing all the hard work he's done during the last three years to convince investors his country is a safe place to put their money.
Source: CBC News Online