Last week, Russian political scandal season reached a boiling point.

On September 16, Mikhail Prokhorov, Russia’s third richest man (with an estimated personal net worth of $18 billion), promised revenge against Vladislav Surkov, deputy chief of the presidential administration, after being ousted from the helm of Right Cause, his own newly launched political party. The tycoon accused President Dmitry Medvedev’s deputy chief of staff of “privatizing the political system” and orchestrating his downfall.

As the metals magnate ran afoul of the powers that be, the order was given last week to rebel against the party founder. Dissenters, led by political strategist Andrei Bogdanov and party boss Andrei Dunayev, blamed the rift on Prokhorov’s “dictatorial leadership style” and appearance on the party list of the anti-drug activist Yevgeny Roizman.

Immediately, the Kremlin-controlled Russian TV channels—which, until then, covered Right Cause and its boss positively—began the bashing. Stories about past court convictions and questions about the way Prokhorov got his wealth proliferated. This scandal is a further example of Russia’s sclerotic and brittle political system and deteriorating political climate heading into the 2012 elections.

Right Cause is a pro-Kremlin center-right party that Prokhorov launched with the Kremlin’s encouragement last June. The party had barely a chance to get Duma seats and more likely would have gotten only 1–2 percent of the vote.

Prokhorov said he resigned from Right Cause because it had become a Kremlin-controlled puppet party, and he called upon his former followers to resign en masse in order to begin a new political movement. Last Wednesday, Prokhorov called a hasty press conference where he warned of the impending mutiny against him. He also warned that he would be requesting a meeting with Prime Minister Vladimir Putin and President Medvedev to tell them “what happened to the party, how, and show them the necessary documents.”

This election season, the Kremlin went out of its way to prevent a classical liberal, center-right party from running in the Duma elections. In summer, the Justice Ministry prevented the PARNAS—a party headed by the veteran 1990s democratic politicians Mikhail Kasyanov, Vladimir Milov, Boris Nemtsov, and Vladimir Ryzhkov—from registering. Nor is Garry Kasparov, the former world chess champion, allowed to run for the Duma.

For a time, it appeared that Prokhorov’s entrance into the political arena was an attempt by the Kremlin to have a controllable “liberal” candidate, but the control proved to be short-lived. After Prokhorov’s outburst and his accusations that the Kremlin micromanages politics, he is decisively at odds with those who until now provided him with political cover.

Prokhorov is currently President of Onexim Group, a private investment firm with roughly $25 billion in assets. He is also owner of the New Jersey Nets and, despite this poor choice in sports franchises, he remains one of the most powerful men in Russia. Prokhorov, having survived a decade under the conditions dictated by Putin, may be different case, but he also stands to lose everything he’s worth before being sent to the Gulags.

In light of the Obama Administration’s “reset” policy toward Russia, the White House toned down its criticism of political freedom violations in Russia. It has been a long time since the Kremlin had a prominent opponent emerging. Now, after the billionaire Prokhorov attacked the political system, he has a good reason to worry about his wealth—and possibly his health. In the past, such attacks did not end well. Just remember Mikhail Khodorkovsky and his YUKOS oil company: The man is serving the second lengthy jail sentence after kangaroo court-style proceedings, and the company has been expropriated from him.

As The Heritage Foundation warned, the Obama Administration’s bet on Medvedev as the principal diplomatic interlocutor and Russia’s agent of democratization will leave the U.S. in a weaker position vis-à-vis Moscow.