Russian capital flight triples

Russia's finance chief predicted that capital flight will triple this year but said the campaign against Yukos would barely affect the figure.

Finance Minister Alexei Kudrin forecast that net outflow of private capital from Russia in 2004 would reach about $9 billion (£5bn) in 2004. Capital flight from Russia last year was estimated at about $2.9 billion.

Mr Kudrin said the main reason for the increase is higher American interest rates and that the web of legal actions against Yukos and its main shareholders would have almost no effect on the process.

Capital flight, a significant concern for Russia's economy, declined sharply in recent years as economic growth and apparent stability set in under President Vladimir Putin after the chaos of the 1990s.

But the problems facing Yukos, Russia's largest oil producer, have raised questions about the security of property rights and investment in Russia, and analysts have predicted capital flight could reach at least $12 billion this year.

Yevgeny Gavrilenkov, chief economist of the Troika Dialog investment bank, said recently that Yukos was among a combination of reasons for the capital exodus - among them mixed signals from Russia's leadership about economic policy.

Mr Kudrin appeared to address that concern today, saying that there is no difference of opinion within Prime Minister Mikhail Fradkov's government about economic policy.

Meanwhile, Russian prosecutors today continued their onslaught against the country's largest oil producer, raiding the accounting division of Yukos and seizing documents.

The Russian Interfax news agency reported that investigators from Russia's General Prosecutor's Office seized boxes of bookkeeping records concerning the activities of Yukos and its subsidiaries for 2003 and 2004.

A Yukos spokeswoman said that the investigators were confiscating documents and electronic data. Officials at the prosecutor's office refused to comment immediately.

Yukos is struggling to pay a potentially crippling 99.4 billion ruble (£1.9bn) back-taxes bill for 2000. It faces a similar claim for 2001, and the total claims against it for the period 2000 to 2003 are expected to swell to some $10 billion (5.6 billion).

The former Yukos chief executive Mikhail Khodorkovsky is on trial on charges including fraud and tax evasion, in what is widely seen as a Kremlin-backed campaign of punishment for his growing influence beyond the busienss world. Mr Khodorkovsky, Russia's richest man, provided funds to opposition political parties and had challenged Kremlin policy as head of Yukos.

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