The Telegraph
Since 1st March, 1999
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Khodorkovsky steps down as head of Yukos

Moscow, Nov. 3 (Reuters): Oil tycoon Mikhail Khodorkovsky, Russia’s richest man and held in jail on tax evasion and fraud charges, quit today as head of oil giant Yukos, saying he wanted to spare the company further action by prosecutors.

Shares in the company, at the centre of a confrontation with the Kremlin, rose by 12.95 per cent to $12.65 in dollar-based trade on the Russian trading system and by 13.39 per cent to 391.20 roubles on the MICEX exchange after his announcement.

But they remain about 15 per cent below their level before Khodorkovsky’s gunpoint arrest on October 25. Khodorkovsky controls about 26 per cent of Yukos. “I am leaving the company,” Khodorkovsky said in a dramatic statement from his Moscow cell. He said he wanted to shield Yukos from further judicial action and now intended to go into charity work.

“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 in a statement.

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

Prosecutors have also frozen a controlling stake in Yukos owned by him and his associates.

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

Many analysts saw the announcement as good news for Yukos. “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.”

“From an operational point of view we do not see any negative consequences because he did not take part in direct management of the company and he was, above all, a person who gave strategic direction. He can continue in this role as an external consultant,” said Pavel Kushir of UFG.

Khodorkovsky, 40, was whisked to Moscow after his arrest in Siberia and thrown into jail 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 privatisation deal and prosecutors say they want to lift the parliamentary immunity of another shareholder so they can pursue tax evasion charges against him.

An international lawyer acting for Khodorkovsky accused Russian authorities of disregarding the rule of law. “We are talking about a cancer, a cancer that is growing on the Russian body politic,” said Robert Amsterdam, of Toronto law firm Amsterdam and Peroff, in Brussels.

Putin, some of whose top lieutenants are openly expressing alarm at the legal assault on Russia’s biggest oil firm, will try to mollify European leaders this week with assurances that the Kremlin remains pro-business.

Putin’s trip to western Europe will be his first foreign venture since Khodorkovsky’s arrest and the freezing of shares in Yukos raised questions about the future of big 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 talks with President Jacques Chirac.

Earlier today, in what is likely to be taken as a confidence vote for investors, Deutsche Bank said it would buy a 40 per cent stake in Russian investment bank United Financial Group.

Putin says he remains committed to the market.

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 over prosecutors’ action.

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