MOSCOW, September 18 (RAPSI) – The arrest of Vladimir Yevtushenkov, the board chairman and largest beneficiary of Russia’s largest publicly-traded diversified holding company Sistema, will create additional risk for Russia’s investment climate, Economic Development Minister Alexei Ulyukayev said on Thursday.

"It is clear that the suspicion that there is some economic motive behind this complicates investors' decision-making," Ulyukayev told journalists. He added that the situation with Yevtushenkov could boost capital flight.

Yevtushenkov has been charged with money laundering under a case on alleged embezzlement and money laundering during the sale of Bashneft to Sistema in 2009. The court ruled that he be placed under house arrest in his mansion near Moscow until November 16. The decision has not yet become effective.

Sistema said the charges were unfounded and that it would use all available legal options to settle the conflict.

Sistema is one of Russia’s top 10 companies by revenue. Its largest assets are mobile operator MTS (a 53.5% stake) and Bashneft (89%).

Investigators believe that Bashneft shares were sold in 2009 at a huge “discount” of $500 million. The former head of Bashneft, Ural Rakhimov, was charged with embezzlement during the transaction and the subsequent laundering of the funds.

The investigation will determine the role Sistema played in the transaction and the individual who approved it.