The detention of a billionaire on money-laundering charges sent shockwaves through Russia's business and political circles on Wednesday and prompted comparisons with a crackdown on former oil tycoon Mikhail Khodorkovsky.
The Investigative Committee, which reports directly to President Vladimir Putin, announced late Tuesday that Vladimir Yevtushenkov had been placed under house arrest and was being investigated for misappropriation or embezzlement linked to an oil deal.
The move was reminiscent of the prosecution of Khodorkovsky, once Russia's richest man and head of the now-defunct Yukos oil firm, who spent a decade in jail up to 2013 in what his supporters say was revenge for challenging the Kremlin.
Many said Yevtushenkov's arrest marked a watershed for Russian business as the authorities signalled that even tycoons loyal to the Kremlin were no longer immune from prosecution.
The 65-year-old Kremlin-friendly chairman of Sistema conglomerate, who is Russia's fifteenth wealthiest man with a fortune of $9 billion (7 billion euros) according to Forbes, must now wear an electronic bracelet, said a spokeswoman for the prison service.
He has been placed under arrest until mid-November in his country residence outside Moscow and is banned from using the Internet, said a spokeswoman for Moscow's Basmanny court which ordered his detention.
The probe into Yevtushenkov centres on how his holding acquired oil company Bashneft and followed speculation that Russia's biggest oil producer Rosneft run by Putin's loyal lieutenant Igor Sechin was keen to get its hands on the company.
The high-profile arrest stunned economists and analysts who said it was a further blow to an economy battered by Western sanctions, capital flight and looming recession.
"The house arrest of a businessman of such level is absolutely unprecedented," said Sergei Guriyev, the former dean of Moscow's New Economic School who fled Russia last year after coming under pressure from investigators over a case linked to Yukos.
"The most dangerous thing for investors is that they no longer understand the rules of the game," Guriyev, now professor of economics at Paris-based Sciences Po, told AFP in written remarks.
"What seemed impossible, now happens every day."
- 'Daylight robbery' -
Khodorkovsky pointed the finger at Sechin and said the arrest showed Putin was losing his grip on domestic politics.
"I see in this a total loss of control by the president, who simply does not see what is going on under his own nose," Khodorkovsky told Vedomosti business daily.
"If he did see, I doubt that he would so misjudge the situation and give such an order," said Khodorkovsky.
"I still hope that our president will at some point tear himself away from his new conquests and see what is happening in the country," he added, apparently referring to Russia's annexation of Crimea in March and its confrontation with the West over Ukraine.
Rosneft, targeted by Western sanctions, denied any role in the investigation.
Khodorkovsky, who has accused Sechin of orchestrating his downfall, was suddenly released from prison late last year and now lives in Switzerland in self-imposed exile.
Yevtushenkov's arrest sparked fears that authorities, who are under pressure to keep the battered economy afloat, could move in on other private businesses too.
"We have a really bad feeling about this... this all makes us think of a second Yukos case," an aide to a senior Russian official was quoted as saying.
"This is even not a racket, this is simply daylight robbery," wrote former deputy finance minister and economist Sergei Aleksashenko.
"An oil company in Russia is too attractive a business not to pique the interest of people close to the authorities."
Sistema is a vast holding which has major interests in the country's biggest mobile telephone company MTS and a range of other assets.
The Investigative Committee said it had launched the probe because it had "sufficient grounds" to believe Yevtushenkov was involved in the legalisation of property acquired by criminal means.
Sistema responded that the accusation was "without foundation."
Shares in Sistema dropped 28 percent at the opening in Moscow on Wednesday and lost 35.70 percent at 0945 GMT in London trading.