Mikhail Khodorkovsky, the main owner of oil giant YUKOS, goes on trial on Wednesday in what many see as a government-inspired campaign to jail the nation's richest business tycoon and despoil him of his wealth.

The downfall of Khodorkovsky, the foremost of Russia's fabulously rich oligarchs, is said by analysts to be the work of people in the Kremlin who fear he was using his wealth to sway public policy and mount a challenge to their authority.

Khodorkovsky will be tried along with his close business associate Platon Lebedev, also a major shareholder in YUKOS, at the Meschchansky district court in Moscow on seven counts of fraud and tax evasion.

The trial is an important test-case for Russian President Vladimir Putin, who has said he wants justice to run its course in the YUKOS affair. He has also warned tax evasion will not be tolerated and other captains of industry may face prosecution.

Human rights activists accuse Putin of manipulating the judicial process to suit the state's interests.

Wednesday's hearing is part of a two-pronged judicial assault on YUKOS and its owners which comes to a head this week and could pitch the company into bankruptcy.

A Moscow court will hear an appeal on Friday by Russia's tax ministry aimed at forcing YUKOS to pay a $3.4 billion bill for back taxes immediately.

If the court finds in favor of the tax authorities, as expected, YUKOS says it may go bust because another court has frozen the company's assets, making it impossible for YUKOS to raise enough cash in time to pay the tax bill.

Investors appear to be giving up hope of any chance of a negotiated settlement with the authorities that could let YUKOS off the hook. YUKOS shares on Tuesday were at one point 14 percent down at $6 on Moscow's RTS exchange, its lowest level for more than two years. "I personally do not see any other scenario apart from bankruptcy," said Stephen Dashevsky, an oil and gas analyst at Aton brokerage in Moscow.

Khodorkovsky's trial will be the most prominent of a business figure since the fall of the Soviet Union in 1991. Khodorkovsky has been held in pretrial detention since his arrest in October and Lebedev since last July.

Source: CD/Agencies