Choose Your Language Of Preference Below
French Version German Version Russian Version Spanish Version
Portuguese Version Chinese Version Arabic Version
Oleg Deripaska, born in 1968, is Russia’s youngest billionaire at age 35. Deripaska accumulated a business empire through a series of ruthless and elaborate, though technically legal, takeover raids.
When the Soviet Union collapsed in 1991, he was a 23-year-old student at Moscow State University. He soon got a job in the fledgling metals trading market. By 1994, he was chief financial officer of Aluminprodukt.
Through the company, he bought a stake in a Siberian smelter plant, beginning his ascent to the top of one of Russia’s roughest industries. Deripaska became the plant’s manager to protect it from a takeover by its former owner, who once threatened him with a grenade launcher.
Later, Deripaska waged his own revolt to take over the shares of the London-based Transworld Group, then owned by controversial multimillionaire Mikhail Chernoi. Fellow oligarch Roman Abramovich became Deripaska’s partner; in early 2000, the two created a joint venture called Russian Aluminum (RusAl).
Today, RusAl has $4 billion in annual sales and is the world’s second-largest aluminum producer. Deripaska owns 75 percent of the company. His other businesses include power stations, Russia’s largest car and commercial vehicle manufacturer, and the country’s largest insurance company.
Estimated Worth: $1.5 billion Current Position: Chairman of the board of directors, Basic Element Company Major Holdings: Russian Aluminum Other Interests: Ingosstrakh Insurance; aircraft builder Aviacor; the GAZ automobile company; several bus builders and paper and pulp interests. Political Connections: Deripaska is married to Polina Yumashev, the daughter of former President Boris Yeltsin’s chief of staff. Deripaska’s father-in-law in turn married Yeltsin’s daughter, which makes Deripaska a grandson of Yeltsin by marriage. In the current political climate of struggles between the Kremlin and oligarchs, Russian news media speculated in July 2003 that Deripaska would be “next in line” for investigations of his business practice by the Kremlin. One of Deripaska’s deputies at Russian Aluminum, the executive in charge of contacts with state agencies, is running in the December 2003 election for the State Duma (the lower chamber of the Russian parliament) on the ticket of the center-right, ruling Liberal Democratic Party of Russia. New Plays: In October 2003, Deripaska bought an additional 25 percent stake of Russian Aluminum for an estimated $2 billion from fellow oligarch Roman Abramovich. Lifestyle: For more than a year, Deripaska has flown by private jet to London every week to improve his English. Yet, unlike his fellow oligarchs, Deripaska says he has no interest in leaving Russia. In addition to his home in Moscow, Deripaska owns a country house in the wild southern region of Khakassia.
http://www.pbs.org/frontlineworld/stories/moscow/deripaska.html |
July 31, 2007 at 6:44 pm
How To Become A Billionaire In Russia
Special Update
Oct 28, 2003
Just five days before FRONTLINE/World’s broadcast of “Rich in Russia,” Mikhail Khodorkovsky was seized at gunpoint by Russian federal agents. read more
When the Soviet Union collapsed in 1991 after decades of communist rule, it was a monumental event full of hope and new possibilities. The Cold War ended, and political, economic and military alliances that had shaped the world for nearly a half-century were reformulated practically overnight. The Soviet Union’s fiercest enemy, the United States, hailed the fall as a victory for democracy and evidence of capitalism’s superiority over socialism. For the majority of Russians, the transition to a market system was painful, chaotic and anything but democratic. Amidst the confusion of the country’s reorganization, however, a few shrewd businessmen rose to the top. In just a few short years, Russia’s crown jewels became the private possessions of a small group of men who have come to be known as the Russian oligarchs.
Unlike the 19th-century American robber barons who built their monopolies from the wilderness, Russia’s oligarchs amassed their control and wealth from existing enterprises. With few exceptions, Russia’s oligarchs built nothing new. The men had varying backgrounds. Some were factory managers who during Russia’s transition forced their employees to sell them their shares in the once-state-owned enterprises; others were senior government officials while yet others were underground businessmen on the margins of society. But all shared a common thirst for money and power, the latter of which included establishing — or maintaining — connections to the political elite in Russia, a country where the rule of law is still sometimes trumped by the rule of in-laws.
In Russia today, just a handful of oligarchs control 85 percent of the value of the country’s leading private companies. And with their multibillion-dollar fortunes, they are joining the top ranks of the world’s wealthiest people. Meet a few of Russia’s most powerful and influential business tycoons.
Next: Roman Abramovich – Stealth Oligarch
——————————————————————————–
By Kelly Whalen
Kelly Whalen is a freelance writer and documentary producer based in Oakland, Calif.
Producer: Angela Morgenstern; Designed by: Susan Harris, Fluent Studios; see full web credits.
——————————————————————————–
Photo Credits
Photo of Vagit Alekperov – Photographer/Getty Images
Photo of Vladimir Potanin – Photographer/Getty Images
Photo of Roman Abramovich – AP / Wide World Photos
Photo of Mihail Fridman – AP / Wide World Photos
Photo of Vladimir Gusinsky – AP / Wide World Photos
http://www.pbs.org/frontlineworld/stories/moscow/billionaires.html
Mikhail Khodorkovsky, 40, Russia’s wealthiest man, made his first fortunes in banking. Born in 1963, he was raised in a communal apartment in Moscow by factory worker parents. As a child, he talked of becoming a factory director, and later he became an active member in Kommosol (Communist Youth League). He studied economics at the Mendeleeva Chemical Technical Institute, and in 1987, with several of his fellow classmates, opened a cooperative, selling computers and designing software. By 1990, Khodorkovsky had founded Menatep, a bank with profits rumored to be supplemented by funds controlled by various Kommosol, Central Committee and KGB groups attempting to divert state funds. When the old order collapsed, Menatep provided credit to state enterprises and regional offices while they waited for the new government to establish financial flows. Khodorkovsky also set up a market for state vouchers, and at this time he gained control of several enterprises. Through his holding company, Rosprom, Khodorkovsky snatched up chemical, construction, textile, mining and oil enterprises. In 1995, he won a controlling stake in the oil giant Yukos for less than $500 million — today it is Russia’s largest oil company with market capitalization of $15 billion. In 2003, he became a main target of the Kremlin’s anti-oligarch crackdown. After raiding his offices and arresting Khodorkovsky’s close business associate, investigators went after several other people and companies affiliated with Khodorkovsky for fraud, tax evasion and even murder. In October 2003 Khodorkovsky was seized at gunpoint by Russian federal agents on charges of fraud and tax evasion.
Estimated Worth:
$8 billion
Current Position:
Founder, Menatep Group
Major Holdings:
Yukos
Other Interests:
Bank Menatep, Trust Investment Bank and Menatep International Financial Alliance; investment firms Global Asset Management, the Blackstone Group, the Carlyle Group and AIG Capital Partners: information technology company Sibintek; telecom operators MKS, Macomnet, Metrocom, Rascom and Magistral Telecom; and, through his Open Russia Foundation, several Russian news publications
Political Connections:
Khodorkovsky cultivated relationships with government officials through his bank, Menatep, which served the accounts of many state enterprises and regional governments. Three years before his acquisition of oil company Yukos, Khodorkovsky was appointed to the Ministry of Fuel and Energy. In 1996, he was among the Big Seven, Russia’s most influential bankers who backed the reelection of President Boris Yeltsin. Khodorkovsky’s longtime partner, Leonid Nevzlin, is a senator in the Federation Council (the upper chamber of the Russian parliament; seats in the Federation Council are appointed). Despite an informal pact Russian oligarchs made with Putin in 2000 that they would stay out of politics, Khodorkovsky has become increasingly involved in the Kremlin’s affairs. He has financed two liberal opposition parties, Yabloko and the Union of Right Forces, upsetting Putin’s dominance in the Russian parliament.
New Plays:
In April 2003, Khodorkovsky announced his intention to merge Yukos with competitor Sibneft to create the fourth-largest oil company in the world. Although antimonopoly officials have approved the merger, with the ongoing investigations into Khodorkovsy’s activities, it may be delayed.
Lifestyle:
Khodorkovsky lives with his wife and four children in Moscow. He frequently travels to the United States. He reportedly dined with Condoleezza Rice last year and recently was a guest at Herb Allen’s Idaho ranch, along with Bill Gates, Warren Buffett and other luminaries, for an annual telecommunications executives meeting.
Notoriety:
After a series of dubious business practices, Khodorkovsy has struggled with a poor public image. In 1998, his bank Menatep collapsed, yet Khodorkovsky managed to protect himself, despite damage to his depositors and creditors. (The bank also defaulted on a $236 million loan from Western banks.) In 1999, he moved the location of a Yukos shareholders meeting 160 miles from Moscow without advance notice to minority stockholders, keeping them from voting against the sale of Yukos’s assets to an offshore company. That same year, he prepared a large issue of new shares that diluted the stake of American investor Kenneth Dart, who claimed Khodorkovsky defrauded him of millions of dollars. Recently, however, Khodorkovsky hired a Washington, D.C., public relations firm, and he is presenting himself as a crusader for stockholder and investor rights. Khodorkovsky donated $1 million of Yukos profits to the U.S. Library of Congress, and he set up the Open Russian Foundation, with Henry Kissinger as a member of its board of trustees, to donate to museums, hospitals and universities. In 2001 and 2002, Khodorkovsky’s net worth increased fourfold.
July 31, 2007 at 6:49 pm
In 1994, he was appointed Director General of Sayansk Aluminum Smelter. In 1997, he was elected President of Sibirsky Aluminium Group. In 2000, he was appointed Director General of Russian Aluminium Corp. Mr. Deripaska is also vice-president of the Russian Union of Industrialists and Entrepreneurs, Chairman of the Board of the Russian National Committee of the International Chamber of Commerce, member of the Entrepreneurship Council of the Government of the Russian Federation. In 1999, Oleg Deripaska was awarded an Order of Friendship by a decree of the President of the Russian Federation. The newspaper Vedomosti (published jointly with Wall Street Journal and Financial Times) declared him “The Entrepreneur of the Year 1999”. Mr. Deripaska was born in 1968. He graduated from the Lomonosov Moscow State University with honors, and later got a master’s degree from the G.V. Plekhanov Russian Academy of Economics.
*********************************************************************
Oleg Deripaska is one of the controlling shareholders of Russian Aluminum (Rusal), which he shares with Roman Abramovich and the Sibneft group. It isn’t clear with whom he shares control of Base Element, the holding that includes Ingosstrakh Insurance, Aviacor the aircraft builder, the GAZ automobile company, several bus builders and paper and pulp interests.
Of all the oligarchs for whom the elections of parliament and president pose serious risks, Deripaska is the most vulnerable, and this has begun to show already. He has failed to secure privileged access to cheap electricity for his metal production. He lost the tussle he started with rival Siberian Ural Aluminum (Sual) over the Nadvoitsk smelter, and in the process demonstrated that Abramovich may have more clout on the Rusal board than Deripaska does.
His insurance and paper-pulp acquisitions face difficult legal challenges in the Russian courts, while in foreign courts Rusal is facing multimillion-dollar breach-of-contract awards, and the grave possibility that the federal U.S. court in New York will rule that it has jurisdiction over a billion-dollar fraud and racketeering claim against Rusal. He has made numerous attempts to establish and expand his foreign assets. A Romanian alumina refinery has been a costly failure. He has done moderately well in the bauxite-rich Central African republic of Guinea, but he has been rejected in most countries, including China, which is a strategically vital market for his metal.
Deripaska is far from losing his jacket, but, compared to other oligarchs, he is further from securing the access to international capital that he would like. To that end, the toys he has acquired aren’t quite what he wants or needs.
Mikhail Fridman, the oligarch who controls Alfa Bank and Tyumen Oil Co., has been trying for some time now to sell a stake of about 20 percent in both the bank and the oil company to what is known in polite circles as a “strategic investor” (that’s someone whose fortune exceeds their intelligence). It didn’t help that one of the foreign victims of his acquisitions, Norex Petroleum, decided to sue on similar grounds and for similar damages as Deripaska faces in the same place.
That suit helped expose Fridman’s hidden ownership of the proceeds of his businesses. The sinking of the oil tanker Prestige, chartered by one of Fridman’s oil-trading networks, spilled more than oil on the beaches of France and Spain, and, by threatening the way in which Tyumen Oil Co. conducts its offshore business, it forced Fridman to dispose of the asset as quickly as he could.
He and Abramovich did well to acquire control from the Russian government of oil producer Slavneft, but that transaction only reinforced the appearance that he’s vulnerable to the political changes that may follow the new elections. If Fridman has been planning on a clean getaway by election time, he looks likely to be frustrated.
Fridman is not the only Russian oilman who has been hoping for a 20 percent share sale or a stock market listing in New York, only to be nabbed by the alarm that is being raised by the American war machine. In the short term, this has raised the value of oil assets, only to make them appear at the same time to be too volatile and risky for investors to value. The Russian oilmen have also done their best to court American, as well as Japanese and Chinese, money, with lavish promises to convert their growing reserves into expanding deliveries.
However, to make good on those promises they depend on the Kremlin’s control of the pipelines and ports to export the oil. But even the prime minister, Mikhail Kasyanov, can’t let that out of the government’s hands.
And that’s why we find the oligarchs in the metaphorical shrubbery, counting what they have and what they haven’t gotten away with. Unlike Tyapkin – the name in Russian suggests he digs like a farmer hoes his potato patch – the heroes of our time can’t contemplate trying the alternative of armed robbery. That’s how we got here from our unfunny past.
July 31, 2007 at 6:53 pm
MINING FINANCE AND INVESTMENT
RUSAL UNVEILS AT TRINITY HOUSE
Rusal aluminium IPO briefing held in secret as problems surface
Russian aluminium giant, Rusal has held a secret briefing at London’s Trinity House for its London IPO investors .
Author: John Helmer
Posted: Tuesday , 03 Jul 2007
MOSCOW –
When Gioacchino Rossini, the 19th century opera composer, had grown famous and rich, he was told that a group of his admirers were collecting the equivalent of $50,000 to erect a statue to celebrate him. Rossini responded: “Give me the money, and I’ll stand on the pedestal myself.”
Rossini came from humble origins; his father was a slaughterhouse inspector, his mother a baker’s daughter. He had made himself wealthy enough, and his career assured, by the age of 32; he stopped writing music for money five years later. But the problem of cash for the self-made rich is that they never feel secure without more of it coming in.
The problem of Oleg Deripaska and Victor Vekselberg — the two Russians who made themselves very rich in a short time by mining and smelting some of the world’s largest volumes of bauxite and aluminium — is that, like Rossini, they believe the only cure for nerves is cash. But unlike Rossini, they haven’t the public reputation to stand on a pedestal. Since an Initial Public Offering (IPO) is the London market’s equivalent of a statue on a pedestal, and the investor cash at stake runs into several billion dollars, the reputational risk of the pedestal is now the subject of extraordinary measures.
Last Friday, in London, at Trinity House, managers and bankers of United Company Rusal arranged a highly secret, and carefully screened briefing. All trace of the session was carefully wiped, except for two umbrellas left behind with the Trinity House porter.
Rusal is the recently merged form of Deripaska’s and Vekselberg’s aluminium assets; Deripaska owns 66% of the new company; Vekselberg 22%; and Glencore, which has contributed alumina refineries, 12%. Registered in the British tax haven of Jersey, the Rusal IPO calls attention to itself as the largest proposed for the London Stock Exchange for this year. A market capitalization target of $30 billion has been set, with a share sale of up to 25%.
It is also, according to sources who were at Trinity House, the subject of a series of problems Rusal managers and tune-whistling public relations men have yet to address convincingly. These include litigation pending against Deripaska in the UK, and Vekselberg in the US, for attempting to sell assets to which others lay claim, alleging breach of trust; charges of corrupt practices in violation of the US statute on the part of the original Rusal, its owner and managers, also pending in the US and UK courts; charges against Deripaska that have already led the US Government to revoke his entry visa; deposition orders that have made Vekselberg reluctant to cross the US frontier (he has already repudiated his US immigration green card); a ruling from last year by a UK High Court judge that condemns Rusal business practices in Tajikistan; and investigations by government officials in several jurisdictions that have been triggered by the IPO proposal, and the US government action against Deripaska.
And if these weren’t problems enough to whistle at, there is the possibility — reported before in Mineweb — that once the IPO sets a market value for Rusal, Kremlin officials have in mind to take control of domestic aluminium-making; a process many behind that particular wall regard as the most profitable form of converting Russia’s state-owned electricity into cash. That President Vladimir Putin all but called Vekselberg an asset thief in recent remarks about how the huge Siberian gasfield Kovykta fell into his, and other Russian shareholder hands, a decade ago, sharpened the concern felt at Trinity House at the way aluminium smelters fell into his and Deripaska’s hands; and might slip out again.
Vera Kurochkina, Rusal spokesman, was asked to confirm that Rusal had arranged Friday’s session with brokerage analysts. She refused. A source inside JP Morgan, one of the US banking groups selected to sell Rusal shares at the listing, claims there was an attempt at blacking out the US side of the investment bank by the Cazenove side; the latter believes it is more secure from the legal liabilities that arise from the litigation over assets Rusal is attempting to sell to shareholders. Kurochkina declined to say who spoke for Cazenove-JP Morgan, or Morgan Stanley.
Morgan Stanley is already jumpy. Two years ago, in the preparation for the London IPO of Russian steelmaker Evraz, the research department of the US bank clashed with the investment banking side, claiming the latter were ignoring contested claims to ownership of substantial shareholdings in Evraz, which were being put up for sale by principal shareholder, Alexander Abramov, as if they were his. Mineweb reported the details of the claims at the time; Abramov paid them off in confidential out-of-court settlements. Morgan Stanley, according to a banker engaged in the share trading at the time, quietly dropped out of the Evraz IPO altogether.
According to a London Times report, Goldman Sachs is reportedly another of the US banks that is contemplating an underwriting and book-running role for Rusal in the share sale. There, too, there are internal conflicts over whether the Rusal asset risk is too great to justify the claims the drafters of the Rusal prospectus will make on behalf of the prime sellers, Deripaska and Vekselberg.
Inside Rusal’s own legal team, there are also recriminations. It was publicly reported ten days ago, and independently confirmed by Mineweb, that Max Goldman, the coordinating lawyer at Rusal for the IPO, has left his post. The Lawyer.com, a London lawyers’ website, reports that Goldman was “set to coordinate the much-anticipated flotation in London, which has gifted [sic] roles to Ashurst, Cleary Gottleib Steen & Hamilton, Egorov Puyginsky Afansiev & Partners, and Linklaters.” A source close to Vekselberg told Mineweb that a number of the lawyers involved in preparing the merger of Rusal with SUAL, since it was announced in October of last year, were promised substantial rewards. These were to be paid by both Deripaska and Vekselberg, the source said, adding there is considerable disgruntlement, because they haven’t been paid.
Among the non-payments, the biggest in value was the subject of an agreement between Vekselberg and former SUAL chief executive, Brian Gilbertson. When SUAL went out of existence in March, and Gilbertson was dropped as chairman of the new Rusal, Vekselberg and Gilbertson failed to agree on compensation. Gilbertson believes Vekselberg defaulted; the threat of litigation hangs over the negotiations which continue between representatives for the two men. Gilbertson, now engaged in a new takeover for Consolidated Minerals in Australia through his Pallinghurst Resources, could reenter the Rusal IPO stakes, if he were to provide litigants with evidence that investors may be unable to find in the Rusal prospectus.
The biggest of Rusal’s problems is the lawsuit filed in the UK High Court by Michael Cherney (Mikhail Chernoy) against his protégé, Oleg Deripaska. Cherney accuses of Deripaska of defaulting on a 6-year old agreement the two men signed confirming the former’s stake in the latter’s Rusal shareholding. According to a judgement issued from the High Court by Justice Langley on May 5, citing oral argument by lawyers before the bench several weeks earlier, “it is alleged that this agreement was expressly made subject to English law and that it is evidenced by a written contract agreed and drafted in England. The written contract does not include an English law clause.”
Legal specialists fault Langley for going further than the available evidence and case law allowed. It is said that, even if Langley’s ruling is accepted that Deripaska is not domiciled in his UK homes for the purposes of Cherney’s lawsuit, his agreement – signed on March 21, 2001, in a well-known London hotel, with physical witnesses and corroborating documents — establish the jurisdiction of the High Court over enforcement of Cherney’s claim. In addition, experts preparing the appeal of Langley’s ruling say, Deripaska was adequately served with the Cherney writ for the case to commence.
The Russian agreements that are the foundation of this case, plus an unofficial English translation, can be read at:
What the banks proposing to underwrite Deripaska’s sale of his shares cannot do is to ignore where it was signed, and what the agreement says — that Cherney, whom everyone close to Deripaska admits put him in the aluminium business, continues to own a 20% stake in Rusal’s shareholding, for which Deripaska hasn’t paid; and which, accordingly, Deripaska lacks the legal right to sell. One source, close to Deripaska for many years, admits that he himself remains personally fond of Cherney; hasn’t felt obliged by his duty to Deripaska to cut his links with Cherney; and telephones him from time to time to ask Cherney’s advice.
A prospectus that says otherwise about the Deripaska-Cherney relationship is likely to expose its drafters to fraud claims. No Russian asset that has successfully passed through the IPO disclosure requirements of the London Stock Exchange has an asset liability obstacle as tall as this one. Those IPO’s which have had such problems, albeit on a smaller scale, have either withdrawn before listing to mend the liability, or compensated shareholder claimants with provable trustee agreements. Those agreements, which the evidence confirms were signed in London, have always been paid.
It is this standard of disclosure, and its obvious Black downside, that has started speculation, circulating widely in the City of London, that the full listing which Rusal wants requires too much disclosure. This, runs the assessment, exposes the bankers, lawyers, and Deripaska himself to too much liability for incomplete disclosure. The recommended fall-back option is listing Rusal as a global depositary receipt (GDR). The problem with this as a less demanding procedure of disclosure to investors is that the asset cat is already out of the bag. Continuing to think zoologically, what investor will buy such a pig, if the poke of second choice is admitted to have loopholes that make the first poke untenable?
If Rusal believes its valuation is $30 billion, Cherney’s stake is arguably worth $3.96 billion. And if Rusal wants to sell 25% of the shareholding, then Cherney’s share of the proceeds from Deripaska ought to be $990 billion. That’s a big sum. But it’s not one Deripaska – who has paid all major asset claimants who have sued him, whether they secured US or UK court jurisdiction, or not – cannot afford to borrow; even if he is already obligated to share his proceeds with the Kremlin, by way of compensating for a decade of tax minimization, and delaying a state takeover.
The more insiders like Goldman and Gilbertson leave Rusal disgruntled, the more evidence that could be sought from them to indicate what, until now, the insiders have been reluctant to concede that they have even discussed – what is Deripaska’s ongoing relationship with Cherney, and why doesn’t he pay him off? This question has become especially sharp for US citizens working for Deripaska, since it was revealed that sometime between July and October of last year, the US Government decided that Deripaska’s undertakings to it lack the veracity to warrant his retaining his entry visa. US citizens with potentially culpable knowledge of Deripaska’s business practices in Tajikistan, Nigeria, and Guinea, for example, include Peter Clateman, Rusal’s general counsel, and the new coordinator of the legal side of the IPO. Under the US Foreign Corrupt Practices Act, Clateman is liable to answer the allegations lodged in ongoing or decided court cases filed in the US and UK, regarding payments to foreign officials. US bankers and banks, through which Rusal’s cash to and from Tajikistan and Nigeria, has flowed, appreciate they may be in a similar position.
It is noteworthy that the banks reported to be in line for Rusal’s IPO mandate – JP Morgan, Morgan Stanley, Goldman Sachs, Credit Suisse, UBS, and Deutsche Bank – don’t include a bank from the large syndicates which have loaned money to Rusal over the past six years, since its formation. In June, Rusal announced a $2 billion secured fund-raising by ABN AMRO, Barclays Capital, BNP Paribas, Calyon, Citi, ING, Natexis and Societe Generale. Why is there no overlap? Why aren’t the banks which know Rusal best also participating in the IPO?
One reason is that the banks which have been lending cash to Rusal longest also have in place the most elaborate methods to secure repayment of aluminium loans, in the event of default. Thus, they know how Rusal’s aluminium trading schemes work; why the metal changes title as it crosses the Russian frontier; and how title, metal and money move between intermediary traders, final users, and Rusal’s profit centres.
Knowing the confidential secrets of Rusal’s trading schemes – also the subject of a successful lawsuit against Rusal by the Reuben brothers of London – creates for the lending banks a knowledge of transaction risk, cashflow and taxation risk, which these banks have sworn to keep secret. They would be in a more exposed position towards unsecured share- buyers, a position they may not want.
Whistling tunes to the financial press and the share markets is costly, especially if the refrain is unmelodious. Financial Dynamics, Rusal’s London PR agent, is currently in dispute with another Russian client over early termination of agreement for GBP60,000 worth of song-writing per month. So far, by keeping Rusal’s roadshows in London, Frankfurt, and Edinburgh as secret as possible, Rusal seems to be more afraid of whistle-blowers than confident of the tune it wants investors to hear.
Where is Rossini now that Rusal needs him? One of the most successful tunes he wrote is the overture to an opera about a girl about to be put to death for a theft she was falsely accused of, and didn’t commit. She is rescued at the last minute by la gazza ladra. The tune is more famously known by its English title — The Thieving Magpie.
http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=22856&sn=Detail
September 22, 2007 at 5:39 pm
ALUMINIUM IPO SINKS
Rusal Banks leave Deripaska twisting as huge aluminium IPO deferred
The real reason why the world’s biggest metal resource float has failed at least for the foreseeable future.
Author: John Helmer
Posted: Saturday , 22 Sep 2007
Moscow –
Scoop! Rabbit overtaken by tortoise.
The news that Oleg Deripaska – zaitschik, “rabbit”, as he was known when younger – has been overtaken, and overturned, by JP Morgan Cazenove and Goldman Sachs, was front-page on Friday. In a carefully worded despatch, the Financial Times claimed the world’s largest aluminium industry share flotation, and the London Stock Exchange’s biggest new listing for this year, had not failed, so much as put “on hold because of market conditions”. A prospectus for the Rusal share issue was purportedly drafted a month ago, but it had not been filed with the UK Listing Authority, the market regulator, so Rusal “could monitor market conditions”. A meeting of the Rusal board of directors, on Wednesday September 19, had decided not to proceed with the share sale “because of market turmoil and liqudity worries.”
The FT version mentioned the possibility that Deripaska and his company were struggling “to bring its corporation governance and accounting up to the standards required by London fund managers”; and that there were legal challenges to Rusal, “including filings from Mikhail Cherney, a founding father of Russia’s aluminium industry, who has claimed a 20 percent stake in company”
This said, more than at least one of the Rusal shareholders wanted to concede in public, and so, a day later, on September 22, a London Times reporter issued Victor Vekselberg’s version of what has happened. Deripaska controls 66% of Rusal; Vekselberg 22%; and Glencore 12%. When Deripaska and Vekselberg agreed last October on the merger of Russian Aluminium (Rusal), Deripaska’s company, with Vekselberg’s SUAL, the two men also promised that within 36 months of merging, a public share sale would be held, allowing one or both to sell his shares. There is a penalty catch in that agreement – if Deripaska delays the IPO, he will be personally liable to pay Vekselberg a heavy premium. Thus, the IPO scheme is intended to be significantly cheaper for Deripaska – at least with respect to his obligations to Vekselberg. His obligation to Cherney – see Bankers’ war erupts over Rusal aluminium IPO reported in Mineweb at the end of August also makes the IPO a relatively lower cost option for Deripaska to meet.
Bankers advising the two have since told Mineweb that Deripaska has not intended to sell his shares into the planned IPO, and that if and when a 25% placement is made, most of the shares would come from Vekselberg.
According to Vekselberg, in the Times, there had been a meeting in Moscow on Thursday last, September 20, when it was decided the Rusal IPO “will definitely not happen before year-end. The reason is obvious. All companies are reviewing timings of their flotations. The market is very volatile and to take the risk without being sure the IPO will be successful does not make sense.”
The Times was obliged to acknowledge sentiment in the London market: “there was also speculation in London yesterday that Rusal decided to pull its November IPO after early indications suggested that it would receive only a lukewarm reception from investors even if the market were stable.”
The Moscow investment banks and brokerages have pulled a blanket of silence over what has happened. Except for MDM Bank, which claims that Rusal “does not have a pressing need to raise capital.” Without audited financials, Rusal has told analysts it is carrying total debt of $7.8 billion. Year-end Ebitda, Rusal says, will be $6.2 billion.
Rusal’s spokesman, Vera Kurochkina, and the company’s London PR agents, have remained uncommunicative. A single sentence, not posted on the company website, claims everything is on track. “There is no change to the plans we have announced for an IPO to take place within three years of the merger deal closing.” As the ancient fable warned, when racing against tortoises, over-confident rabbits always believe there is plenty of time.
The FT version appears to have come from JP Morgan, one of the bank syndicate which has been slowly conducting the preparations for a main board listing this November. That deadline was publicly announced by Vekselberg early in the year, and then publicly endorsed by Deripaska.
The public versions of what has happened are not those of the insiders. There are also recriminations between them, since the syndicate has been torn by a conflict between JP Morgan and Morgan Stanley over whether to place Rusal as a full LSE listed share, with high disclosure requirements, or as a General Depositary Receipt (GDR), with fewer obligations to shareholders.
According to several versions of the board’s decision to withdraw the placement for this year, Deripaska and Vekselberg had agreed on a main-board listing, following the JP Morgan recommendation; they had disagreed with Morgan Stanley, advocate of the GDR route. But Deripaska’s reason for this has been his confidence that he would receive US Government endorsement, in the form of a re-issue of the entry visa. That visa, denied by the US authorities for almost a decade, was granted in 2005, and then revoked in 2006. Magna International, a Canadian auto parts producer which is selling a stake to Deripaska, publicly recorded the revocation in a US regulatory filing in August, and in an advisory to Magna shareholders. Mineweb and the Wall Street Journal had reported the action earlier.
Goldman Sachs has been promising to deliver Deripaska’s new visa. Its appointment to the IPO syndicate, and also the naming of an ex-US ambassador, Philip Lader, as a director on the Rusal board, had both been made by Deripaska with the understanding that they would deliver his visa – and in Deripaska’s view, vindication of the charges of unlawful conduct in accumulating his assets, and laundering the proceeds. A Harvard professor of government, Graham Allison, was also receruited to Rusal’s “international advisory board”, with the same purpose. Allison has refused to talk about it.
The visa, reported by Mineweb as expected a month ago, has failed to materialize, so far. Worse, as one of the London banks acknowledged to Mineweb on Friday, German prosecutors in Stuttgart have opened criminal indictments in the city court against two men, whom the prosecutors link to Deripaska. The first hearings in the case have been scheduled for October 16. The first public report of the proceeding appeared in Der Spiegel early this month. The German prosecutors are confirmed as making contact with a range of witnesses and others with evidence against Deripaska. One of the Rusal bankers in London told Mineweb he was aware of the German case. The question raised, the source added, “have to be answered. There are lots of problems with this company. Otherwise, it would be listing.”
The UK High Court litigation by Cherney is about to move into high gear, lawyers say. But the IPO bankers have claimed this is Deripaska’s problem, not Rusal’s. They say the same thing about the new Stuttgart case, and about the charges of fraud and corruption, alleged in a court filing by the Tajikistan government and the Tajikistan Aluminium Plant (Talco) in a pending case in the British Virgin Islands.
Although Deripaska himself has insisted on vindication for himself, the IPO advisors have urged him to stay away from the Rusal marketing campaign. This has been led by Alexander Bulygin, Rusal’s chief executive. But Bulygin isn’t exactly Deripaska’s protégé. His career began when he was introduced to Cherney by Deripaska, and approved by the latter to run the day-to-day operations of the company. A source, who used to work for Bulygin, told Mineweb that “Misha always respected Sasha.” Bulygin was also the beneficiary of an agreement between Cherney and Deripaska, assigning about 5% of their original (and joint) shareholding in Rusal to the company’s management. Most of that went to Bulygin and finance boss, Gulzhan Moldazhanova. Bulygin reported regularly to Cherney until a year after the Deripaska-Cherney agreement of 2001, one of the key documents in evidence in Cherney’s High Court action.
“Bulygin is trying to convince the banks he is independent of Oleg Deripaska”, a source involved in the London negotiations says. One of the bankers responds that for the IPO, there must be a non-interference agreement, signed for the incoming shareholders by Deripaska and Vekselberg. “Bulygin needs that safety net, but he is totally dependent on Deripaska,” one of the negotiators said. The banker concedes that, to date, no non-interference agreement has been signed. Propsed board chairman, Simon Thompson – who resigned from Anglo American early in the year – still needs time to “get acquainted” with the controlling shareholders before he will agree to serve.
The rabbit isn’t without his barrackers, on the sidelines. A metals analyst in Moscow told Mineweb:” the simple reason [for the IPO delay] is market conditions. The multiples they thought they were going to get are no longer attainable. It took a while for the numbers to dampen their arrogance. They really believed that they would get a premium to the major global peers Alcoa and Alcan. That has fallen away, as has sentiment towards aluminum. Oleg is relaxed about Russia but also prefers the private platform. Of course there are other theories for postponing the IPO regarding corporate action on which I am not going to speculate as there is enough of than already going around.”
The tortoise has his backers, also. “The banks simply couldn’t separate the man from the business; weren’t confident of where the assets really were; were nervous about back tax issues. Rusal did nothing to dispel these concerns. One bank pulled out, and then the syndicate fell apart.”
One of the insiders told Mineweb this is “bollocks”. According to this version, the accountants working on the IPO were prepared to sign off on a statement that Rusal has paid all its tax. This is not quite the same thing as saying that Deripaska’s group would not be liable to heavy back-tax claims relating to transfer pricing and tolling violations. As Deripaska operated the old Rusal, Rusal was a shell, without title to the alumina that was freighted into the smelters, nor the aluminium freighted out, then exported through a string of allegedly unconnected companies with trading rights.
Deripaska’s standing with the new head of the Russian government, Victor Zubkov – appointed the day the Rusal board reportedly gave up on the IPO for this year – is unclear, and so is his liability for claims the new Russian president, possibly Zubkov or former defence minister Sergei Ivanov, may raise. As the former head of the government unit pursuing money laundering and tax violations, Zubkov is in a position to know more about the Rusal case than any of his predecessors. The London bankers have told Mineweb that some form of assurance to investors against crippling tax claims and renationalization is required for the IPO. They concede they don’t have it, yet.
Those who believe Deripaska hasn’t wanted the IPO, in order to preserve instead the private status of Rusal, believe he may now concentrate on amassing enough cash to settle the claims against him. The tortoise may have passed the rabbit last week, but the latter isn’t resting. His next move depends on what happens in the courts of London – and Stuttgart.
http://mineweb.com/mineweb/view/mineweb/en/page67?oid=37251&sn=Detail
December 6, 2007 at 12:19 am
http://panther-dailypost.blogspot.com/2007/12/meet-toughest-siberian-shark-russian.html
It has been quite a climb for Oleg V. Deripaska. Just five years ago, he was an obscure regional business baron who ran Sayansk Aluminum Works, Russia’s fourth-largest aluminum smelter, for London-based Trans-World Group. Now, at just 34, he is CEO and co-owner of Russian Aluminum (RusAl), a company with more than $4 billion in sales that has arrived at the top of an industry once racked by turf wars and brutal killings. Controlling 70% of the nation’s aluminum industry, RusAl is rivaled in size only by Alcoa Inc. of the U.S. Deripaska also has a monopoly on bus production in Russia and owns Russia’s second-biggest car plant, Gorky Avtomobilny Zavod.
December 12, 2007 at 12:56 pm
hello Carlos Slim,
this comment has been deleted because sunny is a scam artist and such are not welcome here at the Zambian Chronicle … Deleted by Admin
February 16, 2008 at 12:05 am
It seems that Clateman has been fired by Rusal as his name is no more there on the website. Will it affect the cases against him?
January 14, 2009 at 10:14 pm
(1.)7 Star – Graphics Service Team
L.A. Lewis Enterprize Ltd is the #1 designing company in the Caribbean. We design graphics for your business and campaigns starting from business cards, flyers, posters, billboards up to complete solutions to cover bus, cars and bikes.
(2.)7 Star – Promotional Service Team
L.A. Lewis Enterprize Ltd is #1 one promotional company in the Caribbean. We use guerilla style marketing to get your artiste or your product promoted in the streets.
As you know the streets is the people and the people is the streets. We have successfully promoted dancehall events, concerts and festivals as
Sting – the greatest one night Reggae show in the world / Portmore, Firelink- Hot Monday and Weddy Weddy / Kingston
(3.)7 Star – Supplies & Rentals and Services Team
At L.A. Lewis Enterprize Ltd. we offer the full range of equipment for your successful event or incentive.
Ask us for:
1. Lighting & Stages , 2. Sound systems 3. P.A. systems
(4.)7 Star – Legal Service Team
At L.A. Lewis Enterprize we network with the finest lawyers to suit your needs. Our lawyers work 24/7 to see that your case is well represented and victorious. We represent DJ´s, singers, musicians, sports personalities. whether it is to assist in copyright, publishing, lawsuit and case claims on any area that the law is required, under music and entertainment.
(5.)7 Star – Tracking Service Team L.A. Lewis Enterprize Ltd. provides the #1 tracking services in the Caribbean for Jamaican Musician, sound systems, sport personalities, venues, entertainers. Over a short period, our team has tracked down 576 artists and found them with their excellent connections to police and cooperators. If we cannot find them – no one else can! We help you to find out – call now.
(6.)7 Star – V.I.P. Service Team
L.A. Lewis Enterprize Ltd. is specialized in extreme demand for high-class guests and VIP´s.
– Limousine service, top car and luxury car rentals, male and female escorts. We make you feel comfortable! Highly confidential.
(7.)7 Star – Fashion Service Team
We recruit and supply the finest male and female models in different sizes for all your fashion shows and party needs. We also provide videographers and photographers to cover all your fashion events. .
Please feel free to call us now.
March 10, 2009 at 7:28 pm
From the desk of the
Project Manager and Marketing of
L.A. Lewis Enterprize Limited
24 Burlington Avenue Kingston 10, Jamaica West Indies Telephone: 876 398 5710/ 631 1826/ 631 1823
To:Firm/ Corporation/ Company
Dear Sir / Madam
L.A. Lewis Enterprize Limited the number one promotional, bookings agency is proudly inviting you to Marley Magic Spring Break at Wavz Beach in Negril, the show is held by Ghetto Youths International as a day and night show, in the day they’ll be lot of fun and surprize and giveaways, as well as entertainers and masters football match, then we will close off in the evening with one of the most powerful Spring Break stage show ever in the Caribbean.
With superstar artist such as Stephen Marley, Junior Gong, Julian Marley, Junior Reid, Capleton, Spragga Benz, Bongo Herman, Junior Kelly, Munga Honorable, Wayne Marshall, gospel artist Romain Virgo just to name a few. For further information you can contact us at L.A. Lewis Enterprize Limited Head Office in Kingston, Jamaica or Tuff Gong Recording Studio, phone number # 876 398 5710/ 876 435 0842.
You can purchase pre-sold tickets at Western Sport location anywhere in Jamaica, Lane Plaza Ligueanea, Ocean Village Ochi Rios, Bay West Shopping Centre Mobay, Twin Gate Plaza Constant Spring, Moon Dance Hotel and Rock House Hotel in Negril, security traffic jam Style.
Your Respectfully
Jason R. Mullings
Project Manager of the L.A. Lewis Enterprize Limited
June 10, 2009 at 12:09 pm
[…] Youngest Russian Billionaire – Worth $1.5 billion @ 35 Years Old … … million loan from Western banks .) In 1999, he moved the location of a Yukos shareholders meeting 160 miles from Moscow without advance notice to minority stockholders, keeping them from voting against the sale of Yukos’s assets to an offshore company See original here: Youngest Russian Billionaire – Worth $1.5 billion @ 35 Years Old … […]
June 10, 2009 at 12:09 pm
[…] Youngest Russian Billionaire – Worth $1.5 billion @ 35 Years Old … … Here is the original post: Youngest Russian Billionaire – Worth $1.5 billion @ 35 Years Old … […]
June 18, 2013 at 2:27 am
Incredible points. Sound arguments. Keep up
the good spirit.