Russian President Vladimir Putin is backing the prosecution in the weekend arrest of the head of Russia's largest oil company Yukos. Mikhail Khodorkovsky was arrested on charges of fraud and tax evasion.
President Putin has never before commented on the Yukos affair, or Mikhail Khodorkovsky, who is widely believed to have invited the Kremlin's wrath by financially backing opposition parties challenging President Putin's allies in parliamentary elections scheduled for December.
President Putin urged his cabinet in Moscow to avoid being drawn into the nearly four-month-old dispute. He also defended Russian prosecutors and law enforcement as acting within the framework of Russian law.
President Putin ruled out discussing the case with Moscow's business community, but acknowledged he understood their concern about the status of privatization in Russia. President Putin said no generalizations or precedents about the future of privatization in Russia should be drawn from the Yukos investigation. Mr. Putin urges the Russian business community, media, and public to put an end to, what he called, the speculations and hysterics over Yukos.
Mr. Khodorkovsky's arrest on Saturday rocked Moscow's stock market, sending the prices of Yukos shares down by as much as 20 percent. Trading in the stock was briefly suspended, but resumed by noon, and regained some of the lost ground.
James Fenkner, the Director of Research at Moscow's Troika Dialogue brokerage house, said trading turned sour from the start. "It is a wild day today, except the direction is very clear," he said. "Absolutely everything in the Russian market is down; from the price of the Russian Eurobond to Yukos' share prices, which is down as low as 20 percent in dollar terms this morning."
The company issued a statement saying the arrest of its chief would not affect ongoing operations. The statement dismissed the charges against Mr. Khodorkovsky as absurd, and said he was the first Russian businessman to understand the importance of adopting international standards of corporate governance and financial transparency.