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Great article on Roman in Wall Street Journal today


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Here it is for those who can't access it. It's fascinating. I love the "trailer" at the end - "the public excavation of their past resumes in court next week..."

"Russian billionaire Roman Abramovich rose to prominence revealing almost nothing about how he acquired his power and wealth. In a courtroom here, his cone of silence is being dismantled.

Mr. Abramovich is embroiled in a nasty high-stakes legal scrap with another Russian tycoon, the exiled Boris Berezovsky, over oil, metal—and widely conflicting versions of the two men's onetime business relationship.

Mr. Berezovsky, who arrives at London's High Court each day in a black Maybach limousine with a phalanx of Israeli bodyguards, is suing his rival for $6 billion, claiming he was bullied out of his Russian oil assets. But, more than a straight business dispute, the case is a cinematic drama of a master oligarch and an apprentice who built a lucrative business but fell out when Russia's political winds suddenly shifted.

The master, Mr. Berezovsky, fled the country and saw his influence fade. His protégé, Mr. Abramovich, remained and became one of Russia's richest men.

The post-Soviet Russia in which they first did business was a "society without law," Mr. Abramovich's attorney, Jonathan Sumption, told the court last month. "In our own national experience, we have to go back to the 15th century to find anything remotely comparable."

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Russian businessman Boris Berezovsky, arriving at a London court on Nov. 2, claims that Mr. Abramovich bullied him out of Russian oil assets.

The case is complex yet boils down to a simple idea. Mr. Berezovsky claims that, after he became estranged from then-President Vladimir Putin in the fall of 2000, Mr. Abramovich took advantage of his weakness by intimidating him into selling his stake in the Russian oil company OAO Sibneft at a fraction of its value.

He also claims Mr. Abramovich breached an agreement by secretly selling shares held in trust for Mr. Berezovsky in the aluminium company Rusal.

Mr. Abramovich says Mr. Berezovsky never owned any part of either company.

Some $2.5 billion paid to Mr. Berezovsky over the years, by Mr. Abramovich's account, wasn't a share of oil or aluminum profits, as his rival says, but rather was payment for "political protection" the once-well-connected Mr. Berezovsky provided—a service known in Russia as "krysha," the word for "roof."

Legal observers say Mr. Berezovsky will have a struggle to prove share agreements that were never written down but were sealed—if they existed—only by a handshake and the oligarch code of honor.

Yet, some add, the sight of his enemy subjected to an embarrassing cross-examination about his murky past is in itself a kind of victory for the exiled oligarch.

Neither Mr. Abramovich nor Mr. Berezovsky would comment for this article, nor would a spokesman for Mr. Putin.

Taking the witness stand last week, the reticent Mr. Abramovich was immediately grilled by Mr. Berezovsky's attorney about whether he had stolen a trainload of diesel fuel in 1992, had forged documents and had traded in weapons—all of which he denied. He did admit he had staffed companies with disabled people to take advantage of tax exemptions.


Born in 1966, Mr. Abramovich lost both parents at an early age and was brought up by relatives in Siberia. He quit college and took a job as a welder. When the fading Soviet Union began to allow private enterprise, he started a small business making plastic toys.

By the early 1990s, as the old Soviet economy collapsed, he had become a successful oil trader, running firms that bought crude oil and refined products at prices fixed below market rates and sold them abroad at a big markup.

Mr. Abramovich was getting most of his oil from a Siberian producer called Noyabrskneftegaz and a refinery in the nearby city of Omsk. He realized they could be much more profitable if the two could be merged.

But to do that—and gain control of the combined company—he needed someone with the clout to influence government decision-makers.

Mr. Berezovsky was such a person. A Soviet-era mathematician who had built up a large auto dealership, a man 20 years older than Mr. Abramovich, he was friendly with members of then-President Boris Yeltsin's family.

The two businessmen met in 1994 on a Caribbean cruise hosted by a former trade minister. Mr. Berezovsky, in court, has said the younger man felt "like my son," and had a genius for persuading people to trust him.

On the cruise, Mr. Abramovich presented his idea of consolidating control over the two oil companies and directing their sales through his trading firms. Mr. Berezovsky saw promise in the idea. He had recently taken control of Russia's main television channel, ORT, but it was running big losses. The oil company could provide a source of funding.

Mr. Berezovsky would seek to persuade President Yeltsin to merge the two state companies Mr. Abramovich got his oil from into one—Sibneft—and earmark it for privatization. Mr. Berezovsky's TV channel, buoyed by Sibneft cash flow, would provide positive coverage of Mr. Yeltsin in his 1996 re-election bid.

Mr. Abramovich's attorney, Mr. Sumption, described the deal in court as "corrupt," adding: "I accept, of course, that my client was privy to it. But the reality was that that was how business was done in Russia at the time."

Mr. Abramovich estimated that directing the new company's oil through his trading firms would boost their profits $60 million a year. Mr. Berezovsky said he would need about $30 million a year for the TV channel and his personal expenses, according to Mr. Abramovich's witness statement.

At this point, their accounts diverge. Mr. Berezovsky says—and Mr. Abramovich denies—that they agreed that after Sibneft had been formed and privatized, they would co-own it and split its profits 50-50.

According to Mr. Abramovich, Mr. Berezovsky began making demands for money even before Sibneft's formation, asking at a March 1995 meeting for $8 million. "I can recall being particularly annoyed afterwards that I had been asked to do this, particularly as I had had to wait for about 5-6 hours to see Mr. Berezovsky that day," Mr. Abramovich wrote in his witness statement.

One day later that year, according to the Abramovich legal team, a $5 million payment was delivered in cash to the Logovaz Club, an opulent Moscow mansion that was Mr. Berezovsky's headquarters. Mr. Berezovsky said he didn't receive any payments as early as 1995.

In any case, the government soon formed Sibneft. And when it was then privatized in a series of share auctions, Abramovich firms won them. Mr. Abramovich had obtained the backing of Soviet-era managers of the oil companies being combined into Sibneft. He won one auction in a process his own lawyer described in court as a "stitch-up," with no other serious bids.

Mr. Abramovich's trading firms soon flourished selling Sibneft's oil. But he faced growing demands for cash from his older associate. Initially, Mr. Abramovich says, his trading firms had to pay off the Berezovsky-controlled TV channel's debt, but soon they also were paying most of Mr. Berezovsky's personal expenditures.

Mr. Abramovich says his firms bought Mr. Berezovsky yachts, aircraft and paintings, settled his girlfriend's credit-card bills and helped him acquire the Chateau de la Garoupe, a palatial villa in Cap d'Antibes. "When he needed money, he would call me," Mr. Abramovich told the court.

The two also socialized. In court last week, Mr. Abramovich said their families vacationed together eight times between 1995 and 1998, in places like Corsica and the Swiss ski resort Gstaad.

In early 2000, they spent $50 million backing the election campaign of Mr. Putin, the former KGB spy whom the ailing President Yeltsin wanted as his successor.

Yet in a matter of months, Mr. Berezovsky lost faith in Russia's new leader, accusing him of trying to return Russia to its authoritarian past. Mr. Berezovsky's ORT television channel lambasted Mr. Putin over his handling of the Kursk nuclear-submarine disaster.

Soon, Mr. Berezovsky found himself under Kremlin pressure to sell his shares in the TV channel. In October 2000, he left Russia, never to return.

Mr. Abramovich now became a crucial intermediary between his exiled mentor and a Russian president determined to smash the oligarchs' political power once and for all.

The same month that Mr. Berezovsky fled Russia, according to Mr. Abramovich's account, a Georgian tycoon who was a partner with Mr. Berezovsky in the TV channel proposed that Mr. Abramovich buy them out.

Mr. Abramovich says he agreed. He said he saw the move as a way to "take the 'political heat' out of the relations between Mr. Berezovsky and the Kremlin."

Mr. Berezovsky's attorney portrays the younger oligarch's motives otherwise. The attorney, Loz Rabinowitz, told the court that Mr. Abramovich at that point faced a choice—stay loyal to his friend or seek to profit from his difficulties—and chose the latter path, showing "he was a man to whom wealth and influence mattered more than friendship and loyalty."

In a meeting with the Georgian tycoon, Badri Patarkatsishvili, at the renowned Parisian restaurant Le Fouquet, Mr. Abramovich agreed to purchase the stake in the TV channel for $150 million, according to testimony Mr. Patarkatsishvili provided before his death in 2008. Mr. Abramovich said he discussed such a purchase with Mr. Putin, who had no objection.

In December 2000, all three moguls—the Georgian and Messrs. Abramovich and Berezovsky—met in the VIP lounge of Le Bourget, a Paris airport that caters to private business jets of the rich. A transcript of the conversation, secretly taped by the Georgian, has become a key piece of evidence in the trial, although the meaning of some exchanges on it is hotly contested.

The conversation touched on the Sibneft oil company's profits, dividends and taxes. At one point, the men discussed "legalization." Mr. Berezovsky says this referred to the idea of registering his shares in Sibneft and Rusal and making his hidden interest visible. Mr. Abramovich disputes that interpretation.

The transcript also shows Mr. Abramovich asked for a signed paper confirming the sale of the TV-channel stake that he could show to Mr. Putin. The Georgian and Mr. Berezovsky appeared noncommittal.

Soon, pressure on Mr. Berezovsky intensified. Moscow police arrested a close friend of his.

According to Mr. Berezovsky, he was visited in Cap d'Antibes by Mr. Abramovich and told that if he didn't sell his TV-channel shares, and at an acceptable price, his close friend would "be in jail for a very long time"—and the Kremlin might seize the TV stake anyway.

Mr. Berezovsky's side says this meeting is central to his case, establishing a pattern of threatening behavior later used to bully him out of his shares in Sibneft.

Mr. Abramovich says such a meeting never happened.

In January 2001, the final break came. At the posh French ski resort of Courchevel, according to Mr. Abramovich's witness statement, he met with the Georgian tycoon, Mr. Patarkatsishvili, and the latter man proposed that the relationship among the three moguls be ended with a "large final payment" to Mr. Berezovsky, later fixed at $1.3 billion.

Mr. Abramovich says he agreed to this. He said in court it was his way of saying to Mr. Berezovsky that, no matter what was happening in Russia, "I remained loyal and would always respect what he had done for me," but Mr. Berezovsky "should now leave me and Sibneft alone."

Mr. Berezovsky says the $1.3 billion actually was payment for his stake in Sibneft. And, he says, it came to only a quarter of what his stake was worth.

In 2005, Mr. Abramovich sold Sibneft to the state-owned gas giant OAO Gazprom for $13 billion.

In the years since, the rivals' fates and fortunes have diverged widely. The Sunday Times recently estimated Mr. Berezovsky's wealth at £470 million, or $750 million. Many believe he actually has much less. The paper pegged Mr. Abramovich's wealth at £10.3 billion, or $16.5 billion.

Mr. Abramovich has become famed for an extravagant lifestyle. Besides the Chelsea Football Club, he owns the world's largest yacht, called the Eclipse, a Colorado ski estate and a Cap d'Antibes chateau. Since embarking on a relationship with a 30-year-old art-gallery owner, Darya Zhukova, he also has become one of the world's biggest-spending art collectors.

The rival moguls give starkly different explanations of their disparate fates since 2001. Mr. Berezovsky contends his younger rival thrived because he became a tool of the Kremlin, a loyal oligarch who did Mr. Putin's bidding and was rewarded for it.

By Mr. Abramovich's account, his former friend simply failed to adapt to the changing times, the new and more disciplined business environment that Mr. Putin had ushered in, an era where "krysha" and the political fixer were a thing of the past.

The public excavation of their past resumes in court this week.

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Interesting stuff

There does not necessarily have to be any contracts or legal documents is my understanding, but Mr Berezovsky will be hard pushed to prove anything without them.

Looks like the only concrete evidence is a taped conversation and that seems inconclusive.

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  • 2 weeks later...

A brain and right place right time as always I suspect. Great doc, hope Mr Abramovich wins... ;-)

I suspect the brain and right place-right time scenario are only part of the story here. Anything went in the old Soviet Union in those days and I mean ANYTHING and EVERYTHING

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