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Khodorkovsky quits as YUKOS chief
( 2003-11-04 08:57) (Agencies)

Detained Russian oil tycoon Mikhail Khodorkovsky quit on Monday as head of oil giant YUKOS in the latest twist in a power struggle between business oligarchs and the Kremlin.

Khodorkovsky, Russia's richest man, owns a controlling stake in YUKOS. Prosecutors froze the stake last week after he was arrested on charges of tax evasion and fraud, a move that has rattled investor confidence in President Vladimir Putin's economic reforms.

Shares in the company rose by 12.95 percent to $12.65 in dollar-based trade on the Russian trading system and by 13.39 percent to 391.20 roubles on the MICEX exchange after his announcement.

But they remain about 15 percent below their level before Khodorkovsky's gunpoint arrest on October 25. Khodorkovsky controls about 26 percent of YUKOS.

"I am leaving the company," Khodorkovsky said in a statement from his Moscow cell. "As the leader of this company, I must do my utmost to lead our...team out from under the attack which has been directed against me and my partners," he said.

It was not immediately clear what difference this would make to the legal case against Khodorkovsky or whether it would stay the hand of prosecutors against the firm.

Most political commentators say Khodorkovsky has been targeted by hawks in the Kremlin for backing political opponents of Putin in December parliamentary elections.


According to a source close to YUKOS's owners, the company's chairman Simon Kukes will head a new seven-strong executive board that will run the business in future.

Kukes joined YUKOS this year from Russia's third-largest oil producer TNK, where he was president. Oil major BP bought a 50 percent stake in TNK earlier this year and Kukes left the company after a staff reshuffle. He holds no significant YUKOS stake.

Many analysts saw Monday's developments as good news for YUKOS, which ahead of Khodorkovsky's arrest had absorbed smaller rival Sibneft and entered talks to sell a big stake to the world's largest oil firm Exxon Mobil in a bigger copy of BP's bold investment.

"Khodorkovsky wants the company to distance itself from him personally and for its operational activity not to stall since this requires his participation," Konstantin Reznik of Alfa-bank said. "In principle, this is an understandable step."

Khodorkovsky, 40, was whisked to Moscow after his arrest in Siberia and detained while his case was investigated.

In other action against YUKOS, a major shareholder is being held on a charge of theft going back to a 1994 privatization deal and prosecutors say they want to lift the parliamentary immunity of another shareholder so they can pursue tax evasion charges against him.

"I have to say that this whole scenario is very troubling for any kind of Western investment in Russia," said Grant McCrea of U.S. law firm Dewey Ballantine LLP, who has experience with Western firms dealing with Russia.

"It may be that this is just a bump in the road, but it may be that it's a harbinger of things to come and the hard liners are in the ascendancy. And until you have some confidence that that's not going to happen, I would not be irrevocably committing myself to any investment in Russia right now."

Putin says he is committed to the market. With some of his top lieutenants openly expressing alarm at the legal assault, the president will try to mollify European leaders this week with assurances that the Kremlin remains pro-business.

Putin attends a Russia-European Union summit in Rome on Thursday with Italian Prime Minister Silvio Berlusconi and then moves on to Paris for brief talks with President Jacques Chirac.

In comments to the Italian news agency ANSA, the Russian president said he would "categorically oppose...a review of the privatizations of the 1990s," easing fears sparked by the high-profile inquiry into YUKOS.

Putin was quoted by ANSA as saying that all those investigated were "presumed innocent" until proved guilty, but said Russia's businessmen "must learn to respect the law" and to pay their taxes.

Earlier on Monday, in what is likely to be taken as a confidence vote for investors, Germany's Deutsche Bank said it would buy a 40 percent stake in Russian investment bank United Financial Group.

The Kremlin leader last week vowed there would be no "bargaining" with industrialists over the affair. But his new chief of staff expressed his reservations at the prosecutors' actions at the weekend and Prime Minister Mikhail Kasyanov has also expressed concern.

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