Roman Abramovich’s life appears tailor-made for a Robert Ludlum novel. One of the new breed of Russian oligarchs and the owner of England’s Chelsea Football Club, Abramovich is a billionaire many times over.
South Africa will soon be adding to his asset base, as one of his companies, Evraz, will be taking over Anglo American’s 79% stake in Highveld Steel & Vanadium.
Evraz is a recent purchase for Abramovich, who became part owner of the company only last month, buying 41,3% of the Russian steelmaker, for about $3,4-billion. Evraz and Credit Suisse have each bought 24,9% of Highveld from Anglo, and Evraz plans to purchase the entire stake once it has regulatory approval, for R4,8-billion.
According to Bloomberg data, there have been more than 200 mergers and acquisitions in the steel industry so far this year, representing nearly $80-billion.
For the same period a year ago, 179 mergers worth $25-billion were recorded. And Abramovich isn’t the only Russian billionaire looking to invest in steel: Alexei Mordashov of SeverStal battled Mittal Steel for Arcelor and lost, while iron ore owner Alisher Usmanov was also interested in Highveld.
The Highveld purchase is small change for Abramovich. Forbes magazine named him the richest Russian, second-richest person in Britain (after Lakshmi Mittal), and the 11th-richest person in the world. His personal wealth is estimated to be $18,2-billion, the magazine said. Perhaps more remarkably, he was the youngest person to make the list, aged only 39, with most of the other names having passed retirement age.
At the time, Pravda commented that the list was wryly known as “police instructions” in Russia. Many Russian businessmen prefer to keep quiet about their wealth, and with good reason — Yukos’ Mikhail Khordovsky, once Russia’s richest man, is now in jail, although Forbes still estimates his personal fortune at $220-million.
Like his former partner, Boris Berezovsky, and other oligarchs like Khordovsky, Abramovich has often been accused of being on the wrong side of the law. Up until now, he has had more luck in evading charges of fraud and corruption, however. Rumour has it that, as a close friend of former Russian president Boris Yeltsin, he was protected from prosecution for criminal activities. He has been cleared of 1992 charges that focused on alleged misappropriation of diesel fuel.
Yeltsin’s predecessor, Mikhail Gorbachev, allowed Russians to open small private businesses in the 1980s. Abramovich started his career at this time, eventually forming companies that focused on the oil trade. But it was Yeltsin’s privatisation programme of the 1990s that cemented his wealth. Abramovich became a major shareholder of oil company Sibneft, and also of Russian Aluminum (Rusal). He also bought assets in the Russian airline Aeroflot.
In 2005, Berezovsky announced that he would sue Abramovich for allegedly pressuring him into selling his Russian assets cheaply, after Berezovsky fled to England in 2000. According the Independent, he said Abramovich had acted on the orders of President Vladimir Putin. Berezovsky had been under investigation for fraud and political corruption; he suspects his real mistake was to criticise Putin. So far, nothing has come of the planned lawsuit.
In September last year, Abramovich sold 72% of his company’s stake in Sibneft to state-owned Gazprom for $13-billion — a tidy profit considering he and Berezovsky bought their shares for $100-million a decade earlier. The deal was “the biggest state buyout in post-Soviet history”, said the St Petersburg Times. The paper also remarked that Russia’s Audit Chamber found Sibneft owed $360-million in back taxes, and that the company also had a much lower effective tax rate than Yukos and the statutory tax rate of 24%. However, no action has been taken against Sibneft.
Though Abramovich is at pains to keep in Putin’s good books, he does have political interests. He has governed the remote autonomous region of Chukotka, since 2000, and invested millions of dollars in projects to improve the lives of its inhabitants. Chukotka, part of Siberia, has also come in handy as a tax haven for Sibneft. Earlier this year, he was awarded the Order of Honour by Putin, in recognition of his “huge contribution to the economic development of the autonomous district”.
But the oil tycoon and Siberian governor likes to spend most of his time in Britain, preferably watching Chelsea play in the English Premiership. A passionate football fan, he bought the team for a reported £140-million. He certainly enjoys spending his money, and owns three lavish yachts and several mansions.