/ 25 February 2008

The new KGB: Keep Gathering Bucks

While “oligarchs” from the era of former president Boris Yeltsin were purged by the Kremlin, a new breed of super-rich tycoons has thrived under Vladimir Putin, bringing the number of dollar billionaires in the country to more than 100. Russia now has the most billionaires in the world after the United States, which has 415. Germany is third with 60.

An annual survey published by Russia’s respected Finans magazine says metals tycoon Oleg Deripaska (40), a mild-mannered physics graduate, is the country’s wealthiest man. With assets estimated at $40-billion, he is worth almost twice as much as Roman Abramovich (41), the Chelsea Football Club owner, who is second with $23-billion.

The survey found the number of billionaires soared to 101, compared with 61 last year. Russian companies sold a record $33-billion in shares in 2007, while reserves of oil, gas and coal and soaring commodity prices poured money into the coffers.

Many tycoons live in Rublyovskoye Shosse, near Putin’s dacha on the edge of Moscow, where Lamborghini showrooms jostle alongside Gucci boutiques. Plastic surgery is a huge growth industry, while elite restaurants and nightspots are booming. The capital’s über-wealthy set was shocked this month when its favourite club, Dyagilev, burned down. Tables at up to £7 500 a night ensured privacy away from the prying eyes of ordinary Russians, who earn less than $600 a month on average.

Analysts say the big hitters in business are diversifying from traditional money-spinners such as the extraction industries and cashing in on new growth areas, such as car manufacture and retail, as ordinary Russians’ spending power takes off.

The survey confirms the dominance of a tier of tycoons who have developed friendly relations with the Kremlin by agreeing to Putin’s ultimatum to stay out of politics.

Deripaska has poured hundreds of millions of dollars into a sports complex near Sochi, the Black Sea town where the 2014 Winter Olympics will be held, while Abramovich has funded a new training camp for the Russian football team. Viktor Vekselberg (ninth richest, with $15,5-billion) is famous for buying a clutch of Fabergé eggs worth about $100-million to ensure they stayed in Russia. And Arsenal Football Club shareholder Alisher Usmanov (12th, with $13,3-billion) splashed out $40-million last year to buy the art collection of the late cellist Mstislav Rostropovich for a state museum. By comparison, the self-exiled London resident, Boris Berezovsky, who held immense political clout in the late 1990s until he fell out with Putin and fled to the UK, has seen his assets dwindle. He came 80th with $1,3-billion.

Mikhail Khodorkovsky, who was jailed and stripped of oil company Yukos after clashing with the Kremlin and being convicted of fraud in 2005, did not even figure in the list of Russia’s 500 richest people.

Despite their philanthropy, the new tycoons are not popular. While the economic boom has begun to trickle down to an embryonic middle class, social inequality has risen.

The country’s richest 500 are worth $715-billion; more than half of Russia’s GDP, while some pensioners get less than $120 a month.

A figure notably absent from the rich list was Putin. The Moscow-based political analyst, Stanislav Belkovsky, speculated that Putin had a personal fortune of $40-billion, with holdings in three oil and gas companies. Putin dismissed the reports last week as “detritus excavated from someone’s nostril and smeared across bits of paper”. — Â