Russian prosecutors have seized about half of shares in Russia's largest oil producer Yukos, Russian news agencies reported Thursday.

"The shares have been seized as security against material damage," a Prosecutor General's Office representative told Interfax.

The Prosecutor General's Office said the shares are owned by two foreign companies registered on Cyprus and the Isle of Man.

The Yukos spokesman Alexander Shadrin said 53 percent of the company's shares had been arrested by prosecutors, adding that they had taken such move in connection with a criminal case against the company's chief executive Mikhail Khodorkovsky.

The investment bank of Trust, which had kept the shares, said the prosecutors had arrested only 44.1 percent of the shares in Yukos.

The Prosecutor General's Office representative said that the shares have only been seized, not been confiscated.

"Only shares belonging to people figuring in criminal cases -- Mikhail Khodorkovsky, Platon Lebedev, and Vasily Shakhnovsky -- have been seized. Other shareholders' shares have not been seized," he said.

The shares cannot be sold, "but all other transactions with the seized shares can be performed, " he added.

However, Shadrin denied that only shares owned by Khodorkovsky, Lebedev and Shakhnovsky have been seized, adding that all Yukos shares owned by these companies were placed under seizure.

"What we are seeing is a gross infringement on the rights and ownership rights of other Yukos shareholders. These events are a fine example of how ownership rights are really regarded in Russia today," Shadrin said.

Following the arrest of the stake, the papers of most Russian market leaders fell 3 percent to 5 percent in the Russian Trade System (RTS).

Yukos has been facing a judicial campaign by prosecutors since July when core company shareholder, Platon Lebedev, was arrested on charges of theft of state property in a 1994 privatization deal.

The company's chief Khodorkovsky, Russia's richest man, was arrested Saturday on charges of fraud, tax evasion and five other offenses. He is at present undergoing a two-month pretrial detention in a Moscow prison.

Earlier this month prosecutors charged Vasily Shakhnovsky, the head of Yukos-Moscow, Yukos' main subsidiary, with tax evasion to the amount of 29 million rubles (US$970,000) in 1998-2000.

(Xinhua News Agency October 31, 2003)