High flier brought low by his protégé
As the stocky Russian, a sworn enemy of then Russian president Vladimir Putin, leaves the store, he notices Roman Abramovich, aka “the Stealth Oligarch” — one of Putin’s closest allies — shopping next door at the elegant, and pricier, store Hermès.
For seven long years, he has waited for this opportunity. Bustling past Abramovich’s bodyguards, he bursts into the luxury boutique. “I have a present for you,” he tells his onetime protege. “This is to you from me!” The older oligarch throws a piece of paper at the man he once thought of as a son. But the younger Russian recoils, and the piece of paper — a writ in a $5.6bn (€4.3bn) private litigation case, the biggest ever filed anywhere in the world — flutters to the floor.
Thus begins the public part of a story that, at times, seems scripted in Hollywood with its colourful cast of billionaire characters, its armoured yachts, casual assassinations, money-stuffed suitcases, and Kremlin intrigue. Played out in front of a rapt audience in a London courtroom, it reveals a lot about power in Russia, and Putin’s rise, and his consolidation of control.
As Berezovsky himself describes it in court proceedings later: “This is a very Russian story — with lots of killers, where the president himself is almost a killer.”
The story starts in 1994 on a private yacht in the Caribbean, during a holiday cruise for some of Russia’s richest men. Always in motion, chattering incessantly on the phone, Berezovsky, who bears a passing resemblance to the Penguin in Batman Returns, is at this point Russia’s most famous tycoon.
A brilliant maths professor, he has been quick to understand how to successfully navigate the post-Communist economy. His car dealership, the first in Russia, makes money by delaying payments to gullible manufacturers with no concept of inflation. He is among the few businessmen in President Boris Yeltsin’s inner circle, known as “the Family”.
But such success comes at a price. Berezovsky’s hands are covered with scars. A month earlier, he barely survived an assassination attempt — 1kg of explosives detonated next to his car, decapitating his driver. In a city rife with gangsters, it was the 53rd bomb attack in Moscow that year. But the near-death experience has transformed Berezovsky, convincing him he needs direct political power to make Russia safe for business.
Quick to grasp that television can influence politics, he has acquired control of Russia’s biggest channel. But he now needs money to run it. During the trip on the yacht, he is scheming, laying plans.
Berezovsky knows most of the men onboard, but there is one new face — the shy-seeming, slightly unkempt, meekly smiling Roman Abramovich, who, at 28, is 20 years younger than Berezovsky.
Orphaned as an infant, Abramovich has been raised by a kindly uncle and, a business natural, has worked his way up to become a successful oil trader. Now, as the men relax on the yacht, Abramovich is using the opportunity to ingratiate himself with Berezovsky. “He is very good at getting people to like him,” Berezovsky will later testify, somewhat bitterly. “He is good at appearing to be humble.”
On the yacht, Abramovich proposes a plan that will help Berezovsky pay for his TV channel. If Berezovsky uses his Kremlin connections to force the privatisation of two state oil assets, Abramovich will merge them with his trading firms to create an oil major.
The two shake hands on a deal to create Sibneft, a company that eventually will be worth more than $13bn. Nothing at all is put on paper. And what exactly is agreed upon during the Caribbean cruise is at the heart of the matter. Along with an alleged threat by Abramovich, it is the main bone of contention today, 18 years later. Berezovsky claims the agreement was to share the oil company 50-50; Abramovich says the deal was for the company to be his alone.
What no one disputes is that, after the 1994 cruise, Berezovsky started lobbying Yeltsin to put the oil assets up for auction, arguing that, with the oil money, he could run a well-funded channel that, in turn, would help the ailing president’s re-election.
On the day of the auction itself, Berezovsky recalled he was in top form, negotiating furiously in the corridors, getting one rival to bid lower in return for favours, another to withdraw if he paid off his debts. It wasn’t fixing, he later told the court. “I just find the way through. In my terminology, that’s not fixing.”
The plan hatched in the Caribbean worked to perfection. In 1996, backed by Berezovsky’s TV channel, Yeltsin pulled off an unlikely election win.
Berezovsky reaped rewards, too. He joined Yeltsin’s administration and became a true powerbroker: negotiating a hostage release with Chechen terrorists one moment, creating a new political party the next. He was one of the few guests at Rupert Murdoch’s wedding. Forbes estimated that Berezovsky was among the top 10 most influential entrepreneurs in the world. But he wanted more.
“There was something of the megalomaniac about Berezovsky that would lead to fantastical proclamations on his part,” Abramovich testified during the trial. “One of his ideas was to return monarchy in Russia. The grander the plan he entertained, the more cash he would be after.”
And while Abramovich got on with the more mundane task of running Sibneft — spinning off a web of offshore firms or setting up trading companies staffed with disabled employees to take advantage of tax exemptions — Berezovsky used his TV channel to gain ever more fame, clout, and notoriety. He also had time for a little shopping.
AS BECAME evident in trial testimony, between 1996 and 2000, Berezovsky contacted his “protégé” Abramovich regularly. He called from France to ask for $27m to buy a chateau; from London to buy baubles for his girlfriend. When Berezovsky needed $5m in cash, they were delivered in five bulging suitcases.
Every year, tens, sometimes hundreds, of millions were transferred by Abramovich to Berezovsky. Berezovsky claimed the transfers show that he was a co-owner of Sibneft; Abramovich said the payments were to keep the political godfather happy, describing Berezovsky as his krisha — meaning “roof”, a term that denotes protection in the Russian criminal lexicon.
Around the time of the 1996 elections, Berezovsky introduced Abramovich to the Family. At Yeltsin’s garden parties, one guest recalled, Abramovich barbecued kebabs and poured wine, going so far in his desire to be helpful that one guest allegedly mistook him for a waiter.
But the chivalrous attitude was well received among members of the Family — a contrast to the uppity Berezovsky. Soon, Abramovich had established himself as a trusted confidant and benefactor. When, in 1998, a television programme described him as “the wallet of the Yeltsin family”, there were no pictures of him to accompany the programme, as his progress had been mostly off-radar.
Abramovich was not the only grey yet young thing Berezovsky was manoeuvring into a position of influence during the 1990s. Another protégé was a certain Vladimir Putin, a former KGB lieutenant colonel so bland his nickname was “the Moth”.
Remembered as always wearing the same mucky, pea-green suit, Putin helped Berezovsky set up a car dealership in St Petersburg. “Our relationship was based on mutual interests and mutual goals,” Berezovsky recalled.
Berezovsky also introduced the Moth to the Family, inviting Putin on skiing holidays at his Swiss chalet. And Putin rapidly rose from a desk job in the St Petersburg City Council to head of the FSB, the former KGB.
Meanwhile, the Yeltsin regime appeared to be sinking. Berezovsky came under investigation for embezzlement, and rivals began to close in. Desperate, the Family launched a quest to find a trusted heir to Yeltsin.
They thought Putin would be the right man. In court, Berezovsky recounted how he flew to a secret meeting with the Moth in Biarritz where, he claimed, he persuaded a reluctant Putin that he should be the next leader of Russia.
No sooner had the little-known Putin taken power than Chechen terrorists had detonated a series of bombs in Russian apartment blocks, killing 293. When Putin launched the second Chechen war, Berezovsky’s TV channel backed him, transforming the Moth into a heroic strongman.
The following year, as the country elected a president, Berezovsky’s channel went all-out for Putin, burying his rivals under verbal mud until they spent more time fighting the channel than dealing with Putin.
The Moth was victorious. And as soon as he had captured the Kremlin, Putin started to show his true colours.
He centralised power and ordered the oligarchs out of politics. Still convinced of his omnipotence, Berezovsky grandly announced he would build a “constructive opposition to the new authoritarianism”.
When a Russian nuclear submarine sank in the Barents Sea, Berezovsky’s channel repeatedly attacked Putin, accusing him of being heavy-footed and failing to save the sailors. Afterward, Berezovsky was summoned to the Kremlin. Unusually, Putin kept him waiting. When he finally emerged, Putin addressed him by the formal vy, not their usual friendly ty, Berezovsky recalled in court.
According to Berezovsky, Putin demanded he give up his TV station. But Berezovsky refused. Soon, he was fighting a corruption investigation into his business, with armed, balaclava-clad police raiding his offices.
Berezovsky realised he’d misread the Moth, and moved to France. He still hoped Abramovich would help in his battle with Putin, but it seemed Abramovich’s loyalties had shifted.
Berezovsky testified Putin had asked them both to contribute to a $50m yacht he wanted. Berezovsky said he refused, sure that Abramovich would do so, too. Later, however, he came to believe Abramovich went behind his back and bought Putin the yacht, telling him Berezovsky had refused to make a contribution.
“I think this was the turning point in my relationship with Mr Putin,” Berezovsky drily noted on the stand.
BUT according to Berezovsky, Abramovich’s greatest betrayal came in 2001. Instead of helping his old mentor when he needed it, Abramovich turned on him, demanding Berezovsky hand over his share of Sibneft at a knock-down price or else Abramovich would use his new influence with Putin to keep one of Berezovsky’s best friends in a Russian jail. “He acted more and more like a gangster,” Berezovsky lamented in court. “It was finally clear to me how ruthless Mr Abramovich was.”
Cornered by the man he had once considered a son, Berezovsky sold his share of Sibneft for $2.5bn — about $5bn less than its estimated worth.
According to Abramovich, Berezovsky was a friend, a valued mentor, but also a political player whose palms needed constant greasing. The $2.5bn, Abramovich testified, was the final payoff to Berezovsky — a thank-you for political services rendered. “I was very grateful to him that he helped me. I could never have achieved my results without his help,” he said.
For the past dozen years, Berezovsky has lived as a political exile in Britain. His fortune is dwindling. The man who, by his own admission, helped bring the Moth to power, has dedicated his life to dethroning Putin — but to little effect.
During the trial, whenever he was caught on discrepancies in his testimony, he clutched his balding head and stared furiously at the evidence, desperately searching for some genius formula to escape his own contradictions. But Machiavelli may have been trapped in his own schemes.
He alleges (as do more objective voices) that Putin and the FSB were behind the attacks that became a catalyst for the second Chechen war. Such allegations raise the spectre of his own involvement in Putin’s rise.
Meanwhile, Abramovich has prospered as one of Putin’s favourites. Forbes estimates his fortune at $12bn, making Berezovsky’s remaining hundreds of millions look paltry by comparison. To rub salt into the elder’s wounds, Abramovich has also moved to the UK, where his exploits as the third-richest person in the country are closely followed by the press.
Chelsea, the football club he poured hundreds of millions into, are the European champions. While Berezovsky has sold his luxury yacht, Abramovich has bought the world’s largest — complete with missile detection system and escape submarine.
Abramovich’s French Riviera chateau, which once belonged to Edward VIII, dwarfs Berezovsky’s property. Rupert Murdoch, Russell Simmons, and Martha Stewart were reportedly guests at his New Year’s Eve party. When Prince Charles was late for a polo match, Abramovich lent him his helicopter.
Despite his high-powered toys and friends, he still manages to come across as the boy next door, liked by everyone he encounters — liberal journalists and former KGB apparatchiks alike. As Yeltsin’s daughter once admiringly remarked, “Roman knows how to make friends”.
And Sibneft, the company at the heart of this case and which was originally acquired from the state for $100m? Abramovich sold it back to the state — or rather, state-controlled Gazprom — for $13bn.
In court, Berezovsky lost, too. Following the most expensive trial in UK history, the judge, Elizabeth Gloster, ruled in favour of Abramovich.
Gloster described Berezovsky as “inherently unreliable”, saying: “I gained the impression he had deluded himself into believing his version of events.”
Within minutes of the ruling, Berezovsky was outside the court, addressing a media scrum, suggesting that “it was as if Putin had written the verdict”, seemingly at pains to suggest he wasn’t out for the count.
But the definitive image of the fallen titan remains a photograph of Berezovsky taken earlier in front of the Russian Embassy in London, an estranged, increasingly eccentric dissident holding up a placard with words addressed to the Moth: “I made you, and I will destroy you.”
* Peter Pomerantsev is a television producer and nonfiction writer.
* Alexey Kovalev is editor of inosmi.ru.
* (c) 2012 Newsweek/Daily Beast Company LLC. All rights reserved.
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