MOSCOW (AFP) - Russian President Vladimir Putin told tycoons not to worry about more rigorous tax probes after repeated investigations into Yukos brought the country's number one oil giant to its knees and sparked worries of a state re-nationalization campaign.
Putin told Russia's business leaders during a meeting that they had to be responsible but not fear the state.
"The state has to guarantee the results of privatization and protection of private property as one of the basis of the market economy," Putin said in televised remarks.
"Investigations into the affairs of big businesses, including their taxes, should not be read as a sign that we are going to view every new business that opens up a threat to the state," Putin said.
"It is not productive to be afraid," the Russian leader added.
Putin's comments on taxes are watched closely by investors who fear that the government may launch a new wave of fiscal probes into companies formed in the economically murky days of the 1990s and eventually review privatization deals of that era.
The probes against Yukos -- Russia's largest oil producer that at one stage was worth more than 30 billion dollars -- have ruined the company and are likely to leave separate chunks of it in the hands of well-connected competitors.
Yukos's combined tax bill now stands at 18.4 billion dollars -- triple its current market value.
Meanwhile company founder Mikhail Khodorkovsky has spent more than a year behind bars facing a separate fraud and tax evasion inquiry that could see him sent to prison for 10 years or more.
Khodorkovsky was an open political opponent of Putin and his supporters charge that the Kremlin used the probes to silence a threatening rival.
But analysts are worried that the Kremlin may at any moment go after Russia's other businesses that allegedly used the same tax evasion schemes as Yukos and thus ruin the country's investment climate.
Putin's comments were mixed with a series of threats against tax cheats and came days after Russian number three TNK-BP -- half-owned by British oil giant BP -- was charged 83 million dollars in back taxes for 2001.
Analysts agreed that the low figure comparative to the charges facing Yukos meant that Russia's big business was safe for now.
"I do not see why this should happen all of a sudden," TNK-BP acting director Viktor Vekselberg said when asked if he expected his company to become the prosecutors' latest favorite target.
But Russian reports speculated that other energy giants had recently had their books checked, reports that LUKoil was forced to publicly dismiss on Tuesday.
Putin said Russian business had to acquire "a habit of paying taxes rather than looking for ways to avoid them."
The Russian leader had set up an unspoken code at the start of his first term in 2000 in which businesses that agreed to play by Russia's new rules -- which included not crossing the Kremlin's path -- would keep assets acquired in the shadowy 1990s privatization deals.
Yukos was believed to have broken that rule. Since then Putin has had occasional meetings with industry barons offering them advice on how best to behave.
His latest suggestion Tuesday was that tycoons should invest more of their money into "the human factor."
"We expect to see greater investments in social projects and science along with education from you," Putin told them. "Investment in the whole development of the so-called human factor."
11/16/2004 - 19:43 GMT - AFP