Move Against 2nd Mogul Spooks Russia Business Elite

A week after the arrest of a powerful media mogul, prosecutors took aim at a second Russian tycoon Tuesday, arousing fears of a possible Kremlin campaign against select business leaders.

The Moscow prosecutor’s office filed suit to reverse the privatization of the country’s largest metal company, Norilsk Nickel, which is controlled by leading oligarch Vladimir O. Potanin.

The action followed the arrest June 13 of media tycoon Vladimir A. Gusinsky, who spoke out Tuesday on his own television network to condemn the actions against him.

Potanin, a former deputy prime minister for economic affairs, is president of Interros. In addition to Norilsk Nickel, his financial group controls Uneximbank, Rosbank and several newspapers, including the Moscow daily Izvestia.

Following news of the action against Potanin, the ASP general index of the Moscow Stock Exchange fell 3.4% Tuesday. The value of Norilsk Nickel shares dropped 10%. The nation’s stock market also dipped last week after Gusinsky’s arrest.

Many Western analysts believe that economic reforms in Russia are doomed without measures to dilute the political influence of the heavyweight tycoons who rose to prominence under former President Boris N. Yeltsin.

But it remains to be seen whether President Vladimir V. Putin, who was elected in March, is spearheading a campaign against all the major oligarchs, or merely taking on those in competition with tycoons who have influence with his Kremlin.

Gusinsky’s arrest and jailing for three days last week on charges of embezzling as much as $10 million during the privatization of a St. Petersburg production group, Russkoye Video, sent shivers through the ranks of the business elite. Released Friday, he still faces charges and could serve 10 years if convicted.

Tuesday’s move to reverse the privatization of Norilsk Nickel, which was carried out over several years in the mid-1990s, increased the fears in the business community.

Some Western analysts were alarmed that the Kremlin may be launching a campaign to overturn a series of privatization deals, which would start an economic battle between Russia’s financial giants and the authorities.

A series of controversial privatization auctions in the mid-1990s saw some of the nation’s prime assets sold off at what critics charged were bargain-basement prices to businesspeople with close ties to the authorities. The sales were part of Russia’s conversion from a Communist-era command economy toward a market system.

“If they’re going to investigate all those privatizations, there’ll be no end to it,” a Western business analyst here said Tuesday.

Gusinsky, speaking live on his Media-Most company’s NTV television network, said the Kremlin was trying to split the oligarchs into friendly insiders and enemy outsiders. He also had no doubt Putin was behind his arrest.

“I think that today the authorities want to control everything: oil, the money that stands behind it,” he said. “The authorities have divided the so-called oligarchs into their own oligarchs and aliens, into those who are closer to them and help them and those who don’t, into those who are working for the authorities and have assimilated into the authorities and those who haven’t.”

The oligarchs now said to wield the most influence in “The Family,” a Kremlin inner circle under Yeltsin and Putin, include Roman A. Abramovich, who controls the Sibneft oil company, and Alexander L. Mamut. With a major power realignment going on in the wake of Putin’s election, it is not clear how much influence another leading oligarch, media tycoon Boris A. Berezovsky, still wields. Berezovsky has lately been sharply critical of Putin.

Interros spokesman Valentin Shapka expressed the fear that Potanin was being victimized for defending Gusinsky last week in an open letter to Russia’s prosecutor general. Potanin’s signature was first among those of 17 business leaders who strongly condemned the arrest.

“It is difficult to imagine a more unsuitable time for such attacks,” Shapka said. “President Putin goes abroad and declares that Russia is ready to embrace foreign investors and create favorable conditions for them. Today’s action is totally contrary to such statements and might just sober up any businessman who took those declarations for granted.”

He said the federal Audit Chamber and Moscow’s Arbitration Court had examined the Norilsk Nickel privatization and judged it legal.

However, Nikolai P. Shmelyov, an economic analyst from the private Institute of Europe, was highly critical of the original Norilsk Nickel deal.

“At the time it evoked nothing but disgust and indignation among those who understood the true price of the most efficient nickel producer in Russia, if not in the world,” he said.

Potanin’s Uneximbank, after an auction conducted by itself, purchased the nickel giant for what critics say was a low price in a controversial loans-for-shares deal.

Despite his criticisms, Shmelyov warned that wholesale moves to overturn privatization would be “totally ruinous and absolutely counterproductive. It would scare away the few foreign investors who were considering risking their fortunes in Russia against all odds.

“What is worse, it would totally demoralize domestic investors and capital flight would become unstoppable,” he added, saying that oligarchs would resist such measures and “unpredictable social upheavals and convulsions might follow.”

Anatol Lieven, a Russia expert with the Carnegie Moscow Center, said there have been many voices in the West calling for a move against the oligarchs, who are seen as standing in the way of positive economic change.

“It will take a hell of a lot of nerve,” Lieven said. “It’s obviously taking a huge risk, because now Putin’s taking on a whole set of extremely powerful interests.

“It depends on whether he’s really confident of the support of the Interior Ministry, security services and, in the last resort, the army.”

Russia will be worse off, he said, if Abramovich and Berezovsky are still flourishing in several years while all their business rivals have disappeared.

“That would be even more dangerous for Russia than the existing situation,” he said, “because then you would have one very small group of oligarchs running everything.”

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Sergei L. Loiko in The Times’ Moscow Bureau contributed to this report.