Moscow court refuses to release 'oligarch' Lebedev

A Russian court refused to release a leading industrialist yesterday, prolonging a crisis in confidence in the country's business elite.

The arrest of Platon Lebedev, the billionaire chairman of Menatep group, the holding company that owns 61 per cent of oil giant Yukos, has sparked fears that the Kremlin has decided to confront Russia's powerful 'oligarchs' - the business leaders who became fabulously rich by buying state assets in the controversial privatisations of the 1990s.

Lawyers for Mr Lebedev, who was arrested earlier this month over fraud charges, had petitioned the Moscow court for his release. The detention, over allegations unrelated to Yukos, has seen the oil company's offices raided by the tax authorities. It is believed that the real target of the Russian authorities is the chief executive of Yukos, Mikhail Khodorkovsky, Russia's richest man, who has been funding opposition political parties.

In 2000, President Vladimir Putin offered the oligarchs a deal that the origins of their wealth would not be investigated, so long as they stayed out of politics. Yukos shares have come under pressure over the affair although the group has insisted it remains on track to complete a deal to merge with Sibneft, an oil group controlled by Roman Abramovich, the businessman who has agreed a deal to buy Chelsea Village.

Mr Lebedev's spokesman, Yuri Kotler, immediately denounced the outcome of yesterday's hearing. "We consider the court decision as unprecedented, illegal and extremely harmful to our firm and the whole Russian investment climate," he said.

So far other oligarchs have not been publicly drawn into the confrontation with the Kremlin but rumours in Russia abound of the tax authorities starting investigations of other companies.