Russian tycoon arrested in London over fraud claims

Boris Berezovsky, the Russian billionaire who made a fortune after the collapse of Communism before moving to London, has been arrested and served with an extradition warrant after allegations that he took part in a £1.2bn fraud involving Lada cars.

After falling out with Vladimir Putin, the Russian President, Mr Berezovsky, 57, fled Moscow in 2000. He owns a string of million-pound properties in London but has remained a thorn in the side of Mr Putin's government. He is accused by the Russian authorities of taking part in a fraud, involving AvtoVAZ, the producer of the Lada, between 1994 and 1995. He is accused of illegally making 60 billion roubles (£1.2bn) with Yuli Dubov, 54, who was general director of LogoVAZ, the company that sold the cars.

In September last year Russian prosecutors issued an arrest warrant against Mr Berezovsky and Mr Dubov, and applied to Britain for the men to be extradited. Both were arrested in London on Monday by officers from Scotland Yard's extradition and international assistance unit. They were banned from leaving the country and bailed to appear at Bow Street magistrates' court on 2 April to face extradition proceedings.

Prosecutors will have to show the court that there is a case to answer before the men can be extradited to Russia to face charges. There is, however, a lengthy appeals procedure, which can drag on for years.

Mr Berezovsky, a friend and adviser of former president Boris Yeltsin, made a fortune in the chaotic first years of Soviet privatisation and deregulation. His financial empire ranged from interests in cars and private banking, to television. He is a vocal opponent of President Putin.

Mr Berezovsky was head of LogoVAZ, a car dealership set up in 1989 to sell Ladas. The company has been accused of overcharging customers and delaying payments to AvtoVAZ, the producer of the Lada, until the producer broke its ties with Mr Berezovsky in 1996.

The extradition warrant alleges that Mr Berezovsky defrauded the administration of the Samara region while director of the LogoVAZ company in 1994 and 1995.

Mr Berezovsky, who denies the fraud allegations, has said: "Everything we did in business was done in strict conformity to the law."

Since moving to Britain he has added to his fortune by becoming a property speculator. Among his recent purchases was a £4.25m house in Belgrave Square.

He was in the news earlier this month when a long-running libel case with the American financial magazine Forbes was settled out of court.

Forbes told the High Court it had not intended to state that Mr Berezovsky, in an article headlined "Godfather of the Kremlin?", was responsible for the murder of a rival television tycoon, Vladislav Listiev, in 1995, merely that he had been included in an inconclusive police investigation. The magazine accepted its accusations were wrong. It resolved the case without paying any damages or costs. After the case Mr Berezovsky published full-page newspaper advertisements. One showed his supposed tormentors, including President Putin.