Abramovich Says He Feared Russia's Murderous Aluminum Business
file photoBillionaire Roman Abramovich had to be persuaded to invest in Russian aluminum plants in 2000 because "every three days someone was murdered in that business," he told a London court.
Abramovich, testifying in the $6.8 billion legal fight with his former business partner Boris Berezovsky, said he got into the aluminum business in spite of worker disputes and the presence of criminal gangs after being pressured by Badri Patarkatsishvili, an associate of Berezovsky. "I didn't want to have anything to do with a business like that without Badri," the 45-year-old billionaire owner of Chelsea Football Club said. "I wouldn't have poked my nose in there."
Abramovich was part of a group who bought the assets, including one of the largest aluminum smelters in the world, for around $550 million in 2000. Berezovsky says Abramovich could never have taken part in that deal without his help and political connections and that he wasn't paid enough for his stake in the business. The aluminum assets eventually became part of what is now United Co. Rusal.
Berezovsky claims in his lawsuit that Abramovich bullied him into selling his stakes in Russian oil and metal companies, including OAO Sibneft, for far below their real value by telling him the government would seize his shares if he didn't sell. The London trial has provided insight into how two of the world's richest men made their fortunes in the chaos following the collapse of communism, and how their friendship soured after Berezovsky fled Russia in 2000.
Offering Krysha
In witness statements filed at court, Abramovich argued Berezovsky's role had been to provide "krysha," or protection, in the "dangerous and risky" environment of Russia after the fall of communism, and that he held no shares.
He said he paid Berezovsky and Patarkatsishvili hundreds of millions of dollars for physical and political protection before eventually giving them $1.3 billion in 2001 and 2002 to break off the arrangement.
In the 1990s, the fight for market share often involved violence and dozens of people died in the "aluminum wars" of the time. OJSC United Co. Siberian Aluminium, or Sibal, in late 2000, merged with the aluminum business of Sibneft, a company by then controlled by Abramovich, to form Rusal. Rusal in January raised HK$17.4 billion ($2.24 billion) in the first initial public offering by a Russian company in Hong Kong.
The case is: Berezovsky v. Abramovich, High Court of Justice, Queen's Bench Division, Commercial Court Case No. 09- 1080.
Article ©2011 BLOOMBERG L.P. ALL RIGHTS RESERVED; article also appeared at www.bloomberg.com/news/2011-11-03/abramovich-feared-russian-aluminum-industry-with-murder-every-three-days-.html
