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What's behind Oligarch's arrest?

Wednesday, September 17, 2014 - 01:47

Shares in Russia's Sistema holding company drop 32 percent after its chairman is placed under house arrest by investigators. Ivor Bennett reports on what's behind the arrest and its impact.

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He's one of Russia's richest oligarchs. But Vladimir Yevtushenkov is now under house arrest in Moscow after Russian authorities accused him of money-laundering. (SOUNDBITE) (Russian) RUSSIAN INVESTIGATIVE COMMITTEE SPOKESMAN VLADIMIR MARKIN, SAYING: "The investigators found sufficient grounds to suspect that Yevtushenkov is involved in the privatization of property on especially large scale, that was obtained by criminal means. He has already been charged with this, and pre-trial restrictions have been imposed." Yevtushenkov is Chairman of Sistema - a Russian holding company. The charges relate to its acquisition of the up-and-coming oil producer Bashneft. After the arrest Sistema's Moscow-listed shares dropped 32%, wiping $2.6 billion off the value of the company. That dragged the wider stock market lower at a time when it's already fragile due to sanctions over Ukraine. Pierre Briancon from Reuters Breakingviews says the two are linked. SOUNDBITE (English) PIERRE BRIANCON, EUROPE EDITOR, REUTERS BREAKINGVIEWS, SAYING: "As Russia is aggressive externally militarily, the Russian economy is slowly closing down. And so it's resorting back to the old authoritarian ways to manage an economy. You see it with embargoes, and bans on Western products." Sistema also controls Russia's biggest mobile phone operator MTS. Its shares dropped 7% while Bashneft's plunged 22%. The Moscow Exchange responded by temporarily restricting trading. The rouble did stabilise after sharp falls over the past week thanks to a new dollar-rouble swap facility launched by the Russian central bank. But western sanctions are clearly hurting Russia. And the worry is - how will it respond next?

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What's behind Oligarch's arrest?

Wednesday, September 17, 2014 - 01:47