Tycoon Takedown.(Mikhail Khodorkovsky faces criminal charges in Russia )

If anyone embodies Russia's transformation from financial pariah to new economic star, it's 40-year-old Mikhail Khodorkovsky. Not long ago he was just another post-Soviet business tycoon, getting rich quick in dubious privatizations and trampling on minority shareholders.

Then he gave himself a makeover. He engineered a management revolution at his flagship company, the oil giant YUKOS, and watched production figures spike. He embraced good corporate governance, and foreign- portfolio investors piled in, raising the stock-market valuation of his company to unheard-of heights. Last but not least, he hired a host of Western experts to handle his PR. These days he's a welcome guest among the world's business elite--and in Washington, too, where he has contributed generously, among others, to conservative think tanks linked with the Bush administration.

It's been quite a roller-coaster ride, and it's evidently not over yet. These days the man who should be basking in his newly acquired status as Russia's richest tycoon is fighting for his professional life. Starting with the arrest of one of his key associates on July 2, Khodorkovsky and his company have found themselves warding off a flurry of searches, official threats and criminal charges ranging from embezzlement to murder. Needless to say, the attacks on YUKOS aren't simply motivated by the government's eagerness to pursue wrongdoing. In fact, the ferocity of the affair has far more to do with a lingering conflict between Yeltsin-era oligarchs, their supporters in the government and a group of parvenu rivals who have risen to power on the coattails of Vladimir Putin. Those Putin confidantes--many of them, like the president, alumni of the old KGB--evidently spied an opening when Khodorkovsky openly declared that he was paying money to political parties that are competing with the Kremlin's own candidates in upcoming parliamentary elections.

The mess has sent shock waves through an international investor community that was just beginning to trust in Russia's newfound political and economic stability. Since the affair started, the once high-flying Russian stock market has lost some $20 billion, around 17 percent of its value. The worth of YUKOS itself has slid by nearly a quarter, from a high of $31 billion in June to $25 billion last week-- knocking it from its place as the country's biggest company in terms of market capitalization. For the first time in years, newly released Central Bank figures suggest that capital flight might be picking up again, indicating that worried investors are opting to move repatriated funds back offshore.

Nor is that all. Khodorkovsky has been a prime moving force behind the much-heralded energy dialogue between Russia and the United States. The growing possibility that he, too, could end up behind bars is casting a pall over that project, just weeks ahead of a high-level energy summit planned in Moscow for September. That's probably the main reason why the U.S. ambassador in Moscow has publicly taken Khodorkovsky's side in the dispute. A State Department official speaks of "very strong concern among the business community in the United States." "Khodorkovsky is the poster child for the new Russia," says a former U.S. government official. "Now you can put bars on the picture."

How did it come to this? The first strong indication that something was up came in the spring, when a hitherto little-known think tank caused a stir by issuing a report accusing Russia's most powerful business tycoons of staging a "creeping coup" against the Kremlin. Some Moscow analysts accuse the think tank's director, Stanislav Belkovsky, of carrying out the job at the orders of a cabal of former KGB officers in Putin's immediate entourage. Belkovsky denies it. ("Do I have contact with them? I wish I did," he says.) What matters, though, --is that the report landed on the desk of none other than the president, and a few weeks later he used the occasion to issue the oligarchs a public ...