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Report: Putin top aide quits

Voloshin
Rumors had been circulating Voloshin quit over the arrest of oil magnate Khdorkovsky.

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The arrest of oil tycoon Mikhail Khodorkovsky has sent shock waves through the Russian stock market. CNN's Jill Dougherty has more. (October 27)
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MOSCOW, Russia (CNN) -- Russian President Vladimir Putin has accepted the resignation of Kremlin chief of staff Alexander Voloshin, Interfax news agency reported.

There were reports in the Russia media that Voloshin submitted his resignation to protest the arrest of Mikhail Khodorkovsky, head of Yukos Oil Company.

The Kremlin said Voloshin is being replaced by Dmitri Medvedyev, who was Voloshin's chief assistant. Kremlin officials would not say when Voloshin submitted his resignation and why.

Khodorkovsky was arrested Saturday on charges of fraud and tax evasion totaling more than $1 billion. He remains in jail.

Earlier Thursday Russian authorities seized a controlling stake in oil giant Yukos. Shares in the company plummeted 5 percent on the news, Interfax said.

"As you can imagine, this news is causing quite a sensation," CNN Moscow Bureau Chief Jill Dougherty said.

Russian President Vladimir Putin was due to meet financial leaders at the Kremlin later Thursday in an effort to calm money market nerves sparked by the arrest of Yukos head Mikhail Khodorkovsky earlier this week on alleged fraud and tax evasion charges valued at $1 billion. He remains in prison.

But the share take-over move "is really stirring the pot," Dougherty added.

Russian prosecutors are seizing 44 percent of Yukos it says Khodorkovsky owns, in a bid to stop the money leaving the country.

They said in a written statement the shares "are being seized as security against material damage."

Prosecutors claim the shares, while technically the property of two international companies, in reality belong to Khodorkovsky.

They add that according to Russian law, they have the right to seize property owned by people accused of crimes.

But public relations agents for Khodorkovsky, said the move was a "gross violation of the law" and that the arrest was on "trumped up" charges.

They add that the shares do not belong to him but rather international investors.

Yuri Kotler, a spokesman for Group Menatep, a Yukos affiliate, told CNN that prosecutors are not correct in claiming that Khodorkovsky owns the shares. Kotler said the shares were put under Khodorkovsky's trust, that he has the right to vote the shares, but has no ownership rights over them.

When Khodorkovsky was arrested, Kotler said, he gave the shares to a third shareholder. The lawyer refused to name the other shareholder. He said the prosecutor's action means shares cannot be sold or moved to other accounts.

The key issue, according to James Fenkner, head of research for Troika Dialog investments, is what ultimately happens to the shares. "Their legal status is unknown at this stage," he told CNN. "They are in a legal vacuum."

Khodorkovsky seen in Moscow's Basmanny district court Saturday.
Khodorkovsky seen in Moscow's Basmanny district court Saturday.

If Khodorkovsky is convicted, he said, he could lose his assets to the state. This could be interpreted as nationalization, which is a highly charged issue in Russia. Putin has promised the Khodorkovsky case will not be used to reopen controversial privatizations of the 1990s in order to re-nationalize Russian companies.

Dougherty said the seizure of the shares is an attempt to remove control from Khodorkovsky.

"They are saying he is a threat," Dougherty said. "Also that he is a law-breaker to the tune of $1bn."

But the political situation is being cited by analysts as the reason for his detention. He has given large amounts of money to political opposition figures.

Earlier this week Russia's general prosecutor asked a regional court to invalidate the election of a Yukos shareholder to Russia's upper house of parliament.

The move would revoke Vasily Shakhnovsky's immunity and open the door to his arrest.

Another key member of the Yukos team currently in custody pending an investigation on charges of fraud and tax evasion is Yukos shareholder Platon Lebedev.

Yukos lawyer Anton Drel, meanwhile, told CNN that Khodorkovsky, in detention in Moscow since his arrest last Saturday, "looks fine, is energetic" and is asking about his family, including his wife and children.

Khodorkovsky "has no illusions" about his case, according to his lawyer, but "thinks that he has a good chance in a really open legal trial process."

"He hopes for civil society, the legal system, and a good future," Drel added.

-- CNN Moscow Bureau Chief Jill Dougherty contributed to this report


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