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. Last Updated: 07/27/2016

Potanin: Yukos Problem Didn't Fall From Sky

MTInterros head Vladimir Potanin
If Mikhail Khodorkovsky thought his fellow tycoons would rally to his defense, he was mistaken.

Of the nation's handful of billionaires, only one, Vladimir Potanin, has publicly expressed an opinion on Khodorkovsky's arrest and the subsequent sequestering of his oil giant's shares -- and Potanin's opinion is remarkably similar to President Vladimir Putin's.

"For humane reasons, I don't want to criticize my colleague," Potanin told a Russo-British Chamber of Commerce conference on corporate governance Friday. "I can only say that this problem did not fall from the sky.

"This problem has a prehistory and observers who know Russia well understand where it stems from."

Unlike Khodorkovsky, who openly funds parties opposed to the pro-Kremlin United Russia, Potanin made his peace with the Putin administration over the origins of his vast wealth early on and agreed to toe the party line.

At a United Russia "fan club" jamboree in late June, just days before the legal assault on Yukos kicked into high gear with the arrest of core shareholder Platon Lebedev, Potanin essentially pledged allegiance to the authorities and vowed to atone for his "past sins."

On Friday, Potanin echoed what Putin told top Western and Russian investment bankers just the night before, saying that there was no indication that the Yukos attack presaged a wider assault on the companies that grew out of the rigged privatizations of the last decade.

"Neither I nor my colleagues with whom I have discussed this topic see any signs" that other businessmen will be targeted, he said.

Political observers have said that Potanin's tacit support for the legal actions against Khodorkovsky is partly an act of self-preservation.

Like Khodorkovsky, Potanin acquired the source of his fortune -- metals giant Norilsk Nickel -- in the notorious "loans for shares" scheme in 1995. Potanin's Uneximbank bought a 38 percent stake of Norilsk for $170 million, which was $140 million short of the asking price. After several fruitless investigations into the legality of that deal, the Audit Chamber got into the act shortly after Putin came to power, prompting Potanin to pay the disputed $140 million in an effort to put the case to rest.

But recently a State Duma deputy from the Khodorkovsky-funded Yabloko party asked the Prosecutor General's Office to re-open its criminal investigation into Alfred Kokh, who was the head of the State Property Committee when Norilsk was privatized. Kokh is now the campaign manager of the Union of Right Forces, or SPS, which is also funded by Khodorkovsky.

"I would stay away from the question of who is right and who is wrong," Potanin said in regards to the Yukos affair.

"Nevertheless, the message to the market is very negative," especially if authorities eventually confiscate shares in Yukos, he said. One of the dangers of becoming a transparent company like Yukos is that authorities will be able "to clearly calculate what is located where."

Like Potanin, analysts polled Friday said the conflicting signals being sent by authorities are a cause for concern.

"On one hand, they are saying that businesses need to be clean and neat and pay taxes," said Timothy McCutcheon, a metals analyst at investment bank Aton. But by doing so they will make themselves vulnerable to legal attacks for what happened a decade ago, when a plethora of legal loopholes existed, he said.

With this in mind, "Potanin has been doing quite a bit of damage control," McCutcheon said.

Sergei Markov, a political analyst close to the Kremlin, said Putin has made it clear to Potanin, Khodorkovsky and the other oligarchs that businesses must be patriotic.

"Those who agree can live normally, and those who don't can leave the country, as [Roman] Abramovich is obviously going to do. But those who choose to fight, like Khodorkovsky, will have problems," Markov said.

Potanin appears to have chosen the first option, he said. "He virtually took an oath at the United Russia party congress."