* Biggest investor Meyer appeals to city prosecutor
* TPG, VTB camp reinstall their CEO nominee Dunning
* Dispute could damage investor perception of Russua
By John Bowker and Denis Pinchuk
MOSCOW, Sept 16 (Reuters) - The corporate battle for Russian hypermarket chain Lenta could be settled in court after its biggest shareholder asked local prosecutors to investigate the current claimant to be chief executive.
Rival shareholder groups have been at loggerheads for weeks over who should be CEO of the company, recently touted as a potential acquisition target for the world's biggest retailer, Wal-Mart.
U.S businessman August Meyer, a 41 percent shareholder, had ousted CEO Jan Dunning in favour of his own candidate, but Dunning this week regained control of the company after a violent brawl between his bodyguards and security.
"We want the legal means to investigate the situation ... Such actions are a civilised way of resolving disputes," Meyer's CEO candidate, Sergey Yushenko, said in a statement.
Dunning is backed by a range of shareholders including private equity group TPG, Russian bank VTB and the European Bank for Reconstruction and Development (EBRD), who together own more than 40 percent of the chain.
CONFLICT TO CONTINUE
The dispute is the latest in a string of shareholder battles at Russian companies, where weak corporate governance and poor minority shareholder rights have long been perceived as a deterrent for foreign investors.
"We have a number of companies in Russia where there are disputes between shareholders -- that is normal. What is worrying about Lenta is they are doing things the old school, Soviet way, using force -- that really damages the investment side," said Alexei Krivoshapko, a fund manager at investment group Prosperity Capital.
A representative of a minority Lenta shareholder -- a supporter of the Dunning camp -- defended the move to regain management control by force but said he did not think the conflict could be resolved.
"The conflict will continue until Lenta is 100 percent sold to a trade buyer or a financial institution," he told Reuters on condition of anonymity.
He added that the issue was unlikely to hurt the group's business or reduce the likelihood of a future sale to Wal-Mart or other interested buyers.
A spokesman for Luna, the investment vehicle for VTB/TPG, said Dunning was always the rightful CEO and his time out of the office could have hurt the company's expansion plan.
"We express our hope that the effects of recent mismanagement will be quickly remedied and Lenta is restored to good order," he said.
Lenta has 37 stores and annual turnover of around $1.8 billion. (Additional reporting by Maria Plis; Editing by Michael Shields)