Windy Public sale: Abramovich draped over this deal

stormy auction
Abramovich got rich with this deal

By Jan Ginger

With the collapse of the Soviet Union, Roman Abramovich sells plastic toys. A few years later, he laid the foundation for his fortune at an oil company auction.

Roman Abramovich is a typical Russian oligarch. He became very rich by dubious means and always maintained a good relationship with the president. First to Boris Yeltsin and then to Vladimir Putin. However, this closeness now became a problem for the oligarchy. He is punished, the British government is taking Chelsea Football Club away from him, and the Portuguese government is checking whether the oligarch’s naturalization process was OK. In addition, the BBC report is now causing problems.

It concerns a very profitable business for Abramovich, which laid the foundation for his enormous fortune. For context: Bloomberg currently estimates his fortune at $13.7 billion, but it has shrunk by $4.3 billion since the beginning of the year.

In 1989, at the age of 23, Abramovich began selling plastic toys. He later established companies that traded in petroleum, minerals, cement and fertilizers, for example. He met Boris Berezovsky, who at that time was in close contact with Yeltsin.

Abramovich cooperated with Berezovsky when he bought half of the Sibneft oil company from the Russian state at a stormy auction in 1995 – during the period of unbridled privatization after the collapse of the Soviet Union. For this he paid the equivalent of about $250 million, and therefore it was clearly much less than it was actually worth. He continued to increase his stake and in 2003 sold most of his package to the state – to the state-controlled Gazprom Group for $13 billion.

Obviously, the first auction was not going well. Abramovich admitted this a few years ago. The BBC has now received a five-page document from Russia intended to provide more evidence. According to the BBC, it is said to be a file created by Russian law enforcement agencies. The BBC has not been able to verify the authenticity of these allegations, but other sources have confirmed many of the allegations.

According to the document, the Russian state was cheated out of $2.7 billion at the auction. A review by the Russian parliament in 1997 revealed this. According to the document, the authorities wanted to bring Abramovich to court on charges of “mass fraud”. But she did not reach it. He is said to have been protected by then-President Yeltsin. The Kremlin suspended the investigation of the then Prosecutor General Yuri Skuratov.

Zoff with Berezovsky

Later Yeltsin dismissed Skuratov. A video previously appeared showing the attorney general having sex with prostitutes. Skuratov always maintained that it was a fake. He had previously investigated the government about possible bribery payments. He told the BBC: “Obviously the whole thing was political because I got so close to the Yeltsin family in my investigations – including the investigation into Sneft’s privatization.”

In the first auction, Abramovich allied himself with Berezovsky, who fled to London after Putin assumed the presidency. Berezovsky sued Abramovich in the UK in 2012, alleging that his former business partner seized the opportunity and forced him to sell his shares for a fraction of the actual value. A British court agreed with Abramovich’s opinion and dismissed Berezovsky’s allegations.

But at trial, Abramovich testified that he gave Berezovsky $10 million before the first Sibneft auction to bribe a Kremlin employee. This enabled both of them to buy the shares for much less than their real value, which is estimated at several billions.

The Chinese are retreating

The document also speaks of another auction in which Abramovich participated. In 2002, the Russian government sold a stake in the oil company Slavneft by auction. The starting price was much lower than requested by the Russian authorities. After some bidders withdrew before the campaign and other interested parties were not accepted, only three companies remained: on the one hand Sibneft and TNK. On the other hand, the Chinese company CNPC.

According to the report, Russian companies previously agreed among themselves that Sibneft would receive the shares – just over the $1.7 billion minimum bid. Kremlin officials were also on board. Problem: The Chinese planned to provide twice as much as the Russians initially.

The Chinese abruptly withdrew their bid shortly before the auction and Slavneft’s stake went to Sibneft for $1.9 billion. The closing auction ended after just seven minutes. The file provides an explanation of why the Chinese retreated: the head of the delegation was kidnapped shortly after landing in Moscow. He was only released after the CNPC withdrew from the auction.

And the BBC asserts that there is no doubt that Abramovich was aware of or related to the kidnapping. His lawyers said Abramovich was unaware of the alleged kidnapping. Allegations of corruption in the purchase of shares in Sibneft and Slavneft are false. The assertion that her client was under Yeltsin’s protection is also incorrect.

Leave a Comment