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. Last Updated: 07/27/2016

Head of Yukos' Parent Company Arrested

Platon Lebedev, the director of Group Menatep, the majority shareholder in the Yukos oil major, has been arrested on suspicion of embezzlement dating back to 1994, prosecutors announced Wednesday.

At the same time, the Prosecutor General's Office announced that the head of one of Yukos' security departments has been charged with organizing a double murder in 2002.

The arrests, seemingly targeting one of the oligarchs, looked set to rock Russia's political and business world.

"It does rather sound like Pandora's box being opened. But most people won't want to see it open, said Stephen O'Sullivan, co-head of research at United Financial Group.

According to the statement released by the Prosecutor General's Office late Wednesday evening, Lebedev is suspected of defrauding the state of more than $280 million by illegally appropriating a 20 percent stake in the Apatit joint-stock company, a leading manufacturer of fertilizers located in the Kirov region.

Group Menatep controls a 61 percent stake in Yukos, while Lebedev personally holds a 7 percent in Gibraltar-registered Group Menatep: a $30 billion international holding whose areas of activities are oil and gas, mineral fertilizers, banking and finance, telecommunications and portfolio investments.

It was unclear when Lebedev was taken into custody and whether he has been formally charged. "He is now being questioned by investigators from the Prosecutor General's Office," said the statement, carried by Interfax.

The investigation was opened after State Duma Deputy Vladimir Yudin alerted law enforcement agencies about the alleged embezzlement of Apatit shares, the statement said. Yudin, a member of the pro-Kremlin Fatherland-All Russia faction, is deputy chairman of the Duma's economic policy committee.

The case is being investigated as large-scale fraud, according to the statement. If convicted, Lebedev could be sentenced to up to 10 years in prison.

Lebedev, 46, was included in Forbes magazine's list of the world's billionaires this year for the first time. The magazine estimated his wealth at $1 billion.

Tuesday morning, Federal Security Service officers searched the offices of Yukos-controlled Trust bank, a bank employee said in a telephone interview.

The FSB officers came to Trust to investigate a "Yukos-related" case and downloaded files from the bank's computers, said the Trust employee, who asked not to be identified. He said Trust employees had been barred from their offices for more than an hour.

Reached by telephone Tuesday, an FSB spokesman said, "I have no information for now."

Mikhail Khodorkovsky, chairman of the Yukos board, condemned the detention of Lebedev and compared it to the highly publicized arrests last week of a ring of senior Moscow police officers accused of extorting protection fees from city businesses. "This looks similar to what we have recently read about werewolves in epaulets that were blackmailing small businesses," Khodorkovsky told the ANI news agency.

Lebedev's spokesman Yury Kotler said Group Menatep believes the detention is illegal and its lawyers are preparing to file a protest," Interfax said.

Federal prosecutors also arrested Alexei Pichugin, the head of one of Yukos' security service departments, and charged him with organizing the murder of two people in "one of Russia's regional capitals" in November 2002.

Investigators searched Pichugin's office and apartment on June 19, and two days later prosecutors asked a court to sanction his arrest, his lawyer Georgy Kagener told Interfax. Pichugin was formally charged on June 26, he said.

Kagener called the murder charges brought against his client a "provocation" and described them as "absurd." According to the lawyer, prosecutors suspect Pichugin of having murdered a certain Gorin and one of his family members. They suspect Pichugin, who is the godfather of Gorin's son, decided to kill Gorin after he tried to blackmail him, Kagener said.

Prosecutors said they also are looking into whether Ramil Burganov, a former executive at Yukos' exploration and production subsidiary, seized 1 billion rubles worth of shares in Eastern Oil Co. in 1998.

In January 2002, the Interior Ministry issued an international warrant for Burganov's arrest, on charges he illegally transferred Eastern Oil assets -- including a large stake in its Tomskneft subsidiary -- to an offshore zone. Burganov has fled Russia, but Eastern Oil remains under Yukos' control, Interfax said, citing law enforcement sources.

Calls to the press service of the Prosecutor General's Office went unanswered on Wednesday evening.

Yukos believes that its acquisition of East Oil Co. was legal and does not understand "the essence of the charges" presented against Burganov, Yukos spokesman Alexander Shadrin was quoted telling the ANI news agency on Wednesday evening.

Equity analysts said the arrests were bad for the investment climate.

"It may look like President Vladimir Putin is going back on the bargain he made with oligarchs in 2000," O'Sullivan of UFG said.

Roland Nash, head of equities at Renaissance Capital investment bank, said the arrests "send a signal that Russia is perhaps not as stable as the market seems to be expecting at the moment."

The Russian market has enjoyed a 40 percent gain over the past three months, finally hitting the pre-1998 economic meltdown levels.

"The level of enthusiasm is much the same as it was in 1997," Nash said. "Nothing went wrong in Russia for quite a while. And this sends a signal that Russia still has some issues."

Staff Writer Alla Startseva contributed to this report.