LONDON (CNNfn) - Russia's once-powerful tycoons are coming under increasing pressure after arrest warrants were issued for two of their leading members, according to Russian news reports Wednesday.
Warrants were issued for Boris Berezovsky and his ally Alexander Smolensky Wednesday as part of an ongoing corruption investigation by the country's general prosecutor, Yuri Skuratov. Both men deny all charges according to the official Interfax news agency.
The campaign against the seven so-called oligarchs who controlled Russia's financial and industrial complex is rocking Russia's business community at a time when investor confidence is shakily returning to Russia.
Skuratov is locked in a power battle with president Boris Yeltsin and offered to resign Tuesday for the second time in two months. His request is unlikely to be ratified by Russia's parliament, which has already thrown out an attempt to oust him.
Berezovsky is alleged to have siphoned hard currency funds from the international arm of airline Aeroflot, in which he indirectly holds a majority stake, according to the Interfax reports.
Financiers had already expressed concern about the airline's cash flow, which has been used as collateral on a $301 million loan to buy 10 Boeing 737s.
Nikolai Glushkov, the airline's former finance chief who negotiated the loans, is also wanted by state prosecutors,` Interfax said. Glushkov was ousted in February with a raft of other airline executives allied with Berezovsky
Yeltsin's power wanes
Berezovsky and Smolensky rose to prominence by financing Boris Yeltsin's presidential campaign in 1996. Together with the other oligarchs their business empires expanded rapidly after Yeltsin's appointment but have waned with the president's weakening grip on power.
Berezowsky's main vehicle is LogoVAV, the former auto group whose interests expanded into a $3 billion empire following the successful takeover of the Sibneft oil group and extensive banking and media interests.
Smolensky founded SBS-Agro Bank, the country's largest retail banking institution. It was declared bankrupt last year.
Berezovsky and Smolensky are both reported to be out of the country, with Berezovsky supposedly at his villa in southern France and Smolensky in Austria.
Berezovsky returned to France after being refused permission to fly to Moscow last week, where he was dismissed by leaders of the former CIS states as president of the loose confederation.
The other five oligarchs are Mikhail Fridman, Vladimir Vinogradov, Aleksander Zurabov, Vladimir Gusinsky and Vladimir Potanin, head of the Gazprom utility giant.
-- from staff and wire reports