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Arrest of billionaire hurts business climate - Russian minister
September 18, 2014 / 10:17 AM / 3 years ago

Arrest of billionaire hurts business climate - Russian minister

MOSCOW (Reuters) - The arrest of Russian billionaire Vladimir Yevtushenkov on money laundering charges has hurt Russia’s business climate and could spur capital flight, Economy Minister Alexei Ulyukayev said on Thursday.

Russian Economy Minister Alexei Ulyukayev (C) speaks with journalists before a meeting of the presidential council at the Kremlin in Moscow, September 18, 2014. REUTERS/Maxim Shemetov

In the first critical comments by a Russian official since Yevtushenkov, chairman of the Sistema telecoms-to-oil conglomerate, was placed under house arrest on Tuesday, Ulyukayev said clarification on the situation was needed.

“This is certainly reflected in the investment climate. It is clear that the suspicion that there is some economic motive behind this complicates investors’ decision-making,” he told reporters, adding that the situation could spur capital flight.

“We have a (growth) forecast for -2.4 percent this year for investment, however this is without a doubt under threat and here we have been waiting for some kind of clarification of the situation.”

Analysts say Yevtushenkov’s arrest over a 2009 deal in which he acquired a stake in oil producer Bashneft may be aimed at putting pressure on the businessman to sell the shares to state oil major Rosneft, led by an ally of President Vladimir Putin.

Chairman of conglomerate Sistema Vladimir Yevtushenkov attends the St. Petersburg International Economic Forum 2014 (SPIEF 2014) in St. Petersburg in this May 23, 2014 file photo. REUTERS/Sergei Karpukhin/Files

Rosneft has denied the allegations.

The arrest prompted fears that the practice of state intervention in business was on the rise in Russia and that even businesses loyal to the Kremlin could be targeted.

Shares plummeted and Yevtushenkov’s Sistema lost a third of its value on Wednesday, striking the stock market and investment climate at a time when the already-weak economy is being dragged lower by Western sanctions over Ukraine.

Ulyukayev also said Moscow had not yet prepared retaliatory measures to Western sanctions.

“There are no prepared decisions. In this situation it would not be productive because any action should be based on the interests of our consumers, and I do not see any clear way of doing this.”

Reporting by Alexei Anishchuk, writing by Elizabeth Piper, editing by Gabriela Baczynska

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