Russia's Arrest of Sistema Boss Raises Specter of Yukos Case
Conglomerate's Top Shareholder Charged With Money Laundering
The arrest fueled concerns about Russia's business climate, drawing comparisons to the case of Yukos, the oil giant that was dismantled by authorities through a series of tax-evasion charges that were widely considered to have been politically motivated.
"Indeed it all looks very much like Yukos No. 2," said Alexander Shokhin, head of Russia's Union of Industrialists and Entrepreneurs, according to Interfax news agency.
But in the Sistema case, Russian officials said that the detention of one of the country's richest businessmen had no political motivation.
Russia's Investigative Committee said late on Tuesday that Mr. Yevtushenkov was charged with money laundering in a deal involving shares in unnamed energy companies in the Russian region of Bashkortostan, where AFK Sistema owns 78.8% of oil company Bashneft. BANE.MZ -22.30%
Sistema's shares dropped nearly 37% in early trade in Moscow, while Bashneft shares fell 22.6%. The news about Mr. Yevtushenkov's arrest also sent Russia's stock index Micex tumbling more than 2%.
AFK Sistema brushed off the allegations of criminal activity and said in a statement on Wednesday that the acquisition of part of BashTEK group, which included oil company Bashneft, was "legal and transparent."
"The company is fully cooperating with the investigation and intends to use all legal means to defend its position," AFK Sistema said.
Ilnur Salimyanov, a lawyer representing Bashneft's former top manager Ural Rakhimov, said that the arrest of Mr. Yevtushenkov could be a "corporate raid," Interfax reported.
Bashneft has been the subject of prolonged court battles amid prosecutors' allegations of financial wrongdoing during its privatization in the 1990s, as well as when Sistema purchased it in 2009. AFK Sistema has denied any wrongdoing as recently as last month, when Moscow's Basmanny Court seized the controlling stake in Bashneft in the privatization case.
Anatoly Chubais, the champion of the 1990s-era privatization program in Russia and the current chief executive of state-owned company Rusnano, said the arrest of the main shareholder of Sistema will have a strongly negative impact on Russia's business climate at a time when the economy is facing risks of recession.
Former Yukos boss Mikhail Khodorkovsky, who was Russia's richest man before he was jailed in 2003 and who was only released late last year, said that the AFK Sistema case may be linked to OAO Rosneft, the country's largest oil producer. In comments published by Russia's daily Vedomosti, Mr. Khodorkovsky said that he thinks that Igor Ivanovich—a reference to Rosneft's chief executive, Igor Sechin —might be interested in taking over Bashneft.
After Mr. Khodorkovsky was arrested, his company Yukos was forced into bankruptcy and was taken over by state-controlled Rosneft.
Rosneft spokesman Mikhail Leontyev said that the speculation voiced by Mr. Khodorkovsky is "nonsense," state news agency RIA Novosti agency reported.
The Kremlin also dismissed any resemblance with Yukos. President Vladimir Putin's spokesman, Dmitry Peskov, said that it was "wrong and absurd" to attribute the arrest to political motives.
But the arrest of the 65-year-old Mr. Yevtushenkov, which is set to last for two months, may strike a further blow to sentiment toward Russia, which has seen investment fall since the Ukraine crisis.
Sberbank CIB said in a research note that "such a dramatic turn of events comes as a surprise."
"As a result of this event, the risk of a change in the shareholder structure of Bashneft escalates, a risk that now spreads to Sistema's other assets," Sberbank CIB said.
Shares of Mobile TeleSystems, Russia's largest telecom company, in which Sistema is a majority shareholder, were down 8%.