Mikhail Khodorkovsky is to remain in jail while under investigation into charges of fraud and tax evasion after the Russian billionaire’s application for bail was denied on Tuesday.

Mr. Khodorkovsky, the former head of Russian oil giant Yukos and Russia’s richest man, was jailed 17 days ago on fraud charges. He took part in the bail hearing via a video link but the judge ordered other observers out of the room before proceedings began.

President Vladimir Putin was last week forced to defend the activities of Russian prosecutors against a growing chorus of domestic and international criticism of procedural abuses in the case.

Mr. Khodorkovsky has been held in a Moscow pre-trial detention center since his arrest at gunpoint in Siberia, after which he was charged with fraud and tax evasion totaling $1 billion.

His foreign lawyers have threatened to take the case to the European Court of Human Rights as well as to the UN Commission on Human Rights, following alleged violations of due process including raids by prosecutors on his Russian lawyers’ offices.

Mr. Khodorkovsky last week made what some political analysts perceived as a gesture to calm the escalating conflict around him when he agreed to step down as chief executive of Yukos, severing his direct management ties to the company of which he is the largest shareholder.

But investigators on Monday intensified inquiries in the Evenkiisky republic, in the far north, where Yukos has significant interests and where a court last week threw out an attempt to grant immunity to Vasily Shakhnovsky, another Yukos executive and shareholder charged with tax evasion, by giving him a seat in the Federation Council, the upper parliamentary chamber.

Separately, commercial lawyers are believed to be preparing actions to appeal against the authorities’ decision to freeze a 40 percent block of shares in Yukos linked to Mr. Khodorkovsky and his key partners. Menatep, the vehicle through which he held the shares, has denied they still belong to him and is seeking their release.

Yukos last week unveiled a new management team and has pushed ahead with existing projects, playing down the interest Mr. Khodorkovsky had shown in a strategic alliance with a key western oil group.

Other shareholders and partners of Mr. Khodorkovsky have traveled to Israel, where Leonid Nevzlin, the second largest owner of Yukos shares, last week obtained citizenship.

Mr. Putin on Monday attempted to put a positive light on last Thursday’s EU-Russia summit in Rome, where he was criticized over the handling of the Yukos case and triggered a sharp exchange within the European Union. In a rare public sign of dissatisfaction, the European Commission on Friday distanced itself from Silvio Berlusconi, Italian premier and current EU president, for his strong defense of Mr. Putin.

Igor Ivanov, Russian foreign minister, at the weekend rejected any interference by other countries in the Yukos affair, which he called an internal matter.

He downplayed criticism from the White House, saying that it had come instead from others still locked in the Cold War.

© The Financial Times Ltd 2013. "FT" and "Financial Times" are trademarks of the Financial Times.


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