As Russian's Trial Ends, So Does Era Of First Oligarchs

As the Kremlin has reasserted control over key industries, including energy and media, it has also placed Putin confidants in positions of power inside strategic companies.

Two of Putin's closest advisers, who are also rivals for his ear, double up as the heads of two of the country's most important companies. Dmitri Medvedev, the head of the Kremlin administration, is chairman of Gazprom, the natural gas giant. Igor Sechin, the deputy head of administration, is head of Rosneft, the state-controlled company that acquired the Yuganskneftegaz oil fields, the centerpiece of Khodorkovsky's former company, Yukos.

Others serving in the Kremlin also hold prominent business positions. Presidential aide Victor Ivanov is chairman of the board of the missile defense corporation Almaz-Antei; presidential aide Igor Shuvalov is chairman of Russian railways.

"Putin creates people who are very wealthy but dependent on Putin," said Yulia Latynina, a political commentator for the Echo Moskvy radio station. "They don't own these companies and he can fire them without having to go to court or forcibly take away property."

Shortly after assuming power, Putin warned the country's leading businessmen in a meeting that the Kremlin was no longer their instrument and said the state intended to reassert its authority in political life, according to one businessman who attended the meeting. He declined to be identified because he is still in Russia.

By then, Berezovsky and Gusinsky had been forced into exile, but for those who remained, including Khodorkovsky, the bargain was clear: Unless asked, stay out of politics, and the wealth acquired in the buccaneer 1990s will be safe. At the time, the businessman said, it was still unclear where the Kremlin's redlines lay.

Wherever they were, Khodorkovsky was crossing them. He spoke of retiring from Yukos in 2007, the year before Putin's second and final term would end. At the same time, he was giving millions of dollars to private groups and political parties that were seen as opponents of Putin, including Yabloko and the Union of Right Forces. He began to seem like a man with political ambitions.

At a meeting in the Kremlin in February 2003, Putin clashed with Khodorkovsky when the tycoon complained about government corruption. The following October, Khodorkovsky was taken into custody by armed commandos who stormed his private plane on the ground in Siberia. Altogether, more than 20 Yukos executives have been imprisoned or forced into exile.

"We needed to make an example," Igor Shuvalov, a senior Putin aide, said last month in a speech.

But the ascendancy of the bureaucracy over business led to persistent grumbling within the financial community over the last year, particularly among people without access to the top levels of power.

"The government wants to convince business that Yukos is an exception," said Yevgeny Yasin, a former economics minister under Yeltsin and now academic supervisor at the Higher School of Economics in Moscow. "The authorities want to humor business a little. But I think as long as the situation in the country depends on the mood of the president or his colleagues in the Kremlin, business has no reason to trust the future."