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Sistema’s billionaire owner Yevtushenkov under house arrest

September 17, 2014, 15:11 UTC+3 MOSCOW
Russian investigators accuse Vladimir Yevtushenkov of involvement in a money-laundering scheme, in which Sistema acquired Bashkortostan oil firms that had been privatized by Ural Rakhimov
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Vladimir Yevtushenkov

Vladimir Yevtushenkov

© ITAR-TASS/Alexey Filippov

MOSCOW, September 17. /ITAR-TASS/. Billionaire Vladimir Yevtushenkov ranked by Forbes among Russia’s 20 richest people with an estimated fortune of $9 billion has been placed under house arrest on suspicion of involvement in a case of illegal privatization of oil companies in the Urals Republic of Bashkortostan.

The oil firms privatized in Bashkortostan are now part of Bashneft, which is majority-controlled by Sistema, a Russian diversified holding company owned and managed by Yevtushenkov.

Russian investigators accuse Yevtushenkov of involvement in a money-laundering scheme, in which Sistema acquired Bashkortostan oil firms that had been privatized by Ural Rakhimov, a son of the republic’s former head, Murtaza Rakhimov.

The stocks owned by Yevtushenkov plummeted on Wednesday on news of his arrest, with public companies integrated into Sistema losing over $5.5 billion in their market value.

Aside from Bashneft, the billionaire’s core assets, which he owns through Sistema, include the Detsky Mir (Children’s World) toy store in Moscow, the Sistema Mass Media Group, MTS Bank, the Intourist group of travel companies, the Medsi network of private clinics and the Indian mobile operator Sistema Shyam TeleServices.

Putin informed about Yevtushenkov's arrest

President Vladimir Putin was informed about “charges brought against Yevtushenkov and his placement under house arrest after investigators had made a corresponding decision,” presidential spokesman Dmitry Peskov said on Wednesday.

“The president who undoubtedly understands that this may have a temporary negative impact on the markets, expects that all questions arising for investigators will be answered as a result of necessary investigative measures in strict compliance with the law and notwithstanding any names or ranks,” the presidential spokesman said.

The Sistema chairman and owner has been placed under house arrest until November 16. If convicted, he may be sentenced to seven years in prison.

Arrest not politically motivated

Privatization of the Bashkortostan fuel and energy sector started in the late 1990s and was completed in 2003. The southern Urals republic does not expect that Bashneft will be brought back to its ownership, but the Bashkortostan Land and Property Ministry has filed a lawsuit to seek $5.5 billion in compensation as part of a criminal case opened against Ural Rakhimov.

Privatization of Bashneft and its subsequent sale are “two different deals”, head of the Russian Union of Industrialists and Entrepreneurs Alexander Shokhin said. “If privatization was carried out with breaches of legislation, this does not mean that Sistema was a mala fide purchaser,” he said.

The arrest of Sistema’s owner is not politically motivated, Russian business ombudsman Boris Titov said on Wednesday.

“Situations connected with corporate, legal or legislative issues should not affect the business image,” Titov said in an interview with Rossiya-24 TV Channel. “I’m almost 200% sure that there are no political motives in this situation,” the Russian president’s business ombudsman said.

Rosneft rejects media reports it held talks to buy Bashneft

Russian oil major Rosneft on Wednesday rejected media reports that it had held talks on the purchase of oil firm Bashneft.

“We have never held any talks with Bashneft,” Rosneft spokesman Mikhail Leontyev said in an interview with Business FM radio station.

The statement follows after speculations that Rosneft run by Igor Sechin, a close ally of President Vladimir Putin, was interested in buying Bashneft.

The Sistema management issued a statement on Wednesday saying that the privatization of the BashTEK group of oil companies in Bashkortostan was lawful and transparent.

Sistema is cooperating with the investigative authorities and intends to use all legal means to defend its position, the company’s statement said.

Fomer Moscow mayor expects court to 'get things straight'

The arrest of Sistema owner Yevtushenkov is a high-profile but not a politically-motivated case, former Moscow mayor Yury Luzhkov said on Wednesday.

The former Moscow mayor who has known the Sistema head for many years said he didn’t see any special political context in the tycoon’s arrest as Yevtushenkov had never showed any political ambitions. Luzhkov said he hoped the “court will get things straight on all the charges brought up by the law-enforcers”.

The former Moscow mayor said Yevtushenko should cooperate with investigators to ensure an objective investigation. “Yevtushenkov has never showed up as a political figure. The main thing for Yevtushenkov is to endure this ordeal. I have the hope that the investigative authorities will sort out things objectively, if the case goes to court,” Luzhkov said.

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