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Russian authorities search Prokhorov's headquarters in tax investigation

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ONEXIM

Russian law enforcement authorities on Thursday conducted searches at the Moscow headquarters of ONEXIM, Mikhail Prokhorov's holding company..  Authorities did not say what they were looking for but Russian media reported that they were looking into tax issues and overseas holdings.  There's no indication yet on what this could mean for Prokhorov's U.S. holdings.

Bloomberg News reported that the company, which Prokhorov founded, confirmed the searches. The FSB, the successor organization to the KGB, was conducting the searches.

"Tax officials are currently conducting checks at Onexim Group’s companies," the firm’s press service said by e-mail on Thursday.  Prokhorov has long been one of Russia's biggest individual taxpayers, paying as much as $50 million a year.

According to reports, the raids also included ONEXIM's financial subsidiary, Renaissance Capital, headquartered elsewhere in the Russian capital. No one was permitted to enter or exit ONEXIM headquarters during the search. All the phones in the ONEXIM offices were disabled.

A Reuters reporter outside the Onexim office building, in an upscale part of Moscow, said the main entrance had been locked. A man in a ski mask briefly emerged and then went back inside.

Russian President Vladimir Putin has recently called for the "de-offshorization" of Russia’s economy, saying the government must move to improve courts and legislation to stop a "flight" from the country’s jurisdiction, Bloomberg reports. Putin is giving his annual call-in Q&A Thursday and was expected to discuss off-shore investment by oligarchs.

Prokhorov and ONEXIM CEO Dmitry Razumov are in New York, having attended Wednesday's season finale in Brooklyn.  The seriousness of the investigation remains unclear, said one Russia expert.

The searches are a "clear warning to other oligarchs to stop capital flight, bring money on-shore, and this is likely all PR spin as Putin does his annual Q&A," said Tim Ash, head of emerging-market strategy at Nomura International Plc in London.

Moreover, said another expert, if Russian authorities wanted to embarrass Prokhorov and Razumov they wouldn't have waited for them to leave the country.  It would have been far more embarrassing if the searches took place with the oligarch in the office.

Prokhorov is also involved in a controversy over his RBC business channel, one of the few independent television channels, left in the country. Authorities want Prokhorov, who ran against Putin in the 2012 presidential race  Some in the media suggested the searches are one of the tools of pressure on the businessman.

RBC, has in recent months published detailed reports into the "Panama papers" leaks and offshore assets of Putin associates, and reported on the business interests of Putin's son-in-law.

ONEXIM Sports and Entertainment Holdings is the owner of the Nets, Barclays Center and 85 percent of Nassau Coliseum, but is not a subsidiary of ONEXIM Russia. It is a separate US entity.  At one point two years ago, Russian authorities called on Prokhorov to repatriate his financial holdings in the U.S.  It never happened.