It's a tune straight from Vladimir Putin's old songbook: a Russian billionaire under house arrest over vague accusations about a murky past deal, causing a meltdown in the shares of his empire of privatized assets.

Vladimir Yevtushenkov's Sistema conglomerate lost a third of its value on Wednesday after he was accused of money laundering in a multi-billion dollar deal to acquire a regional oil company five years ago.

That a seeming past Kremlin favorite could fall so hard so fast has raised the inevitable talk of a return to the bad old days of political feuding and asset grabs that marked Putin's early years in power.

But unlike the oligarchs who fell afoul of the authorities a decade ago, Yevtushenkov never seemed like the sort of person likely to wind up a target. He had no apparent political ambitions of his own and was known for doing deals quietly.

At least two things are clear: Despite denials from Putin's spokesman, the decision over Yevtushenkov's fate almost certainly rests with the president. And whatever the outcome, his arrest will do little to help Russia's flagging investment climate, already hit by Western sanctions imposed over the conflict in Ukraine.

It was a 2009 deal in an oil production company that may have ultimately brought down Yevtushenkov. Jessica Kourkounis/ Getty Images Like many of Russia's billionaires, Yevtushenkov started his telecoms-to-oil empire in the 1990s, when state assets were distributed to insiders at bargain prices. In 1996, Sistema acquired the nascent mobile system of the Moscow city phone network, now Russia's largest mobile network, MTS.

With a close relationship to the Moscow city government under then mayor Yuri Luzhkov, Sistema grew rapidly. It now groups together 15 business sectors ranging from oil to Detsky Mir — "Child World" — a retailer of toys and children's clothes. Yevtushenkov became known in the business community at home and abroad for running an efficient, if unwieldy, conglomerate.

It is a 2009 deal, in which he acquired an almost 80 percent stake in Bashneft, an oil producer in the Russian Ural mountains Republic of Bashkortostan, for $2.5 billion, that has now come under the spotlight.

In the shadowy world of Russian regional politics, the deal was seen at the time as having the Kremlin's blessing. The long-serving boss of Bashkortostan, Murtaza Rakhmimov, was removed from power a year later. Yevtushenkov has said both Putin and Prime Minister Dmitry Medvedev were happy with the deal.

Russian investigators said on Tuesday Yevtushenkov had been charged with money laundering in connection with the deal and on suspicion of being involved "in the legalization of property acquired by criminal means."

He was placed under house arrest. Since then he has not taken calls. Yevtushenkov's son replied to a text message with a brief rhyme meaning "all fine."

Sistema denied the charges, saying the Bashneft deal was legal and transparent. But the denial did not stop the collapse of its shares, which plummeted 35 percent in early trading in Moscow.

Sistema, website pictured, has denied all charges of wrongdoing over the oil production deal. http://www.sistema.com "It is very surprising. Yevtushenkov was the first in this country to start playing by the terribly uncomfortable rules of the toughest transparency, the first of all the big businessmen to not be afraid of revealing his finances, and to openly argue over all transactions and strategic decisions," said a former manager at Sistema.

"The worst thing is that a man who has made it fashionable to conduct civilized business has got into hot water," the former manager told Reuters, declining to be named because of the sensitivity of the issue.

A source at Bashneft said the company was stunned. "It is very surreal ... Of course, we are working, business as usual and no one has turned the switch off. But I'd expect the worst," said the source, who declined to be named.

Bashneft shares fell 20 percent in early trade.

A Re-Run Of Yukos?

Alexander Shokhin, head of the Russian Federation of Industrialists and Entrepreneurs, a business lobby group, condemned the move as political.

"Whatever the reasons that have moved the investigative committee — either a struggle for an asset or an attempt to return the asset to Bashkortostan ... the case takes on a political hue," he told Reuters.

Putin's spokesman denied politics had played a role.

"It's absolutely untrue and absurd to try to paint this story with any political colors," news agency RIA quoted Dmitry Peskov as saying.

But despite the denials, the case has prompted comparisons with that of Mikhail Khodorkovsky, once Russia's richest man, whose Yukos oil empire was seized and nationalized, with most assets sold to state oil major Rosneft.

Khodorkovsky, who had become a critic of Putin with political ambitions of his own, was imprisoned for 10 years and now lives in Switzerland.

The politically ambitious Mikhail Khodorkovsky, standing, was imprisoned for 10 years and now lives in Switzerland. AP In the Russian daily Vedomosti, Khodorkovsky said that while the case against his own firm Yukos had been based on a "social-political conflict," the case against Yevtushenkov was "purely commercial," with state-owned Rosneft once again likely to profit by gaining control of a privatized asset.

"Vladimir Yevtushenkov was stubborn; he did not want to pass his property on the conditions he was apparently offered. So it was decided to use the familiar old method. I think, there is nothing else here," Khodorkovsky said.

Rosneft said it had no role in the matter.

"I don't understand why Rosneft has something to do with that? This is absurd," RIA quoted a Rosneft spokesman as saying on Wednesday.

But Khodorkovsky's prediction that Rosneft will end up with Bashneft assets chimes with the views of others in the industry, who say the state oil giant has long had an eye on the Bashkortostan fields.

Rosneft is struggling with falling production and sizeable debts, and would benefit from buying Bashneft, which has been showing one of the highest production growth rates among Russian oil companies thanks to advanced recovery techniques.

Medvedev Link

Russia's President Vladimir Putin, right, with First Deputy Prime Minister Dmitry Medvedev at a session of the Council for National Projects in Moscow's Kremlin on March 7, 2007. REUTERS/Natalia Kolesnikova/Pool Yevtushenkov is also seen as a friend of Dimitry Medvedev, now Russia's prime minister, who served as president from 2008 to 2012 when the constitution required Putin to sit out for a term.

Some Russian Kremlin watchers speculated that the move against Yevtushenkov could signal a rift between Putin and Medvedev, although Medvedev's downfall has often been predicted in the past and has never come to pass.

While the rumors fly, it is clear the arrest will further hurt Russia's economy, already brought low by Western sanctions over Moscow's role in the Ukraine crisis.

Anatoly Chubais, the architect of privatization in the 1990s and now head of a state development agency for nano-technology, was quoted by Russia's Interfax news agency as saying he did not understand the charges.

"What I do understand is that these actions are a serious blow to the business climate in Russia. Such a blow comes at a time when the Russian economy is teetering on the brink of recession and stagnation," he said.

(Additional reporting by Polina Devitt, Maria Kiselyova, Katya Golubkova, Thomas Grove and Alexander Winning; Editing by Peter Graff)