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Thursday, 28 June 2007

Mikhail Khodorkovsky


Mikhail Borisovich Khodorkovsky (born June 26, 1963) is a Jewish Russian businessman, a former Komsomol activist who became one of Russia's oligarchs at a very early age. He was later convicted for fraud and tax evasion and received a 9-year sentence. As of 2004, Khodorkovsky was the wealthiest man in Russia, and was the 16th wealthiest man in the world, although much of his wealth evaporated because of the collapse in the value of his holding in the Russian petroleum company YUKOS.
On October 25, 2003, Khodorkovsky was arrested at Novosibirsk airport by the Russian prosecutor general's office on charges of fraud. Shortly thereafter, on October 31, the government under Vladimir Putin froze shares of Yukos because of tax charges. The Russian Government took further actions against Yukos, leading to a collapse in the share price. It purported to sell a major asset of Yukos in December 2004.
On May 31, 2005, Khodorkovsky was sentenced to ten years in prison, guilty of fraud. A wide variety of international journalists, politicians, and businessmen — both in Russia and internationally — consider this process to be largely political; in 2003, prior to his arrest, Khodorkovsky funded a Russian political opposition party. Though many speculate that an independent court would have found him guilty of fraud (mainly due to the circumstances of his acquisition of vast sums of money during privatization efforts after the collapse of the Soviet economic system), the politics of the decision are clear. Kremlin involvement has not been proven, but many dispute the correctness of investigations and court proceedings. Much of the "western" media covering the situation tended to side with Khodorkovsky.
In October 2005 he was moved into prison camp number 13 in the city of Krasnokamensk, Chita Oblast.
In March 2006, Forbes magazine surmised that Khodorkovsky's personal fortune had declined to a fraction of its former level, stating that he "still has somewhere below $500m".
Entrepreneurship in Soviet Union
Khodorkovsky grew up in a middle-class Soviet family, in a two-room apartment in Moscow. The young Khodorkovsky was ambitious. He received excellent grades. He then attempted and succeeded in building a career as a communist activist. He became deputy head of Komsomol (the Communist Youth League) at his university, the Mendeleev Institute of Chemical Technology. However, the Komsomol career was an excellent way to get into the ranks of communist apparatchiks and to achieve the highest possible living standards.
After perestroika started, Khodorkovsky used his connections within the communist structures to gain a foothold in the developing free market. He used the help of some powerful people to start his business activities under the cover of Komsomol. Friendship with another Komsomol leader Alexey Golubovich helped him greatly in his further success, since Golubovich's parents held top positions in the State Bank of the USSR.
With partners from Komsomol, and technically operating under its authority, Khodorkovsky opened his first business in 1986, a private café; an enterprise made possible by Soviet leader Mikhail Gorbachev's programme of perestroika and glasnost. In 1987 they opened the "center of science and technology" Menatep (the future bank Menatep). In addition to importing and reselling computers, the "scientific" center was involved in trading a wide range of other products; French brandy, Swiss vodka. It is alleged that these goods were mostly counterfeit: "Swiss" vodka was produced in Poland, and the brandy was not French.
By 1988, he had built an import-export business with a turnover of 80 million rubles a year (about $10 million USD).
Armed with cash from his business operations Khodorkovsky and his partners used their international connections to obtain a banking licence to create Bank Menatep in 1989. As one of Russia's first privately owned banks, Menatep expanded quickly, by using most of the deposits raised to finance Khodorkovsky's successful import-export operations.
Bank Menatep was also successful in forcing the government to award them the right to manage funds allocated for the victims of the Chernobyl nuclear accident; because of its "exempt status" it was alleged the bank might be an extremely convenient vehicle for the evasion of tax and import duties. By 1990, critics suggest the bank was active in facilitating the large-scale theft of Soviet Treasury funds that went on at the time prior to and following the collapse of the USSR in 1991.
In a prophetic statement of the time, Khodorkovsky is quoted as saying:
"Many years later I talked with people and asked them, why didn't you start doing the same thing? Why didn't you go into it? Because any head of an institute had more possibilities than I had, by an order of magnitude. They explained that they had all gone through the period when the same system was allowed. And then, at best, people were unable to succeed in their career and, at worst, found themselves in jail. They were all sure that would be the case this time, and that is why they did not go into it. And I"--Khodorkovsky lets out a big, broad laugh at the memory--"I did not remember this! I was too young! And I went for it." (in David Hoffman, "The Oligarchs", PublicAffairs, 2002)
Khodorkovsky's connections with Komsomol and CPSU structures would prove critical in his success.
A fortune built on privatization
A number of prominent tycoons, including Mikhail Khodorkovsky (far right), pictured with Boris Yeltsin in the mid-1990s
Boris Yeltsin's elevation to power in 1991 meant an acceleration of the market reforms started under Gorbachev, which created a dynamic business environment in Russia for entrepreneurs like Khodorkovsky. In fact, market reforms were conducted so rapidly that they in many cases were outright expropriation of national assets. Stocks of the formerly state-owned enterprises were issued, and these new publicly traded companies were quickly handed to the members of Nomenklatura or known criminal bosses. For example, the director of a factory during the Soviet regime would often become the owner of the same enterprise. During the same period, violent criminal groups often took over state enterprises clearing the way by assassinations or extortion. During Gorbachev's and Yeltsin's rule corruption of government officials became an everyday rule of life. Under the government's cover, outrageous financial manipulations were performed that enriched the narrow group of individuals at key positions of the business and government mafia. While the manipulations of Khodorkovsky and his partners became well known to the public because of later court proceedings, criminal actions of many others are still kept in secret and are allegedly protected by the government.
Khodorkovsky also privatized the Komsomol property available to him. By then Bank Menatep was a well-developed financial institution by Russian standards and became the first Russian business to issue stock to the public since the Russian Revolution in 1917. The bank grew quickly with a help of Rothschild, winning more and more valuable Government clients such as the Ministry of Finance, the State Taxation Service, the Moscow municipal government and the Russian arms export agency, all of whom deposited their funds with Menatep, which Khodorkovsky mostly used to expand his burgeoning trading empire.
Bank Menatep provided the foundation for Khodorkovsky's bidding for Yukos in 1995 in the controversial Loans-for-shares program. In this manipulation, a small group of individuals well connected to government structures were handed valuable pieces of state property in return for cash "loans" (which in many cases were funded by the bank accounts of the state bank). One purpose of this operation was to help Boris Yeltsin's reelection in 1996. Khodorkovsky paid a small price of 350 million dollars for Yukos, considering that approximately $1.5 billion USD has been spent purchasing the assets that now make up Yukos, with a market capitalisation of $31 billion USD. He claims that the depressed value of the company came from widespread fears that the Communists would win the next legislative election and seize it back.
A higher bid from a group of rivals was ruled out of the process by Menatep on a technicality. Menatep won the auction with a bid for $350 million USD for 78% of the company, which implied a value of $450 million. When the company was listed two years later, it was valued at $9 billion. That transaction—and dozens like it—have led many Russians to believe that tycoons like Khodorkovsky have stolen their fortunes from the state.
Foreign business partners complain
Amoco — later taken over by British Petroleum — was an early partner with Yukos in a highly prospective Siberian oil field Priobskoye. Amoco spent $300 million developing the oil field before being completely squeezed out by Khodorkovsky, using methods that would be unlawful in most of the developed world. In 2003 Priobskoye oil production reached 129 million barrels.
When the Russian ruble collapsed in 1998, Bank Menatep collapsed with it because it had borrowed money in foreign currencies. It lost its banking licence. Three banks, the Standard Bank of South Africa, Japanese Daiwa Bank and German West LB Bank, had lent $266 million to Menatep secured by Yukos shares. Khodorkovsky offered oil instead. They refused and took possession of the shares. They dumped the shares very quickly, collecting less than half of their loan, prompted in a panic sale by Khodorkovsky's public threats of massively diluting their stake with new shares. While lawful in Russia at the time, it would not have been so in most of the developed world. Yukos also sold shares in its main production subsidiaries to offshore shelf companies believed to be linked to Khodorkovsky. Daiwa and West LB, suspecting they would end up with nothing if they persisted, sold out to Standard Bank in mid-1999, which in turn exited Yukos at the end of 2000.
The two deals gave Khodorkovsky, Menatep and Yukos notoriety in Western financial circles. Only in 2003 did it feel sufficiently confident to return to Western banks with loan proposals.

A new era of transparency
Khodorkovsky is considered one of the first of the Russian tycoons to realise that foreign investment was needed in order to build a global business. His international connections with the world banking families helped him tremendously. In order to attract foreign investment, investors would be motivated by both greed and fear. Khodorkovsky's tough treatment of some of the West's largest and most powerful businesses created a large amount of fear in most investors. His fellow tycoons had acted similarly, if not more outrageously at times. Coupled with the collapse in the ruble in 1998, very few investors, oil companies or banks were interested in doing business with Russia.
Khodorkovsky introduced unprecedented transparency at Yukos. Having once denied owning any shares in Menatep and Yukos, he confessed his controlling stake. Yukos revealed the identity of its shareholders for the first time, published accounts following GAAP standards, and started paying taxes and issuing large dividends. Khodorkovsky hired many executives from large Western oil companies, placing them in senior roles and appointed respected non-executive directors to the board of directors of Yukos.
Bank Menatep—by this stage rebuilt around its St Petersburg subsidiary which remained solvent—even started lending money to non-Khodorkovsky businesses. The Bank now claims only 15% of its loans are advanced to Khodorkovsky group businesses.
As his foreign executives and consultants had predicted the effect of the new corporate governance principles was a soaring share price as foreign investors forgave past atrocities and bought into Yukos, which continues to be heavily discounted for sovereign risk.
When rival Alfa Bank was successful in attracting BP to invest billions in its oil subsidiary in 2003 many regarded this as a turning point in Western confidence in investing in Russia. President Putin and Prime Minister Blair both attended the signing ceremony, signalling the growing respectability of business in Russia.
Political ambitions
Khodorkovsky also became a philanthropist, whose efforts include the provision of internet-training centres for teachers, a forum for the discussion by journalists of reform and democracy, and the establishment of foundations which finance archaeological digs, cultural exchanges and summer camps for children. Khodorkovsky's critics saw this as political posturing, in light of his funding of several political parties ahead of the elections for the State Duma to be held in late 2003. Some argue that he used his money to finance groups that would help him seize control of Russia in a quiet and deceptive manner. It is also possible that he used these groups to launder billions of dollars to avoid taxes.
He is openly critical of what he refers to as 'managed democracy' within Russia. Careful normally not to criticise the elected leadership, he says the military and security services exercise too much authority. He told The Times:
"It is the Singapore model, it is a term that people understand in Russia these days. It means that theoretically you have a free press, but in practice there is self-censorship. Theoretically you have courts; in practice the courts adopt decisions dictated from above. Theoretically there are civil rights enshrined in the constitution; in practice you are not able to exercise some of these rights."
The merger
In April 2003, Khodorkovsky announced that Yukos would merge with Sibneft, creating an oil company with reserves equal to those of Western petroleum multinationals. Khodorkovsky has been reported to be negotiating with ExxonMobil and ChevronTexaco about them taking a large stake in Yukos. Sibneft was created in 1995, at the suggestion of Boris Berezovsky, comprising some of the most valuable assets of a state-owned oil company. In a controversial auction process, Berezovsky acquired 50% of the company at what most agree was a very low price.
When Berezovsky had a confrontation with Putin, and felt compelled to leave Russia for London (where he was granted asylum) he assigned his shares in Sibneft to Roman Abramovich. Abramovich subsequently agreed to the merger.
With 19.5 billion barrels (3 km³) of oil and gas, the merged entity would had owned the second-largest oil and gas reserves in the world after ExxonMobil and would have been the fourth largest in the world in terms of production, pumping 2.3 million barrels (370,000 m³) of crude a day. However, the merger had been recalled by the shareholders of Sibneft after the arrest of Khodorkovsky.
Khodorkovsky in court. November 2005
Some people believe that singling out Khodorkovsky for prosecution is related to his political ambitions. It is also possible that a major motivation for the arrest was Khodorkovsky's meeting with vice-president Dick Cheney to discuss selling a large share of Yukos to American oil companies to make sure that he could pursue politics without having to fear losing his company, because it would now be backed by foreign big oil.
The arrest in early July 2003 of Platon Lebedev, a Khodorkovsky partner and second largest shareholder in Yukos, on suspicion of illegally acquiring a stake in a state-owned fertiliser firm, Apatit, in 1994, was considered by observers a shot across the bows. The arrest was followed by investigations into taxation returns filed by Yukos, and a delay to the antitrust commission's approval for its merger with Sibneft.
The warning was not heeded, as Khodorkovsky continued his involvement in the political process in the lead-up to the presidential elections scheduled for 2004. Khodorkovsky has spoken out in favour of closer ties with the United States, was in favour of the U.S. toppling of Iraqi President Saddam Hussein and — paradoxically for an oil man — advocated lower but stable oil prices as being good for Yukos and the world economy. He cultivated close ties with government and business figures in the U.S.
Finally, Khodorkovsky was himself arrested in October, 2003, charged with fraud and tax evasion. The Russian Prosecutor General's Office claims Khodorkovsky and his associates cost the state more than $1 billion in lost revenues. Tax evasion, bribery and corruption are widespread in Russian politics and economy. Therefore, Khodorkovsky's supporters claimed that the arrest was politically-motivated and would have a devastating effect on Russia's nascent financial markets.
The spectacular and heavy-handed method of Khodorkovsky's arrest attracted as much attention as the fact he was charged with serious crimes. Many saw it as a sign that President Putin was favouring a very tough approach with prominent business leaders, regardless of how it was perceived by foreign investors. The received wisdom of Russian political circles is that tough, decisive leadership wins votes, particularly if exercised against unpopular figures like the tycoons.
Around 5 A.M. on October 23, 2003, Khodorkovsky's private jet landed at Novosibirsk Tolmachevo Airport in transit to a Yukos refinery production centre in Angarsk, East Siberia. He had been making a series of visits to Yukos and Sibneft properties, which are in some of Russia's most remote territories. Forewarned of his arrival, FSB (the domestic successor of the KGB) agents lay in wait. The plane needed refuelling and had some minor technical problems.
Then two vans with heavily tinted windows drove across the airport. Fifteen masked federal agents wearing FSB issued black combat fatigues leapt out of the vans and stormed the plane. Several dozen more agents armed with assault rifles and pistols surrounded the jet.
Khodorkovsky was in the passenger compartment with several staff members and security guards, who were unarmed, as they were required to hand their weapons to the pilots while on board. He was arrested and immediately flown to Moscow and presented before the Basmanny Court, which ordered his detention pending further investigation and trial.
Subsequent to Khodorkovsky's arrest, Leonid Nevzlin gained a controlling stake in Yukos when Khodorkovsky handed him a 60 percent share in the holding company that controlled the firm . Nevzlin is himself now wanted in Russia and has since fled to Israel.
The impact of Khodorkovsky's arrest
Initially news of Khodorkovsky's arrest had a significant effect on the share price of Yukos. The Moscow stock market was closed for the first time ever for an hour in order to assure stable trading as prices collapsed. Russia's currency, the ruble, was also hit as some foreign investors questioned the stability of the Russian market. Media reaction in Moscow was almost universally negative in blanket coverage, some of the more enthusiastic pro-business press discussed the end of capitalism, while even the government-owned press criticised the "absurd" method of Khodorkovsky's arrest.
Yukos moved quickly to replace Khodorkovsky with Russian born U.S. citizen Simon Kukesas. Simon Kukesasan, who became the CEO of Yukos was already an experienced oil executive.
The U.S. State Department said the arrest "raised a number of concerns over the arbitrary use of the judicial system" and was likely to be very damaging to foreign investment in Russia, as it appeared there were "selective" prosecutions occurring against Yukos officials but not against others.
A week after the arrest, the Prosecutor-General froze Khodorkovsky's shares in Yukos to prevent Khodorkovsky from selling his shares although he retains all his rights to vote the shares and to receive dividends.
Because Khodorkovsky's father is Jewish, some concerns have been raised that his persecution is motivated by anti-Semitism, and that it is only one of many steps to clearing Russian economy from Jews. Gusinskiy and Boris Berezovsky, who too have Jewish roots, have also been persecuted. This concern is not shared by the heads of the Federation of Russian Jews and the Russian Jewish Congress, who both defended Khodorkovsky's arrest. Other Russian Jewish tycoons have not been persecuted; Roman Abramovich was appointed by Vladimir Putin for the second term as Governor of Chukotka Autonomous Okrug. Abramovich was elected Governor of Chukotka in 1999, but suggested that he would not run for the second term. When Russian law was changed so that Governors were appointed directly by the President, he was put in the office nevertheless.
Khodorkovsky's arrest alarmed foreign investors and policymakers alike, though Russian citizens--who largely viewed all of Russia's tycoons as having enriched themselves on the backs of a far less fortunate Russian people--were largely supportive of the arrest.
In 2003 Khodorkovsky's shares in Yukos passed to Jacob Rothschild under a deal they concluded prior to Khodorkovsky's arrest .
Viewpoint of Khodorkovsky's supporters
After the court proceedings established that Khodorkovsky had violated the law, his supporters reserved to the following argument: why did they stop him when many other people were speeding? Another line of criticism is probing the real intentions of the prosecutors.
Khodorkovsky's supporters point to the Russian Prosecutor-General's summoning of the Khodorkovsky's lawyer on the lawyer's activities as evidence that Russian authorities are over-zealous, if not corrupt. President Putin denied that he had played an active role in the prosecution, saying that the prosecutors' move showed that no one was above the law. Some also question the impartiality of the Basmanny Court and one of its judges who approved Khodorkovsky's arrest, Andrei Rasnovsky who is a former employee of the Prosecutor-General's office. The Basmanny Court is in the same district as the investigative division of the Prosecutor-General's office, which is the official reason why it is generally the forum for hearing its cases. Some say it is because many of the judges in that court are former employees of the Prosecutor's office and remain loyal to it. One of Yukos' lawyers say there was not even an attempt to conceal their bias, with judges seen in private discussions with prosecutors prior to hearings.
President Putin's chief of staff Alexander Voloshin, regarded as close to former President Yeltsin and to some of the tycoons, disagreed that Putin had no role in the prosecution and tendered his resignation in protest to Khodorkovsky's arrest. The resignation of the pro-business Chief of Staff was said to augur a new era of the domination of military and security services figures within the Kremlin.
Khodorkovsky was not taking the arrest or the prosecution lying down, threatening to bring defamation lawsuits against the Prosecutor-General and his officials, which were not likely to be heard in the Basmanny Court. Those proceedings displayed the resources Khodorkovsky was able to bring to bear to challenge the activities of the prosecution team. The Prosecutor-General is an influential factor throughout the Russian legal system but does not enjoy the same dominance in other courts as he does in the Basmanny Court.
A martyr to some
Khodorkovsky supporters believe his conviction and imprisonment grant him the status of a martyr. Irina Khakamada, a former leader of the Union of Right Forces party, claimed that Khodorkovsky's imprisonment was making the once hated oil billionaire into a political hero. She asserted:
"The longer he sits in jail, the more of a political figure he will become. Russians love martyrs. They will forget that he is a tycoon. "
Others pointed to his unpopularity as an insurmountable obstacle to his election. It can't also be denied that many of his supporters are actually paid, especially protestors following his arrest. Evidence of this is not vast, but most of these "picketers" after his arrest denied to answer questions from reporters, and showed little emotion in protest.
Viewpoint of Khodorkovsky's critics
There is an obvious contradiction about Khodorkovsky protesting alleged law violation by the prosecutors, and his own treatment of the law during privatisation. In a broader sense, there is a practical dilemma facing Russian tycoons who have made their fortunes during the 90s. On one hand, today they support rule of law and protection of private property rights, since they want to keep assets they obtained from the state. On the other hand, they are against enforcing the laws retroactively when applied to suspected cases of their own corruption and fraud in a very recent past.
As long as this contradiction remains, the Russian business elite is vulnerable not only to government pressure, but to legal attacks from newcomers to the market. According to one view, Khodorkovsky's case has little to do with his political views and a lot with many people's desire to re-distribute Russian property again, this time justifying their actions by the law and using official law enforcement agencies as a tool.
Some claim that the majority of Russians are favorably disposed to the Government's belated enforcement of law in the case of Khodorkovsky, which is allegedly downplayed or ignored in the Western press. According to opinion polls an overwhelming majority of the Russian public considers tycoons criminals who belong in jail, and prosecution of them only adds to Putin's popularity.
In addition, although the prosecution of Khodorkovsky and others who made their fortunes during the 90s are big events in their private lives, they are relatively insignificant to the further development of capitalism in Russia. The positions and assets previously owned by the convicted tycoons will be quickly taken by others, who may be less vulnerable to criminal prosecution.
Criminal charges
Prosecutors stated that they operated independently of the government appointed by president Putin. The Prosecutor-General Vladimir Ustinov was appointed by former President Yeltsin and was not seen as being particularly close to Putin, who once tried to remove him. However, he was politically ambitious and prosecuting Russia's most prominent and successful tycoon was perceived as a boost to his political career and intended candidacy for the Duma.
The criminal charges against Khodorkovsky read as follows:
"In 1994, while chairman of the board of the Menatep commercial bank in Moscow, M. B. Khodorkovsky created an organized group of individuals with the intention of taking control of the shares in Russian companies during the privatisation process through deceit and in the process of committing this crime managed the activities of this company."
Khodorkovsky was charged with acting illegally in the privatisation process of the former state-owned mining and fertiliser company Apatit. It is alleged that the CEO of Bank Menatep and large shareholder in Yukos Platon Lebedev assisted Khodorkovsky. Lebedev was arrested and charged in July 2003.
According to the prosecution, all four companies that participated in the privatization tender for 20% of Apatit's stock in 1994 were shell companies controlled by Khodorkovsky and Lebedev, registered to create an illusion of competitive bidding that was required by the law. One of the shell companies that won that tender (AOZT Volna) was supposed to invest about US$280 million in Apatit during the next year, according to their winning bid. The investment wasn't made and Apatit sued to return their 20% of stock. At this point, Khodorkovsky et al. had transferred the required sum into Apatit's account at Khodorkovsky's bank Menatep and sent the financial documents to the court, so Apatit's lawsuit was thrown out. The very next day the money was transferred back from Apatit's account to Volna's account. After that the stock was sold off by Volna in small installments to several smaller shell companies, which were, in turn, owned by more Khodorkovsky-owned companies in a complicated web of relationships. Literally dozens of companies were registered for these purposes in Cyprus, Isle of Man, British Virgin Islands, Turks & Caicos and other offshore havens. Volna actually settled the Apatit lawsuit in 2002 by paying $15 million to the privatization authorities, even though it didn't own Apatit stock anymore at the time. However, according to the prosecution, that $15 million sum was based on the incorrect valuation which was too low. Allegedly, at the time Apatit was selling off the fertilizers it was producing to multiple Khodorkovsky-owned shell companies below market value, and, therefore, Apatit formally didn't have much profit, lowering its valuation. Those shell companies then resold the fertilizer at the market value, generating pure profit for Khodorkovsky, Lebedev and others.
In addition, prosecutors conducted an extensive investigation into Yukos for offences that went beyond the financial and tax-related charges. Reportedly there were three cases of murder and one of attempted murder linked to Yukos, if not Khodorkovsky himself.
One area of interest to the Prosecutor-General included the 1998 assassination of the mayor of Nefteyugansk in the Tyumen region, Vladimir Petukhov. Nefteyugansk was the main centre of oil production within the Yukos empire. Suspicions arose in Nefteyugansk because Petukhov had publicly and frequently campaigned about Yukos' non-payment of local taxes.
President Putin himself commented on this aspect of the investigation while questioned about the investigation into Yukos in September 2003. President Putin said:
The case is about Yukos and the possible links of individuals to murders in the course of the merging and expansion of this company...the privatizations are the least of the reasons for it...in such a case, how can I interfere with prosecutors' work?
The verdict of the trial, repeating the prosecutors' indictments almost verbatim, was 662 pages long. As is customary in Russian trials, the judges read the verdict aloud, beginning on May 16, 2005 and finishing on May 31. Khodorkovsky's lawyers alleged that it was read as slowly as possible to minimize public attention.
Khodorkovsky was defended by Karinna Moskalenko, who now faces being disbarred by the Russian government for her alleged negligence in defending him. Khodorkovsky denies being dissatisfied with her conduct.
In prison
On May 30, 2005, Mikhail Khodorkovsky was sentenced to 9 years of jail sentence in colony of general regime. At the time, he was detained in Moscow prison Matrosskaya Tishina.
On August 19, 2005, Khodorkovsky announced that he was on a hunger strike in protest at his friend and associate Platon Lebedev's placement in the punishment cell of the jail. According to Khodorkovsky, Lebedev had Diabetes mellitus and heart conditions, and keeping him in the punishment cell would be equivalent to murder.
On August 31, 2005, he announced that he would run for parliament. This initiative was based on the legal loophole: a convicted felon cannot vote or stand for a parliament, but if his case is lodged with the Court of Appeal he still has all the electoral rights. Usually it requires around a year to get somebody's appeal through the Appeal Court, so it should have been enough time for Khodorkovsky to be elected. To imprison a member of Russian parliament, the parliament should vote for stripping his or her immunity. Thus, he had a hope to escape from his prosecution. But the plans were flawed, as the Court of Appeal unusually took only a couple of weeks to process Khodorkovsky's appeal, reduce his sentence by one year and invalidate any of his electoral plans until the end of his sentence.
As reported on October 20, 2005, Khodorkovsky was delivered to the labor camp of Krasnokamensk town near Chita. The labor camp is attached to a uranium mining and processing plant and during Soviet times had a reputation as a place from which nobody returned alive. According to news reports, currently the prisoners are not used in uranium mining and have much better chances of survival than in the past.
On April 13, 2006, Khodorkovsky was attacked by a prison mate while he was asleep. It was speculated that a prison mate tried to disfigure his face but not to kill him. Jail sources told reporters that a fellow prisoner known as Kuchma attacked him after a heated conversation. Western media immediately accused the Russian authorities of trying to play down the incident.
On February 5, 2007, new charges of embezzlement and money laundering were brought against both Khodorkovsky and Platon Lebedev. Khodorkovsky's apologists point out that the charges come just months before Khodorkovsky and Lebedev were to become eligible for parole, as well as just a year before the next Russian presidential election.
In prison, Khodorkovsky announced that he would research for, and prepare, a Ph.D. dissertation on the topic of Russian oil policy.
It is predicted that he might be released by the end of 2009. (Source wiki)

Wednesday, 27 June 2007

Vladimir Gusinksy


Media Baron
Vladimir Aleksandrovich Gusinksy (born 1952), a Jewish Russian - Spanish media baron, is known as the founder of Media-Most holding that included Most Bank, the NTV channel, the newspaper Segodnya and magazines.
After moving abroad in the summer of 2001 he created satellite TV broadcasting company RTVi, which portrays the events in Russia as presented by the TV network Echo's journalists. The related web site newsru.com carries textual, photographic, and video news from Russia.
On August 23rd 2003, Gusinsky travelled from Israel to Athens, where he was arrested under a Greek-Russian treaty. Intense pressure from American leaders (mainly from US ambassador in Athens Tomas Miller), Israeli officials on the Greek government and especially the European Jewish Congress, led to Gusinsky's release within five days.
According to the Union of Councils for Soviet Jews, Gusinsky is a very close friend of U.S. Congressman Tom Lantos.
He holds dual Israeli and Spanish citizenship and often resides in Spain.
Vladimir Gusinsky created the first independent TV channel in Russia, and also set the course for professional and objective TV news coverage in Russia. The emergence of 'NTV+', an offshoot from NTV channel, was a groundbreaking event for Russian media. NTV+ was the first satellite channel ever to broadcast in the former USSR. Gusinsky now owns of the RTVi television channel. (source wiki)

Roman Abramovich

Net Worth:$21billion
Roman Arkadyevich Abramovich (born 24 October 1966 in Saratov, Russia) is a Jewish Russian oil billionaire and the main owner of private investment company Millhouse Capital, referred to as one of the Russian oligarchs. According to the 2006 Forbes magazine, as of 13 February 2006, he had a net worth of $18.2 billion, and according to Russian Finance magazine, as of January 2007, his fortune was $21.0 billion.
In Russia, Abramovich is prominent as the governor of Chukota, a post to which he was elected in 2000. He is most famous outside Russia as the owner of Chelsea, an English Premiership football club, and for his wider involvement in European football. Despite his high profile around the world, Abramovich makes virtually no public statements about his activities.
Early life and education
Roman's parents were exiled to Siberia from Tauragė by the Soviets after the occupation of Lithuania in 1940. Roman grew up as an orphan. His mother, Irina Abramovich, died from bacteremia as a result of a back-alley abortion when Roman was one year old. His father Arkady Abramovich was killed in an incident on a construction site when Roman was three years old] Abramovich grew up in his uncle's family in Ukhta and with his grandmother in Moscow.Abramovich attended the Industrial Institute in the city of Ukhta before being drafted into the Soviet Army. After military service, he studied briefly at the Moscow State Auto Transport Institute before dropping out to go into business. He later earned a correspondence degree from the Moscow State Law Academy.

Post-Soviet privatization and business success
Abramovich started his commercial activity in the late 1980s when Soviet president Mikhail Gorbachev's reforms permitted the opening of small private businesses, known as co-operatives. In 1992 to 1995 Abramovich founded five companies that conducted resale and acted as intermediaries, eventually specializing in the trading of oil and oil products. In 1995 Roman Abramovich, together with Boris Berezovsky, acquired the controlling interest in the large oil company Sibneft. The deal was within the controversial Loans-for-shares program and partner paid $100m for half of the company, only slightly below the stake's stock market value of $150 million at the time. The fast-rising value of the company led many observers, in hindsight, to suggest that the real cost of the company should have been in the billions of dollars.
During the 1990s, through their holding company Millhouse Capital, Abramovich and his business partner Eugene Shvidler acquired significant stakes in Russia's largest air company Aeroflot and several aluminium plants which were merged with the metals assets of Oleg Deripaska to creat aluminum giant Rusal. Millhouse LLC, as it is now known, also invested in several smaller companies in the automobile industry, pharmaceuticals, food processing, real estate and other sectors.
Millhouse divested of several key assets in 2002–2005. Most notably, the company sold its stake in Sibneft to state energy giant Gazprom for $13 billion, and its stake in Rusal to Oleg Deripaska for $2 billion. In 2006, Millhouse reinvested some of the proceeds by acquiring a 41% stake in Evraz Group, Russia's largest domestic steelmaker and one of the top 10 internationally.
In 2004, Swiss criminal investigators abandoned an investigation into an alleged fraud involving a $4.8 billion loan from the IMF to Russia, in which Abramovich was one of the investigators' key suspects, after the United States and Russia refused to divulge information on the scandal. No evidence linking Abramovich to the IMF funds was ever reported.
Despite maintaining that his primary residence is Moscow, Abramovich was named the second-wealthiest person in the UK in the Sunday Times Rich List 2006, with an estimated fortune of £10.8 billion. Abramovich qualified for the list by virtue of retaining residences in Knightsbridge, London and Sussex. His 440-acre estate in West Sussex was previously owned by King Hussein of Jordan. It has a swimming pool, a clay pigeon shoot, a rifle range and a go-kart track.
Political career
In 1999, Abramovich was elected to the State Duma as the representative for the Chukotka Autonomous Okrug, an impoverished region in the Russian Far East. He started the charity Pole of Hope to help the people of Chukotka, especially children, and in December 2000 was elected governor of Chukotka, replacing Alexander Nazarov. Since then he has invested hundreds of millions of pounds in Chukotka, which has paid for a college, a hospital, a pre-school and hotels in Anadyr, as well as renovating the airport and funding new or renovated schools in many small towns and villages. He has also used Chukotka as a tax haven for Sibneft, though the company re-invested most of its tax savings in the region and has been exploring for oil there as part of the governor's drive to boost the local economy. Abramovich said that he would not run for governor again after his term of office expired in 2005, as it is "too expensive", and he rarely visits the region. However, Russian President Vladimir Putin changed the law to abolish elections for regional governors, and on 21 October 2005 Abramovich was reappointed governor for another term. In 2006 Abramovich used his power as governor to help out the explorer Karl Bushby who was deported from the region for border violations after walking from Alaska into Russia during his attempt to walk round the world.
Abramovich was awarded the Order of Honor for his "huge contribution to the economic development of the autonomous district [of Chukotka]", by a decree signed by the President of Russia.


Relationship with Kremlin
Abramovich's close relationship with Boris Yeltsin and his family was well known. At first he was described as an aide to the powerful tycoon Boris Berezovsky: "At every stage of Berezovsky's rise, Abramovich was there, watching and learning."
The proposed merger of Sibneft with Yukos was seen by most as a move to distance himself from Russia, at a time when the Kremlin appears to have decided to bring at least some of the oligarchs to account for their colourful past business practices. Abramovich was a close associate of controversial Boris Berezovsky who sold him his stake in Sibneft, although in July 2005 Berezovsky announced his intention to sue Abramovich in the British courts for pressuring him into selling most of his Russian assets cheaply to Abramovich after Berezovsky fled the country.
The Kremlin press service reported that Abramovich's name had been sent for approval as governor for another term to Chukotka's local parliament, which confirmed his appointment on 21 October 2005.
Chris Hutchins, a biographer of Vladimir Putin, claims that the relationship between the Russian president and Abramovich is like that between a father and a favourite son; when rumours began about the latter's relationship with Zhukova, Putin reportedly told him "to clean up his act". Reports of such a conversation are hearsay and have never been verified. Abramovich himself has stated that his relationship with Putin is professional, as signified by his use of the Russian language's formal "vy" in addressing Putin, as opposed to the informal "ty".(source:wiki)

Boris Berezovsky


Boris Abramovich Berezovsky a.k.a. Platon Elenin (born January 23, 1946) is a Russian-born billionaire. He emigrated to the UK in 2001, where he was granted political asylum.
Berezovsky was born into a Jewish family in Moscow. He studied forestry and then applied mathematics, receiving his doctorate in 1983. He did research in Optimization and Control theory, publishing 16 books and articles between 1975 and 1989. He later became a Corresponding Member of the Russian Academy of Sciences in 1991 and the chair of a laboratory in its Institute of Control Sciences.
Boris Berezovsky
Berezovsky started in business in 1989 under perestroika by buying and reselling automobiles from state manufacturer AutoVAZ. Officially, Berezovsky was called upon as an expert in development of optimized system of management of the enterprise. In 1992, a new middleman company, "LogoVAZ", was created with Berezovsky as its president. LogoVAZ became an exclusive consignment dealer of AutoVAZ, enabling a scheme (named "ReExport") in which cars were sold abroad and then bought back for sale on the internal market. Frequently cars also were not taken out at all - all operations on export and import remained only on paper. Each car realized by this scheme brought dealers an income of up to USD 1,500.
In May 1994, Berezovsky became head of the notorious Automobile All-Russia alliance "АVVА" ("АВВА" in Russian) and became known as the initiator of the project of "the national car". This enterprise has appeared only as a financial pyramid. Shares of a nonexistent factory which has never been constructed were sold. On the data published in the Russian mass-media, the sum of default before investors totalled USD 50 million.
During the lawlessness of the early 1990s Berezovsky, like many businessmen, was targeted for extortion by the Russian mafia, which were powerful in Moscow at that time. He survived several assassination attempts. In 1994, as his Mercedes was pulling out of his headquarters, a huge car bomb decapitated Berezovsky's chauffeur. Berezovsky was not injured, as he was in his LogoVAZ offices during the assassination attempt.
During the presidency of Boris Yeltsin, Berezovsky was among those businessmen who gained access to the president. He used his political connections to acquire stakes in state companies including AutoVAZ itself, the state airline Aeroflot, and several oil properties that he organized into Sibneft, paying a fraction of the companies' book values. Berezovsky established a bank to finance his operations and acquired several news media holdings as well. These media holdings provided essential support for Yeltsin's re-election in 1996. Berezovsky's holdings included the television channels ORT and TV6, along with the newspapers Nezavisimaya Gazeta, Novye
Izvestiya and Kommersant.
Berezovsky is a leading proponent of political and economic liberalization in Russia. He has frequently entered into politics by investing in the liberal media, financing liberal candidates, making political statements, and even seeking office himself. He was briefly secretary-general of the Commonwealth of Independent States and later a member of the Duma. Berezovsky had strong ties with Chechens through their Moscow diaspora connections. According to Ramzan Kadyrov, Berezovsky was strongly opposed to the Second Chechen War but nonetheless supported Vladimir Putin's 2000 presidential campaign.
On June 15, 2000, The Times reported that Spanish police discovered Putin illegally visiting a villa in Spain belonging to Berezovsky on up to five different occasions in 1999.
Exile
Putin neither welcomed Berezovsky's views on Chechnya, nor his political clout and opened investigations into Berezovsky's opaque business activities. Fearing arrest, Berezovsky fled to London, where he was granted political asylum. He has been charged with fraud and political corruption, but the Russian government has not been able to extradite him. From his secure base in the U.K., he has strongly criticized the current Russian administration.

Alleged travel document on the name of Platon Elenin
In 2003 Boris Berezovsky formally changed his name to Platon Elenin ("Platon" being Russian for Plato, and Elena is the name of his wife) in the British courts. No reason has been given - but Platon is the name of the lead character in a film Tycoon based on his life. In December 2003 he was allowed to travel under his new name to Georgia, provoking a row between Russia and Georgia.
In recent years, Berezovsky has gone into business with Neil Bush, the younger brother of U.S. President George W. Bush. Berezovsky has been an investor in Bush's Ignite! Learning, an educational software corporation, since at least 2003. In 2005, Neil Bush met with Berezovsky in Latvia, causing tension with Russia due to Berezovsky's fugitive status. Neil Bush has also been seen in Berezovsky's box at the Emirates Stadium, the home of British soccer club Arsenal F.C., for a game. There has been speculation in the English language Moscow Times that the relationship may cause tension in Russo-American bilateral relations, "especially since Putin has taken pains to build a personal relationship with the U.S. president."
In September 2005, soon after the Ukrainian government led by prime minister Yulia Tymoshenko was dismissed by president Viktor Yushchenko, former president of the Ukraine Leonid Kravchuk accused Berezovsky of financing Yushchenko's presidential election campaign, and provided copies of documents showing money transfers from companies he said are controlled by Berezovsky to companies controlled by Yuschenko's official backers. Berezovsky has confirmed that he met Yushchenko's representatives in London before the election, and that the money was transferred from his companies, but he refused to confirm or deny that the companies that received the money were used in Yushchenko's campaign. Financing of election campaigns by foreign citizens is illegal in Ukraine.
In January 2006, Berezovsky stated in an interview to a Moscow based radio station that he was working on overthrowing the administration of Vladimir Putin by force . In November 2006, Berezovsky accused Putin of ordering the poisoning of FSB defector and fellow dissident Alexander Litvinenko, who also lived in exile in the UK. The two were close associates. [ Berezovsky said he had no doubts that Russian authorities were behind the poisoning.
On April 13, 2007, in an interview with the British newspaper The Guardian, Berezovsky declared that he is plotting a new Russian revolution to overthrow the regime of Vladimir Putin by financing important people in Putin's administration.
"We need to use force to change this regime," he said. "It isn't possible to change this regime through democratic means. There can be no change without force, pressure." Asked if he was effectively fomenting a revolution, he said: "You are absolutely correct."
During the interview, however, he did not mention violence and cited the recent nonviolent revolutions in Ukraine and Georgia as examples for Russia.
He also admitted that during the last six years he struggled much to "destroy the positive image of Putin" and tried to portray him whenever possible as a dangerously anti-democratic figure. On April 13th Berezovsky told the Associated Press by telephone in Britain, "Putin has created an authoritarian regime against the Russian constitution." He added, "I don't know how it will happen, but authoritarian regimes only collapse by force."
The Russian Prosecutor Gereneral's Office has launched a criminal investigation against Berezovsky to find whether his comments can be considered a "seizure of power by force", as outlined in the Russian Criminal Code. If convicted, an offender is facing up to 20 years of imprisonment.
The British Foreign Office has denounced Berezovsky's statements, warning him that his status of a political refugee may be reconsidered, should he continue to make similar remarks. Furthermore, Scotland Yard has announced that it will investigate whether Berezovsky's statements are in violation of the law.
Allegations of corruption
A 1996 Forbes magazine article titled "Godfather of the Kremlin?", by Paul Klebnikov, portrayed Berezovsky as a mafia boss who had his rivals murdered. Berezovsky sued the magazine for libel, and the dispute was ultimately settled with the magazine retracting both claims. Klebnikov expanded the article into a book, Godfather of the Kremlin, that Berezovsky did not contest in court. Klebnikov subsequently became the editor of the Russian edition of Forbes, but he was murdered in Moscow on July 9, 2004.
After his self-exile, prosecutors in Russia had accused Berezovsky of a host of crimes, including fraud and preparing a violent overthrow of Putin's government. Berezovsky denies all the allegations. (source:wiki)

Vagit Alekperov

Forbes Net Worth:$12.6billion
Vagit Alekperov (born September 1, 1950 in Baku, Azerbaijan) is currently a President of the leading Russian oil company LUKOIL.
Vagit Alekperov, rated by Forbes magazine as the 48th richest person worldwide with US $12.6 billion of net worth, was born in Baku, one of the earliest centers of the international petroleum industry. His father, who died when Vagit was a boy, worked in the oil fields all his life and inspired Alekperov to follow in his footsteps. He was 18 when he landed his first job in the industry.
Vagit Alekperov graduated in 1974 from the Azerbaijan Oil and Chemistry Institute. As a student he also worked as a drilling operator in Kaspmorneft, a Caspian regional production company.
After graduation, he continued to work there, and by 1979 he had advanced from engineer to deputy head of a production unit. He had to work in extreme conditions on offshore oil rigs. On one occasion, an explosion on his rig threw him into the stormy Caspian sea, and he had to swim for his life.
Alekperov moved to Western Siberia in 1979 and worked at Surgutneftegaz between 1979 and 1985, earning his reputation as an industry expert. He was ascending positions and by 1985 became first deputy general director of Bashneft production company. In 1987, he became general director of the newly created production company Kogalymneftegaz.
In 1990, Alekperov was appointed deputy minister of the Oil and Gas Industry of the Soviet Union and became the youngest deputy energy minister in Soviet history. At that time, Alekperov promoted establishment of vertically integrated state-owned energy companies, which would bring together the wide range of organizations in the energy sector that were, at the time, reporting to different Soviet bureaucratic institutions.
As deputy minister of the oil and gas industry of the Soviet Union, Alekperov was engaged in the formation of the first vertically integrated state-owned energy company, Langepas-Urai-Kogalymneft, which was established in late 1991 as a subsidiary of the Ministry of Fuel and Energy. In April 1993, Langepas-Urai-Kogalymneft became LUKoil Oil Company, with Alekperov as its president.
Lukoil thus arose in the dying days of the Soviet Union in 1991, set up by a small group of Soviet oil bureaucrats led by Alekperov. Another member of the group was his close friend Vitaly Schmidt, a petroleum engineer. The group forged strong bonds working in a remote drilling camp in the Siberian swamp town of Kogalym, meaning "the lake where a man died."
Oil tycoon Schmidt was himself a multi-millionaire with luxury residences in four countries. Much of his fortune came from a group of small offshore energy companies he oversaw on behalf of himself and the few fellow executives of Lukoil.
His sudden death under mysterious circumstances in Moscow in August 1997 set off a struggle for control of his assets, hidden in tax havens from the Isle of Man to Panama. It led his son Vadim Schmidt, 19 when his father died, to accuse Lukoil executives, including Alekperov, of raiding his father's estate, allegations they deny, according to front page article in the Wall Street Journal on December 6, 2006.
Vadim made the claim in an Isle of Man court and in the high U.K. appellate court known as the Privy Council. In response to the allegations that Lukoil executives sometimes took control of company profits Vitaly Schmidt had secreted in the Isle of Man, Alekperov said, "Unfortunately, the son didn't take after his father. He's looking for his father's supposed money."
Schmidt had been head of drilling in Kogalym when Alekperov moved to the oil ministry in Moscow. There, Alekperov helped establish Lukoil as a state company with control of Kogalym and extensive natural-gas assets. A minority slice of Lukoil's shares started trading publicly in Russia in 1993, after which the state's interest gradually shrank to zero.
Alekperov has remained president of LUKoil since that time. Employing more than 100,000 people, today LUKoil is among the world's most powerful oil companies, with reserves second only to Exxon.
Lukoil was also the first Russian company to acquire an American company. In November 2000, Lukoil acquired Getty Petroleum Marketing and its 1,300 gas stations in the U.S.A. Like many other Russian oligarchs, Alekperov has also moved into banking and media.He is the only
russian oligarch with islamic roots(source main:wiki)

Viktor Chernomyrdin


Viktor Stepanovich Chernomyrdin (born April 9, 1938) is a Russian politician.
Chernomyrdin was the Prime Minister of Russia from 1992 to 1998. Since 2001, he has been Russia's ambassador to Ukraine. He is also a Russian business
oligarch. Le Monde once estimated Chernomyrdin has assets of $5 billion; but Chernomyrdin stated in 1996 his assets totaled $46000.
Viktor Chernomyrdin is a target of numerous jokes for his syntactically extravagant speech. One of his expressions "We meant to do better, but it came out as always" became a popular proverb (Хотели как лучше, а получилось как всегда in Russian). He said it after a highly unsuccessful monetary exchange performed by the Russian Central Bank in July 1993.

Youth and education
Chernomyrdin's father was a labourer. Viktor was one of his five children. Chernomyrdin completed school education in 1957. He was a C-student. Half of his school grades were Cs, and he did not have a single A. He found employment as a mechanic in an oil refinery in Orsk. He worked there until 1962, except for two years of compulsory military service from 1957 to 1960. His other occupations on the plant during this period included machinist, operator and chief of technical installations. He became a member of the CPSU in 1961.
In 1962 he was admitted Kuybyshev Industrial Institute (which was later renamed Samara Polytechnic Institute). In his entrance exams he performed very poorly. He failed maths and had to take the exam again, getting a C. He got only one B in Russian language, and Cs in the other tests. He was admitted only because of the very low competition. In 1966 he graduated from this institute. In 1972 he completed further studies at the Department of Economics of the Union-wide Polytechnic Institute by correspondence.
Career
During 1967-1973 he was involved in CPSU work in Orsk.
During 1973-1978 he worked as the director of the natural gas plant in Orenburg.
During 1978-1982 he worked in the heavy industry arm of CC CPSU.
In 1982, he was appointed deputy Minister of the natural gas industries of the Soviet Union. Concurrently, beginning from 1983, he directed Glavtyumengazprom, an industry association for natural gas resource development in Tyumen Oblast. During 1985-1989 he was the Minister of gas industries.
In 1989, when the Ministry of Oil and Gas was converted into the government company Gazprom, Chernomyrdin was elected its chairman.
In May 1992, Boris Yeltsin appointed Chernomyrdin deputy prime minister in charge of fuel and energy. In December 1992, Chernomyrdin became prime minister of the Russian Federation.
In April 1995 he formed a political bloc called Our Home — Russia, which was aimed at becoming the central force in the parliament, but failed in this, gaining only 10% of votes.
During the summer of 1995, Chernomyrdin was involved in direct negotiations with the Chechen terrorist Shamil Basayev, whose armed group has taken hostages in a hospital in Budyonnovsk. Some of the hostages were released after the negotiations.
Chernomyrdin remained prime minister until his dismissal in 1998. Following the default in August 1998, Yeltsin offered Chernomyrdin's re-appointment to the position of prime minister, but the Duma rejected the offer.
In December 1999 he was elected a member of the Duma.
In May 2001, Vladimir Putin appointed Chernomyrdin ambassador to Ukraine. This action was interpreted by some Russian media agencies as a move to distance Chernomyrdin from the centre of Russian politics. In 2003, he dismissed talk of an apology for the Holodomor Famine.(source:wiki)

Viktor Vekselberg

Forbes 2006 net worth: $10 billion
Viktor Feliksovich Vekselberg
(born April 14, 1957, Western Ukraine, Soviet Union) is the owner and president of Renova Group, a large Russian conglomerate.
After working as an engineer in an obscure state lab for many years, Vekselberg moved to business in 1990. He rose to prominence after Yeltsin's reelection in 1996 as co-owner and chairman of Tyumen Oil (TNK), one of Russia's largest oil and gas companies. He took a controlling interest in the company in 1997 and has subsequently developed a joint venture with BP. About the same time he co-founded SUAL Holding, which since grew to control Russia's second-largest aluminum business and is ranked ninth in the world. Later, he integrated those and other assets under the umbrella of Renova Group, delegating operating responsibilities to managers.
Vekselberg is now overseeing a vast restructuring of his assets: the division of property with partner Leonid Blavatnik, the merger of Renova's aluminium assets with those of Oleg Deripaska, and the integration of various electricity and telecommunications investments.
Viktor Vekselberg is often considered to be one of the remaining Russian oligarchs. The Forbes magazine estimated his wealth at 5 billion dollars in March 2005. Actual net worth is estimated over US$10 billion.
Vekselberg is of Jewish origin. He is married to Marina and has two children, a daughter, Irina, and a son, Sasha.(source wiki/Forbes)