By Laura Mills

MOSCOW--Russian Economy Minister Alexey Ulyukaev was detained and accused of bribery by law enforcement agencies on Tuesday, the highest profile arrest of a sitting government official since President Vladimir Putin came to power in 2000.

Russia's Investigative Committee said Mr. Ulyukaev had been detained late on Monday and was accused of accepting a bribe of $2 million bribe for the privatization of a midsize oil company last month.

Kremlin spokesman Dmitry Peskov was cited by the Interfax news agency as saying that the president was aware of the arrest and had been "informed at the moment the operation began," though it wasn't immediately clear whenlaw enforcement agencies had started investigating Mr. Ulyukaev.

"This is a very serious accusation, one which demands serious evidence," he said. "In any case, it can only be determined by the court."

The 60-year-old Mr. Ulyukaev is perceived as one of the more liberal voices in Russia's government. He served in the finance ministry and in Russia's central bank before becoming economy minister in 2013.

While Russia's security organs have opened criminal investigations and occasionally arrested high-profile businessmen and senior officials under Mr. Putin's tenure, detaining a sitting minister--and the president's personal involvement in the case--signals an unprecedented move.

The Investigative Committee said that a criminal investigation had been opened against Mr. Ulyukaev for bribery on a major scale, a charge that carries a penalty of up to 15 years in prison. A Moscow court said that a hearing was slated for Tuesday.

The Investigative Committee alleged that Mr. Ulyukaev had accepted the bribe in exchange for giving a green light for state oil producer PAO Rosneft to buy just over 50% of a smaller producer, PAO Bashneft

"The accused issued threats that, using the powers of his office, [he could] create further obstacles for the company," the committee claimed in a statement. It said that representatives of Rosneft itself had informed law-enforcement officials of Mr. Ulyukaev's actions.

The deal was initially postponed after officials bickered publicly over whether Rosneft, a state-controlled company, should be allowed to participate in the deal.

Mr. Ulyukaev spoke out against the deal in August, saying privatization of one state company by another was "inappropriate." In early September, however, he said that Rosneft would be allowed to participate in the deal.

Rosneft eventually bought the shares for 330 billion rubles ($5 billion), higher than the government's initial valuation of the company at 306 billion rubles.

A spokesman for Rosneft declined to comment on the Investigative Committee's actions, but said the stake in Bashneft "was acquired in accordance with Russian law."

The Investigative Committee said there was no wrongdoing by Rosneft "and that the legality of the sale of Bashneft to Rosneft is not being disputed by anyone and is not a subject of the investigation."

Gleb Pavlovsky, an analyst and former political adviser to the president, questioned why the investigation was focused solely on Mr. Ulyukaev, given that the president had signed off on the high-profile Bashneft sale.

"Perhaps the Kremlin has decided that the country is in a crisis and needs new decisions, so they decided to arrest a strong [government] manager like Ulyukaev."

A spokeswoman for the Ministry of Economy couldn't be reached for comment. Russian marketswere mixed midday, with the ruble-traded Micex index down 0.32% and the dollar-traded RTS index was up 0.99%.

Write to Laura Mills at

(END) Dow Jones Newswires

November 15, 2016 06:12 ET (11:12 GMT)

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