MOSCOW, 24 July 2003 — A Moscow court yesterday turned down an appeal to release Platon Lebedev, core shareholder of oil giant YUKOS, deepening a confrontation pitting Russian big business against the Kremlin.
“The court upheld an (earlier) decision regarding Lebedev and decided to consider the appeal unsatisfactory,” said Olga Timofeyeva, chairman of a Moscow court, after hearing a call by Lebedev’s lawyers for his immediate release.
Lebedev was detained on July 2 on charges of theft stemming from a 1994 privatization deal. But YUKOS chief Mikhail Khodorkovsky — Russia’s richest man and seen by many as the real target of the action — says his detention was launched by conservative forces in the Kremlin.
The affair has led to a sharp decline in the share price of YUKOS, and the court’s decision to prolong Lebedev’s detention seemed certain to further unnerve investors, who had been enjoying a rare period of political calm and post-Soviet growth. YUKOS shares deepened their losses after the announcement, falling 4.1 percent to $11.00 per share.
Lebedev’s spokesman Yuri Kotler immediately denounced the outcome of the hearing. “We consider the court decision as unprecedented, illegal and extremely harmful to our firm and the whole Russian investment climate,” he said. He said the ruling would be appealed against but added: “But we fear Lebedev will spend another month or month and a half in jail.”
President Vladimir Putin has made little direct comment on the YUKOS case, but has described the detention of suspects in economic crimes as excessive.
Putin ordered his government yesterday to limit state intervention in private business.
It appeared to be Putin’s first response to an issue fueling local and foreign investor fears that the government was considering a review of shadowy privatization deals of the mid-1990s and a redistribution of property.
Any such redistribution could trigger a massive flight of capital, which has only begun to trickle back into Russia with the country’s recent economic upswing.
Earlier, Renaissance Capital head of trading Pavel Naumenko said investors, rattled by the unexpected assault on a blue chip firm, were inclined to sell the stock and predicted a major selloff if Lebedev was not released. Stock market speculators bought YUKOS stock this week, betting Lebedev would be released.
Lebedev’s lawyers, during an earlier recess in court proceedings, said the prosecutor’s office was seeking to introduce new evidence, but believed this would not weigh on the petition for him to be released.
“Lebedev is not a terrorist, not a killer, not a violent maniac and of course he in no way represents a threat to society,” said lawyer Yevgeny Baru.
He added that his client, who was detained by police while he was in hospital, was suffering from high blood pressure, dizziness and pains in the back of his neck.