#19 - JRL 7301
Financial Times (UK)
August 26, 2003
Abramovich is happy on the sidelines:
In part two of a series, Andrew Jack
looks at one of the richest and cleverest Russian oligarchs
Yukos and Sibneft chose Moscow's newest and most glitzy hotel this spring to announce their merger into one of the world's largest oil groups. But as Mikhail Khodorkovsky, chief executive and largest shareholder in Yukos, addressed the gathered journalists, his counterpart at Sibneft hovered silently at the edge of the crowd before slipping out almost unnoticed.
It was characteristic of the low-key style of 36-year-old Roman Abramovich and helps explain why it is Mr Khodorkovsky and not he who is under pressure from the Russian authorities, which have launched a series of investigations in the past two months into the way he built his business.
While acknowledged as one of Russia's richest and most influential "oligarchs", probably worth more than Dollars 10bn (Pounds 6.4bn), Mr Abramovich was scarcely known until 1999. The fair-haired, timid and informally dressed man still hates media appearances, while being simultaneously drawn to flamboyant pursuits.
"He is probably the cleverest of all the oligarchs," says one acquaintance. He could soon be even richer and one of the most secure. Mr Abramovich seems to be cashing in on his investments while the return is high and there is a fresh frisson of concern about Russia's shifting political and business climate.
As a Jew and an orphan from Saratov in the Lower Volga region, Mr Abramovich lacked the kick-start that being in the Soviet elite gave some of his rivals. But he has since leapfrogged them. In the early 1990s he was an oil trader, at one point subject of an inconclusive investigation after a shipment of diesel oil disappeared.
He says Tatiana Dya-chenko, daughter of Boris Yeltsin, the former president, is a friend but denies he was the "cashier" of the "family" of close associates that dominated Russian politics in the late 1990s. Whatever the case, he was closely associated with Boris Berezovsky, the "grey cardinal" behind Mr Yeltsin and a kingmaker to President Vladimir Putin before they fell out shortly after his election in 2000. Indeed, the principal intrigue around Mr Abramovich is that his main investments closely shadow those of Mr Berezovsky. Yet his fate has been markedly different since Mr Putin warned early in his term that oligarchs should become a thing of the past and stay out of politics.
Mr Abramovich and Mr Berezovsky jointly acquired Sibneft - a company carved out of state oil assets by one presidential decree in 1995 and sold off under another for just Dollars 250m. They were both involved in creating Russian Aluminium (RusAl) in 2000, which sailed through anti-monopoly procedures in spite of completing mergers that gave it 70 per cent of the market.
Mr Berezovsky later fled into exile, first to southern France and then to London, from where he regularly criticises Mr Putin. He claims still to have 25 per cent of RusAl. When he has sold - starting with Sibneft - it has been to Mr Abramovich.
When Mr Berezovsky appointed allies to run Aeroflot, the national airline, Mr Abramovich bought 26 per cent. When Mr Berezovsky sold his controlling stake in ORT, Russia's leading television channel, Mr Abramovich was the buyer.
But Mr Abramovich has shown himself to be loyal to the new Kremlin and fell in with Mr Putin's demand that Russian business give back more to society.
He says he became governor of the far eastern province of Chukotka in 2000 "for a challenge" and claims to have spent Dollars 200m of his own money there, on top of annual income tax of at least Dollars 40m in the region.
That has not stopped him from indulging in extravagances such as a luxury yacht, or last month's purchase of Chelsea, the British premiership football club, which diverted most journalists' attention from his business dealings while provoking the ire of some Russian politicians.
Mr Abramovich has been among Russia's pioneers in employing professional managers in his businesses, and reinvesting in order to boost the value of Sibneft and his other companies. "He puts managers in place and lets them do their job," says one colleague.
"His style is psychological and relation-based," adds a long-standing friend. "He is good-natured and uses others to be aggressive. He relies on those he trusts. That's an advantage; but it means using a very narrow circle of people. All his successes are around relations, but that's not enough for creative development. He never had the goal of being an oligarch; it was more important to survive. He's very careful."
With his Yeltsin-era connections of more uncertain worth under Mr Putin, and his announcement that he will not stand for re-election in Chukotka, it seems Mr Abramovich's trader in-stincts remain strong. Indications that he is diversifying from his first wave of investments suggest he is at least hedging his bets for the months and years ahead.
Top • NextAug. 26, 2003: #7300 • #7301 • JRL Home
- Back to the Top -