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Dominic Midgley is a British journalist and author who specialises in biographies of prominent business people and celebrities.

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Born for the jobBorn For The Job

Michael O'Mara, 2004

media coverage >> on the ball

On the Ball, Jewish Chronicle, 15 October, 2004

On the ball,
Dominic Midgley traces the rise and rise of Roman Abramovich,
The Jewish Chronicle, 15 October, 2004

October 25 marks the first anniversary of the arrest of Mikhail Khodorkovsky, the Russian oligarch being held on tax fraud charges. While Russia’s richest man languishes in a grim Moscow jail, however, the country’s second richest man, Roman Abramovich, appears to live a charmed life.

jewish chronicle  
   

The contrast in their fortunes can be attributed to the very different ways in which these two Jewish billionaires behaved towards President Vladimir Putin.

From his earliest days as a businessman on the make, Abramovich worked from within. In the mid Nineties, in tandem with his then partner, Boris Berezovsky, he charmed Tatyana Dyachenko – the influential daughter of former president Boris Yeltsin – and succeeded in securing one of the plum privatisations, Siberian Oil, or Sibneft. Bought for $200 million, it is now worth seventy five times as much.
At the same time, Khodorkovsky gained control of an even bigger oil company, Yukos, but it was when Putin came to power that their approaches began to diverge.

As Chris Hutchins and I reveal in our new book, Abramovich was so close to Yeltsin and Putin that when Putin was appointed prime minister in August 1999, the oligarch borrowed an office in the Kremlin and interviewed all the ministerial candidates one by one.

He later told our source, the influential Russian radio commentator Alexei Venediktov that these were ‘just friendly conversations’. As Venediktov responded in disbelief: ‘Friendly conversations? In the Kremlin?’

And Abramovich’s vetting of Putin’s cabinet was just the beginning of what was to become a highly active career in political power-broking. Throughout his presidency, Yeltsin had been forced to wrestle with a Duma dominated by communists and, while Putin’s popularity rating started rising steadily, a strong showing in the parliamentary elections of 2000 by the communists and the Fatherland-All Russia coalition might have fatally damaged his prospects.

What was needed was a party that would offer wholehearted support to Putin. The result was Unity, an entity created from scratch under the leadership of the charismatic and good-looking emergencies minister Sergei Shoygu. But the paymaster and organisational genius behind it was Abramovich. ‘Abramovich put that party together,’ maintains one former associate.

And so, while Khodorkovsky was backing oppositionist candidates in the run-up to the parliamentary elections of 2003, Abramovich was cementing his relations with the man who had succeeded Yeltsin as president on New Year’s Day, 2000.
But even Abramovich – who had been warned by Venediktov just a few months earlier that Putin was in a mood to make an example of at least one oligarch – was ‘stunned and nonplussed’ when Khodorkovsy was arrested last year, according to the broadcaster.
He appears to be aware that, while Putin owes him a debt of gratitude, the president must also take account of his electorate, who are universally hostile to the oligarchs, the men who procured so much of the national wealth at bargain-basement prices. In such a volatile situation it is wise to have a fall-back position. Abramovich’s appears to be a London base.

Indeed, one fellow oligarch described Abramovich’s acquisition of Chelsea as ‘the cheapest insurance policy in history’ - the thinking being that no British prime minister could allow the extradition to Russia of a man who had bought the love of tens of thousands of fans should his relationship with Putin turn sour.
This scenario should be of some consolation to Chelsea supporters worried that he might abandon the club should his coach, Jose Mourinho, fail to deliver any silverware this season.

And Abramovich is determined to turn Chelsea into a global brand to rival Manchester United. To achieve this status, the clubs needs to win major trophies: either the Premiership or the European Cup, or both. This would build their international profile and create markets for television rights and merchandise in the lucrative Far Eastern market.

Abramovich has already proved his commitment to this vision by spending more than £200 million on new players, stars such as Didier Drogba, Damien Duff, and Paulo Ferreira.

A role as the owner of one of the world’s glamour clubs and a personal fortune of up to £7.5 billion is a remarkable transformation in the fortunes of a man born into poverty under a communist regime.

Abramovich’s mother Irina died one day before his first birthday after complications set in following a backstreet abortion and his father was killed in an industrial accident less than 18 months later
But while his early life was marked by tragedy, one novelist talks of orphans being ‘baptised into greatness’ on the grounds that they grow up with none of the restrictions imposed by parents that colour the lives of most people. And so it proved with Abramovich.

He was taken in first by his uncle Leib in the north Russian town of Ukhta and later by his uncle Abram in Moscow and while he never shone at school he is remembered by his teachers as a diligent and lovable child.

After spending a traumatic two years in the Red Army on national service, he began a career as a trader. First he would shuttle back and forth between Moscow and Ukhta trading in scarce consumer goods and then set up his stall – literally – as a market trader in plastic dolls in Moscow.

With the collapse of communism, opportunities for the switched-on entrepreneur were many and varied, and Abramovich quickly spotted the potential in oil trading.

Under the Soviet system, locally-drilled oil had been sold at a multiple discount on the international price and it was through the sale of domestically produced oil on the global market that the Soviet regime had made its petrodollars. With the fall of communism, windfall profits of this type became available to private operators.

An oil export licence became a licence to print money.
The encounter that was to turn Abramovich from a millionaire into a billionaire came in the summer of 1995 when he met Boris Berezovsky. Berezovsky was already a wealthy man thanks to a car dealing business but, more importantly, he had the ear of the then president Yeltsin.

So when the opportunity came to bid for one of the state assets to be sold under the privatisation programme of that year, Berezovsky was well-placed to use his contacts to obtain one of the choicest lots. And Abramovich had just the combination of oil and managerial expertise to make him the perfect partner.
His fortune procured, Abramovich’s main task now is to ensure that he does not lose it. He is already said to have $3 billion invested in hedge funds internationally, secure from sequestration by the Russian government.

And the signs are that he wants to free up more of his wealth. He has already sold up his stake in RusAl, the country’s biggest aluminium producer, and a number of other ventures and there are reports that he would like to sell a substantial stake in Sibneft to a Western oil giant.

As William Browder, chief executive of the Moscow-based Hermitage Capital Management, says: ‘The richer you are, the more vulnerable you are. Abramovich;s great epiphany was to realise that and sell everything he could possibly get out of. It’s better to have $10 billion in cash than $20 billion in assets that are vulnerable to confiscation.’

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