Friday 19 April 2019

The great Roman empire

Already the richest man in Britain, the personal fortune of Chelsea FC owner Roman Abramovich increased by almost ?11bn this week. John Meagher reports

It was a moment that may have given Roman Abramovich sleepless nights. In May, compatriot and fellow oil tycoon, Mikhail Khodorkovsky, was jailed for eight years and had his company forcibly renationalised.

This week, the super-sharp Russian billionaire and owner of Chelsea FC avoided such a fate by selling the bulk of his firm, Sibneft, to the state gas company, Gazprom, for ?10.8bn. It is, by some distance, the biggest deal in Russian history and greatly strengthens Abramovich's position as the UK's wealthiest resident.

It was an extraordinary windfall for a man who bought the company for ?150m in one of the many shady privatisations overseen by former president Boris Yeltsin after the collapse of the Soviet Union in 1991.

When Abramovich bought ailing, under-achieving Chelsea Football Club in 2003, only those with a specialist knowledge of Moscow financial affairs had heard of him. Despite his high profile today, Abramovich remains something of a shadowy figure, very wary about talking to the media - he allegedly prohibits his wife from doing so - and who likes to keep his past out of the public eye.

Rarely has the 'rags to riches' cliche been more apt. Abramovich was born into humble stock in 1966. His mother died from a back-street abortion when he was a year old and his father was killed in an industrial accident within six months. Young Roman was brought up by his Jewish uncle and aunt in a town that was home to a Gulag during the Stalin-era.

Old school friends remember him as a bright kid, fascinated by how things worked. A popular boy, he did not seem to suffer from the anti-Semitism baiting that was widespread in Russia at the time.

Fifteen years ago, as the old Soviet Union was collapsing, he was one of the many young students in Moscow embracing a hitherto unknown concept: capitalism. His first serious foray into money-making was trading dolls on a market stall. Buying a Lada counted as an extravagant purchase in 1980s' Moscow and Abramovich soon had his wheels. Within months, his dolls enterprise was pulling in a wage 20 times that of a state worker.

He put all his time into making money and it put a strain on his marriage to his first wife, Olga. Shortly after that marriage ended, he met current spouse, Irina, who had worked as an air hostess with Aeroflot.

The fall of the USSR would prove to be the gateway he needed to making big money. It is thought that Abramovich set up and liquidated no fewer than 20 companies during the early 1990s, in sectors as diverse as tyre retreading and bodyguard recruitment. These early forays into the free market served as a valuable apprenticeship, and his risk-taking instincts, combined with a subtle and manipulative charm, were beginning to serve him well.

Then he got himself into the hugely lucrative business of dealing in oil exploration licences. And from there, within a couple of years, he had bought up many of the state's oil and aluminium assets after a desperate sale by then president, Boris Yeltsin. He did nothing to improve or develop those assets, or make them more profitable, yet the terms of the deal he struck with the Kremlin were favourable enough to turn him into a billionaire overnight.

It has been speculated that Abramovich struck lucky because he is charming, modest and, unlike the other ambitious oligarchs in Russia, not remotely threatening to his country's leaders. He also has an eye for which up-and-coming power-broker to befriend. First it was Yeltsin's daughter, Tatyana Dyachenko, then it was Vladimir Putin.

And it would be the future Russian President who gave him the support he needed to take total control of the country's aluminum industry in 2000, which paved the way for him to become one of the world's wealthiest industrialists. His wealth can be put in context with the revelation that alongside banker Alexander Mamut, Abramovich controls 50pc of Russian industry.

Abramovich's ability to stealthily strike a deal without his rivals noticing allowed him, in the summer of 2003, to negotiate his way into Britain, when he out-manoeuvred Ken Bates, the canny old owner of Chelsea, and bought himself a football club.

According to his biographers Chris Hutchins and Dominic Midgley, Chelsea wasn't a hobby purchase, nor was it remotely a business proposition. It was the "cheapest insurance policy in history", a cunning way to ensure that Abramovich had a bolt-hole for the day when Russian people tire of those who have plundered their wealth.

He has already liquidated many of his assets and sits in his huge country estate in Sussex with a current account stuffed with cash. He is surrounded by security guards to protect him from those who would seek to gain revenge for his rise to riches, and to keep back those who would seek to benefit from it.

Despite his vast wealth, Abramovich is said to relish a challenge - such as his decision to serve as governor of the remote province of Chuchotka. He is also said to tire of things easily. Quite how long he remains at Chelsea and just where his extraordinary wealth will take him remains to be seen.

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