Russian tycoon Vladimir Gusinsky, head of the country's largest independent media conglomerate Media Most, has been arrested and is being held in a Moscow prison pending charges of defrauding the government of more than $10m.

Media Most-owned television channel NTV and daily newspaper Segodnya have been sharply critical of the Russian government and a spokesperson for the group, Dmitry Ostalsky, called the arrest "intimidation."

The arrest is the culmination of a year-long battle with authorities which ran into a head-on collision in May when masked government agents raided the group's offices. The raid was later ruled illegal by a Moscow court.

The prosecutor's office has released a statement saying Gusinsky is suspected of defrauding the government together with the Russkoye Video company at the time of the St Petersburg-based broadcaster's privatisation.

Media Most has far-flung media holdings, not only in Russia, but also in the Israeli and Czech media. Gusinsky is a naturalised Israeli citizen and the group has a controlling stake in Israel's Maariv newspaper group, one of the country's largest publishing companies.

In Russia the group owns a stable of media outlets including the country's largest film production outfit NTV Profit. The group has also ventured into exhibition and is nearing completion on its flagship $20m October Cinema which will be the country's first multiplex when it opens in September.

Guzinsky has clashed with the authorities and his fellow oligarch Boris Berezovsky in the past. In 1994, his group's Moscow headquarters were raided by the presidential security services. Alexander Korzhakov, then head of the presidential security services, later claimed in his memoirs that Gusinsky's business rival Berezovsky has asked him to arrange the murder of Gusinsky.

Media Most's present difficulties began a year ago when the state-controlled Vneshekonbank called in a $42m loan. This was followed by the gas giant Gazprom demanding the repayment of a $211m loan after a statement by Gazprom president Rem Vyakhirev criticised NTV's reporting of the Chechen war.

NTV's popular political puppet satire Kukly which features Russian business and political figures regularly aroused the ire of those in power with its accurately targeted barbs.

Media Most has consistently claimed its financial problems were politically motivated and that it was servicing its loan obligations regularly according to agreements. The group was hit hard by the 1998 financial crisis which swept away 90% of advertising income for most Russian media overnight, but the sector has been making a comeback since the beginning of 2000 along with the rest of the economy.

On a trip to Spain on Tuesday evening, Russian president Vladimir Putin reportedly said he was surprised by the arrest. "I hope the prosecutor's office has sufficient grounds and everything was done in keeping with the law," Putin said.