Russian oil tycoon arrest sparks share slide

[emad]

Bad news for US giants ChevroTexaco and ExxonMobil following the arrest of Russian oil magnate Mikhail Khodorkovsky, as the UK's BBC News reports:


Trading on Russia's MICEX stock exchange has been suspended after a heavy sell-off triggered by the arrest on Saturday of one of the country's leading oil magnates. Mikhail Khodorkovsky, chief executive of oil giant Yukos, was charged with offences including defrauding the state out of $1bn. Trading on the MICEX was suspended for one hour from 8:30 GMT after a tumble of more than 13 per cent, dragged down by Yukos stocks which fell by over 19%. Meanwhile, the rouble has also fallen on foreign currency markets as banks hurried to buy dollars. The arrest has sparked concern about a Kremlin push against Russia's powerful business barons ahead of upcoming elections.

Many of Russia's top businessmen - including Mr Khodorkovsky, one of the country's richest men - built their fortunes on companies privatised during the rapid sell-off of public assets in the mid 1990s. Accusations of sharp dealing swirl around many of the deals, which saw state-owned enterprises sold at rock-bottom prices. Many of the new billionaires shifted much of their new wealth offshore, while some got into politics.

Most - including Roman Abramovich, the tycoon who recently bought the UK's Chelsea Football Club - have now stepped back, even if they retain a position in regional politics. But Mr Khodorkovsky, observers believe, is thought by President Vladimir Putin's supporters to be a potential threat, funding several opposition parties. His arrest, though, could threaten upcoming foreign investment in Russia's energy market.

Both ChevronTexaco and ExxonMobil are negotiating with YukosSibneft, the company emerging from Yukos's takeover of Mr Abramovich's oil group Sibneft, for a sizable stake. Those talks are now likely to be on hold till the situation becomes clearer. A Yukos spokesman said the company had received a summons, but they had written back to say that Mr Khodorkovsky was on a business trip and would be unable to appear. Two Yukos executives are facing criminal charges, including Platon Lebedev, the group's chief financier, who is in jail waiting for trial on charges of defrauding a state company in 1994. Earlier this month tax-evasion charges were filed against Vastly Sharkhnovsky, who is responsible for the auditing of operations.

http://news.bbc.co.uk/1/hi/business/3216743.stm

[jonoboy]

1. I watched a financial expert

discussing this tonight on TV and bemoaning that it was so bad for the economy and that investors may steer clear of Russia etc etc.

I mean I don't know what the levels of corruption in Russian investigation units are but hell, is EVERYTHING in this world supposed to revolve around the stock exchange.??