Abramovich 'paid $2bn for a political godfather'
Published 05/10/2011 | 05:00
ROMAN Abramovich has admitted paying his fellow Russian oligarch Boris Berezovsky $2bn (€1.5bn) to act as his "political godfather".
The billionaire owner of Chelsea football club funded French palaces and a private jet for Mr Berezovsky and bought paintings and jewellery for his girlfriend in an attempt to gain his influence in Russia.
A High Court judge in London was told yesterday that businessmen such as Mr Abramovich needed access to someone with political influence because in the 1990s they were operating in a Russian state where the "rule of law" had simply disappeared.
Mr Berezovsky is suing Mr Abramovich for more than £3bn (€3.5bn).
He claims that he was "intimidated" into selling shares in the Russian oil company Sibneft at a fraction of their value and alleges breach of trust and breach of contract.
Mr Abramovich denies the claims.
Jonathan Sumption QC, representing Mr Abramovich, told Mrs Justice Gloster at the Commercial Court in London that "quite extraordinary conditions" prevailed following the collapse of communism in 1992.
"There was no rule of law," he said. "The police were corrupt. The courts were unpredictable at best and at worst open to manipulation. Nobody could go into business without access to political power.
"If you didn't have political power, you needed access to a godfather who did."
Mr Sumption said that between 1995 and 2002 Mr Berezovsky had received $2bn from "businesses controlled by Mr Abramovich".
The money, he said, was for palaces in France, private aircraft, jewellery for his girlfriend and valuable paintings.
On Monday, Laurence Rabinowitz QC, for Mr Berezovsky, had said the oligarch had been "betrayed" by Mr Abramovich after falling out with political leaders. He left Russia in 2000 following the resignation of Boris Yeltsin.
Mr Sumption said Mr Berezovsky had "persuaded" the Yeltsin government to create Sibneft out of state-owned businesses.
"His (Mr Berezovsky's) contribution was important. Indeed, it was indispensable," said Mr Sumption. "But it was almost entirely political."
The court heard that Mr Abramovich had "always recognised" that he would have to pay Mr Berezovsky.
But the latter had not "contributed a single cent" to acquiring or building up Sibneft, nor made any managerial contribution, said Mr Sumption.
He said Mr Abramovich "strongly disputed" that "oral agreements" had been made between the two men and denied that Mr Berezovsky was entitled to damages.
Mr Abramovich argues that the majority of Sibneft's shares "were (indirectly) owned by him through companies he controlled" and that Mr Berezovsky had never been the registered owner of Sibneft shares.
"The deal" was that "for substantial cash payments, Mr Abramovich and Sibneft would enjoy Mr Berezovsky's political patronage".
Allegations of threats being made by Mr Abramovich were "wholly unfounded".
He said Mr Berezovsky had a "close relationship" with people in the "immediate circle" of the then president Yeltsin.
"Mr Berezovsky persuaded the Russian government to sell the right to manage Sibneft on the state's behalf under an auction procedure which was easy to rig and was, in fact, mainly rigged by Mr Berezovsky himself," said Mr Sumption.
The hearing continues. (© Daily Telegraph, London)