US Ambassador to Russia Alexander Vershbow said Sunday that the recent arrest of Mikhail Khodorkovsky, head of the country's largest oil company Yukos, could negatively affect Russia's investment climate, Interfax news agency reported Sunday.

The event could raise new doubts among both foreign companies operating on the Russian market and potential investors, Vershbow said after Russia detained Khodorkovsky, also known as the country's richest man, on charges of fraud, forgery, embezzlement and tax evasion among other offenses.

Vershbow noted that it is too early to gauge how Khodorkovsky's arrest could affect the plans of major American companies, particularly ExxonMobil and ChevronTexaco, which are reportedly interested in buying a share in the Yukos-Sibneft company.

Washington is concerned over the escalation of tensions surrounding the Yukos issue, Vershbow said, hinting that the event makes people suppose that Russian law is being applied selectively.

Khodorkovsky was arrested on Saturday morning at an airport in Russia's Siberia after his plane landed to refuel. He was then brought to the Prosecutor General's Office in Moscow for interrogation.

Khodorkovsky rejected all the charges brought against him by prosecutors, who also accused him and Platon Lebedev, a core Yukos shareholder who was arrested in July, of causing damage of more than US$1 billion and harming the Russian state.

The Yukos leadership qualified the charges brought against Khodorkovsky as "absolutely unfounded" and "ridiculous," condemning the arrest as an "obviously political motivation".

Khodorkovsky spent his first night in custody on Saturday in an overcrowded detention center in Moscow and has to endure the preventive detention period till Dec. 30, according to his lawyer Anton Drel, who declared the intention on Sunday to appeal against the arrest of his client.

The billionaire oil tycoon shared an ordinary cell with five other inmates, in stead of a large common cell that normally holds up to 15 inmates, in the pre-trial detention center Matrosskaya Tishina.

"There are no grounds for placing Khodorkovsky in any exclusive conditions, but he is in a relatively small cell," Deputy Justice Minister Yuri Kalinin said on Sunday, admitting that some inmates feel uncomfortable in the overloaded prison.

The prison, which is designed for 2,500 inmates, holds 3,500 at present and 8,500 prisoners last year, when the inmates had to sleep in turn.

The Yukos investigation began in July with the arrest of Lebedev on charges of theft of state property during the 1994 privatization drive in a fertilizer plant. Lebedev has remained in jail awaiting trial.

(Xinhua News Agency October 27, 2003)