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The majority shareholder and chairman of AFK Sistema, Vladimir Yevtushenkov, has been charged with the fraudulent acquisition of oil company Bashneft in 2009 and placed under house arrest, in a move that jeopardizes Russia's already fragile investment climate.

Yevtushenkov, the founder and owner of 64.2% in AFK Sistema, a telecommunications and energy conglomerate with a market capitalization of £6bn on the London Stock Exchange, was charged September 16 with theft and money laundering by Russia's investigative committee and placed under house arrest. Sistema denied the charges in a statement.

Sistema's share price on the London Stock Exchange fell almost 38% when trading opened in London on September 17, before recovering by mid-afternoon to trade around down 8%.

Sistema's main asset is Russia's leading mobile operator MTS, which together with international subsidiaries has over 110m subscribers. MTS is headed by Ron Sommer, former head of Deutsche Telekom.

This is the first arrest of a top oligarch since the notorious arrest of former oil baron Mikhail Khodorkovsky in 2003. Forbes listed Yevtushenkov as Russia's 25th richest man with assets worth $4.6bn in 2014. However, the arrest of Khodorkovsky had a political context that the arrest of Yevtushenkov seems to lack.

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Yevtushenkov's Sistema built up its giant mobile business in close partnership with the government of Moscow under long-serving mayor Yury Luzhkov, where he initially headed the municipal committee on science and technology in 1990, before founding Sistema in 1993. The company experienced massive growth as the mobile revolution took off, allowing the conglomerate to spread its wings.

Yevtushenkov bought the companies that are now Bashneft subsidiaries from Ural Rakhimov, son of the long-serving former president of Russia's republic of Bashkortostan, also known as Bashkiria, in 2009. The Bashneft companies were originally state owned, and Rakhimov is widely regarded as having acquired them illegally using his father's position. President Murtaza Rakhimov was later replaced in 2010, and Ural Rakhimov left Russia for Austria. Sistema consolidated the disparate companies into Bashneft, which had a turnover of around $14bn in 2013.

Yevtushenkov is now being charged with having acted as a fence for Ural Rakhimov's illegally acquired property, originally stolen from the state. A key witness in the case is the former senator representing Bashkiria in Russia's upper house, the Federation Council, Igor Izmestev, who is serving a life sentence in connection with terrorist acts and murders.

However, at the time the deal was closed in 2009 there were no questions asked by law enforcement. The current investigation into the circumstances under which Yevtushenkov acquired the Bashneft assets started in April, but moved swiftly, according to business daily Vedomosti. In July, the investigative committee arrested Levon Airapetyan, who had acted as an intermediary in the deal between the Rakhimov family and Sistema, while the country’s share registry imposed restrictions on the holding company’s dealings in Bashneft shares. In August, Ural Rakhimov was put on Russia's wanted list, and informed sources began saying it was only a matter of time before Yevtushenkov himself was charged.

Insiders believe that the real goal of the charges against Yevtushenkov is to force him to sell Bashneft at a price he was not willing to accept. According to sources quoted by Vedomsti, Yevtushenkov had tried to get a meeting with top Kremlin officials to discuss the situation but failed. Dmitry Peskov, press secretary of Russian President Vladimir Putin, denied there was any political motivation behind the charges.

Sistema CEO Mikhail Shamolin told Vedomosti that the company's existence is probably not threatened by the case, since it's run on a day-to-day basis by professional managers independently of Yevtushenkov, who acted more as a business strategist. But other sources question this, saying that all key decisions in the business were taken personally by Yevtushenkov.

"We believe that in this scenario, Yevtushenkov may have to sell the company significantly below the market price, or Bashneft may be taken over by the state, in order to recover alleged losses during its privatization," comments Evgeny Golosnoy, an analyst at brokerage Metropol. "As a result, we expect the market to respond with a heavy selloff of Sistema stock, as it is the main company to lose in the current circumstances. We also expect further a weakening in Bashneft, because of grave uncertainties about its future."