Russia has thirty-six billionaires. Collectively they own nearly twenty five percent of Russian GDP. They are estimated to be worth more then one hundred and twenty billion dollars. This does not include approximately ninety thousand common, run-of-the-mill multi-millionaires.
One of the multi-billionaires is the 37 year-old Governor of Chukotka, an oil tycoon by trade, Mr. Oleg Abramov. In fact, according to Forbes Magazine, Abramov was the youngest and wealthiest Russians of them all. He was also listed as the twenty-first richest person in the world, with an estimated fortune of $13.3 billion.
And for excellent reasons: Oleg was the governor of Chukotka, an oil-rich territory, using his territory as a tax haven for his business deals. Moreover, President Yeltsin provided Oleg with protection from any attempts of prosecution for criminal activities, making him virtually untouchable. Unless Oleg angered the President, of course, in which case he would be bankrupt and in prison the next day.
Geographically, Chukotka is the first bit of Russia you would come to if you crossed the Bering Strait from Alaska. Bisected by the Arctic Circle, Chukotka has little except the native Chukchis and their reindeer, some impossible-to-extract gold and an aged nuclear power station. It is a desperately cold and bleak place, rife with disease and alcoholism. People would do anything to be able to leave. But where would they go? To Miami, Barbados or London town? Actually, to any of these places, if they were Oleg Abramov.
It was a sunny May afternoon, and Oleg was enjoying his spring break off the coast of Southern France. Per his instructions, the captain dropped off an anchor one kilometer from the shore of Cap d'Antibes. Oleg was relaxing on an Art Deco-style cream sofa on the upper deck of his 115-meter super-yacht, The Aesthesia, waiting for his lunch to arrive.
And boy, was it a beautiful ship! The newest and largest of Oleg's flotilla of four super-yachts stationed around the globe, The Aesthesia was custom-built per his personal specifications. The naval architects were given an unlimited budget, with just one instruction: make it fun. For a mere three hundred and forty two million dollars they created the world's finest yacht.
It had all the James Bond toys that any highly security-conscious baby billionaire could dream of. In addition to the elevating helicopter deck, the ship contained a missile-detection system and a hovercraft launch. There was a mini-submarine dock inside the hull, with the sub that detected limpet mines. The underwater cameras would broadcast to large LCD monitors throughout the yacht. All electronics were linked to a sophisticated computer. There were also jet skis, diving equipment, a floating golf range and shotguns for clay pigeon shooting. It was a blend of a modern warship and an incredible floating palace.
The yacht's interior was the height of luxury. Naturally, all of the glass was bulletproof. Aside from a cinema, there was an in-door swimming pool, state-of-the-art fitness center, a steam room and a massage area. Each of the bedrooms had floor-to-ceiling windows, contemporary furniture in cool, muted tones, plus a giant plasma screen. The bathrooms had marble walls and mosaic floors. In fact, this masterpiece created such an excitement among the French Riviera's super-rich that it was even short-listed by the pompous Superyacht Society for a prize in their annual design awards.
The sound of whirling helicopter blades captured Oleg's attention. The captain activated the deck, allowing the on-board helicopter to land. According to his Patek Philippe Perpetual Calendar watch, it was 1:12 p.m. Lunch had arrived at last! It was quite important, because as everything else in life, Oleg loved fresh food. He would always fly it in from his favorite restaurants in Nice, Paris or London, rather then eat the stuff that has been sitting around for a few days. Whenever Oleg was at sea, his gourmet dinners would be delivered by a helicopter. This time, along with his take away lunch, the pilot was bringing a rising star in the neighboring government of Ukraine. Oleg just could not wait for his chopper to land.
To Alexei, the ship's dimensions were breathtaking. The colossal, four deck-high liner towered over the calm sea like a giant spaceship. It's impossible, he thought, that one person could own something of this size. Someday, if Alexei played his cards right, he would also possess one of these toys. He just knew it.
Three little Gurkha soldiers ran across the platform. One of them opened the helicopter's door. He pointed at Alexei's feet and said, "good afternoon, sir. I am terribly sorry, but no one is allowed on board in shoes. Mr. Abramov likes his yachts spotless. Over there is a container with flip-flops for the guests." The soldier politely gestured aside.
The views of the picturesque Mediterranean coast from the open helicopter deck were spectacular.
There was something magical, even medicinal, about the salty sea air and green scenery in the distance. Alexei inhaled deeply and went over to pick up his pair of flip-flops. He wondered, would I make my guests take off their shoes?
Alexei was escorted by his Gurkha guide to the upper deck. Cream leather armchairs were grouped together for private chats over cocktails. A tanned young man of about 35, with unshaved cheeks, was waiting for him. "What football teams do you like?" the man asked out of the blue, as if he knew Alexei for many years.
"Being from Kiev, I'm kind of partial to Dynamo."
"That's already one thing we have in common. My first choice is Milan because they've got Andrei Shevchenko. But they don't want to sell. Guess I'll have to settle for Chelsea."
It took a few seconds for Alexei to comprehend the subject of the conversation. Was the Governor talking about investing into a soccer club? Surely this could not be the reason for his long distance flight to the French Riviera. Still, if Abramov wanted to talk about athletic events, Alexei was willing to oblige his host. "But why bother with sports teams? Seems like a waste of money to me."
"It's not about making money," Abramov replied, stretching lazily on the sofa, barefoot. "And it's not about prestige, either. It's about access. The beauty of a football club is that sooner or later you get to meet everybody important in life. That's why you buy a football club. Whenever Milan plays, you may get Berlusconi in your box. You'll probably have a couple of drinks afterwards, and then the Prime Minister will invite you to his humble Villa Borghese. Or if you purchase Chelsea, then Tony Blair will be your invited guest. It's like buying membership to a nice posh club in Rome or London. You know what I mean?"
"I guess," Alexei said, absorbing the theoretical possibilities. "In that case, maybe I should make an offer to buy Formula One."
"Maybe not. I'm in negotiations with Bernie right now," Abramov said somberly. "It's one of the world's most glamorous sporting events. Hollywood types flock here like bees to a honey pot. Monaco in May, during Grand Prix time, means Brad Pitt, George Clooney, Hugh Grant."
"I was only kidding about buying Formula One."
"Ask me later. Maybe I'll sell it to you one day."
"I am looking forward to that day."
"Let's go inside," Oleg offered. "You never know who could be listening out here."
With a gesture befitting any head of state, Oleg motioned for Alexei to proceed to the main deck VIP stateroom. Alexei left the art deco terrace with great reluctance and entered an enormous room. It spanned the entire width of the yacht. He whistled, clearly impressed. Indeed, it was the preserve of a very wealthy few. Alexei immediately noticed one of Oleg's many indulgences: the gigantic room was full of art. Judging by the quality of the pieces, it was obvious that Abramov knew a thing or two about serious indulgence.
It was quite an imposing gallery with a superb collection of museum-quality world-famous paintings, including Van Gough's Prison Courtyard, Cezanne's Pierrot and Harlequin. Much to his embarrassment, Alexei could not recognize the names of many Soviet artists, whose familiar paintings depicted socialist realism. They were the finest original works by Mikhail Larionov, Piet Mondrian, Wassily Kandinsky, Lyubov Popova: eager workers, well-fed peasants, Stalin and his generals.
"Are all of these are..." Alexei pointed around the walls.
"On a permanent loan to me from the Tretyakov Gallery and the Pushkin Museum," Oleg finished his sentence. "And this beauty came from the Lenin Museum, in Moscow." He pointed to a beautiful oil portrait of Lenin. Nearby in a glass frame were Lenin's original Communist party cards, dated 1920 and 1927. Alexei looked at the cards, numbers 224332 and 0000001, nodding in appreciation of their historical value. Abramov added proudly, "you'd be amazed at what artifacts are available these days. A friend of mine is the director for the Russian State Center for Museums. He had the museum curator deliver them to my door. "
"I bet that helps."
"Doesn't hurt," Abramov shrugged his shoulders modestly. "The problem is, where do you find decent forgeries to return to the museums?"
The amount of wealth surrounding Alexei was mind boggling. And yet to him, it all made perfect sense: when you have all the super cars, mansions, private helicopters and football teams, buying a brand new super-yacht with a world-class private art collection seemed perfectly reasonable.
In sharp contrast with the expansive, grand VIP stateroom with its exquisite art, Abramov's office was sparsely furnished. The floors and walls were made of Norwegian wood. The couches and chairs were upholstered in understated beige colors. His titanium-and-glass desk was fastidiously neat, offering astounding views through its sloping bulletproof glass windows.
On top of the desk was a photograph, a color portrait that showed Abramov and President Yeltsin in swimming suits, holding chunks of skewered lamb cubes. It was snapped during one of the barbecues at Abramov's dacha in Barbados. If a visitor did not get the message, another black-and-white photograph on the wall showed Yelstin and Abramov, enjoying a shot of vodka against the orange sunset on the deck of The Aesthesia.
"I know what you must be thinking," Oleg said. "And you're almost right. Politics are close to me. But there are different ways of participating in that game. I can't afford to be indifferent to politics. At the same time, I don't have personal ambitions. I have only one task connected with politics: to help the President. Now, I'm not a close buddy of his. I treat him with great respect. People like us must not get in the way of people like him. Don't you agree?"
"One hundred percent," Alexei honestly replied. He knew that the government could always reach back into the history and pull out criminal, civil or tax charges. Obviously, Oleg had a great roof.
"You know, I heard good things about you."
"Like what?"
"Like you have a business mind. Plus, you've got both feet planted firmly in the system: you're an unofficial advisor to the President and a member of the Parliament. And most importantly, you have the same go-for-broke instinct, just like me. I can see that in your eyes."
"You may be right. Who knows?" Alexei modestly replied, "Only time will tell."
Oleg peered at Alexei as though he was making a quick assessment. Then he said, "The reason I invited you is to make you an interesting offer."
"One I can't refuse?"
"This is not a joking matter," Oleg said sternly. "I have a couple of ideas I wanted to run by you. For example, how about putting together a new, vertically integrated company, from some of the choicest parts of the old system? I bet you could arrange this with the State Property Fund. They'll sell us a few cherries in a cozy auction for a reasonable amount. Say, up to a billion dollars. I'll finance my half in cash. In a few years, the company's real worth, probably several billions, will become apparent. Then we'll float it on London Stock Exchange. Now, that's a great deal! Trust me."
Alexei was concerned that Abramov's great idea was exactly the same as his, but he did not show it. "That's an interesting concept. Certainly worth exploring." Alexei intentionally did not mention his plans to implement this concept without Abramov's participation.
Encouraged by Alexei's positive attitude, Oleg continued, "in President's Yelstin's election, for example, it was a fair trade of state property for financial support to the President during a difficult re-election battle. A few of us threw our financial muscle behind the President. In exchange, we got some of Russia's most valuable companies below their market value." Oleg fell quiet and then marveled aloud, "as a result, to some degree, I am the real government of Russia. For example, I can dismiss ministers and nominate people who are loyal to the President in their ministerial positions. So could you."
According to Oleg, so far Alexei was on the right track to becoming a baby billionaire too. "I'm open to all of your ideas, Mr. Abramov," Alexei smiled pleasantly.
"You can call me Oleg," his mentor-in-waiting replied. "Another idea is for your National Bank to set up a stabilization fund. It's like a national piggy bank during times of financial uncertainty. Plus an anti-corruption fund, to pay officials a decent salary so they don't have to hustle for bribes. I'll get my Harvard advisors working on it. Believe me, after their reports, the IMF, the World Bank, the IFC, everyone will gladly wire us billions upon billions of loans and grants."
"Sounds perfectly feasible to me."
"Good. In that case, there's a banker I want you to meet. He's helped me in the past. Eduard Safran is his name. Does this sort of thing all the time. I have a meeting with him next. Afterwards may be a good opportunity for you two to have a chat."
"I'd love to," Alexei smiled. With his earning potential, an international banker would be a great connection, even if Oleg's attempt to muscle in on Alexei's plans were doomed to failure.
"I have a few other ideas, but let's start with these projects first. What do you say?"
"Sounds tempting, but I have to think about it."
"What's there to think about?"
"For one thing, I have to consult with my other partners."
"Do you really need to? I was hoping we could keep this between ourselves."
"I can understand that. Still, I'd like to have a few days, if you don't mind."
Immediately Oleg knew that something was wrong. Nobody refuses an offer of obscene wealth without an excellent reason. Still, there was nothing he could do but wait. "Just don't take too long, ok? I want to start working in Ukraine with someone, and soon."
"Of course," Alexei smiled pleasantly.
Something drew Oleg's attention beyond the bulletproof glass windows. One of his hovercrafts was quickly approaching the yacht. "It's my next appointment," Oleg said. "Excuse me."
"No problem," Alexei replied. "Should I just wait out there, on the deck?"
"Yeah, why don't you do that," Oleg replied, his spirit dampened by Alexei's ambiguous, non-committal attitude. "I won't be long."
Standing on the huge upper deck, absorbing the serene atmosphere of the sea, gave Alexei a strange feeling of exhilaration. He had been insulated in his Kiev business world for so long that he forgot all about the fresh air. At last, he was all alone. There were no big fat men, accompanied by people wearing ear-pieces and strange irregular-shaped bulges under their jackets, no young women with mink coats and tight leotards with leopard patterns.
"Hello," a woman's voice called out in perfect Russian. "Do you get here often? South of France, I mean." Alexei turned to see a stunning tall blonde with a gorgeous figure, approaching him. She was fashionably dressed in an all-white business suit with a low cut blouse that revealed her cleavage.
"Every now and then," he lied, trying hard to disguise his provincial roots. "But I'll be spending more time here, believe me."
"In that case, you may need me," she smiled seductively and moved closer to him.
"You're absolutely right," Alexei flirted back with the attractive, sophisticated lady.
"I mean, what do you do after you've already remodeled your apartment, built a country home and bought your Bentley?" She was so sensual that he wanted her, right there on the spot. "The next step is buying a place in the South of France, of course. That's where I come in. Enter DeLux Solutions, a one-stop, all inclusive shopping consultant agency."
"You don't say." Alexei was disappointed to learn that the beautiful blond was just a real estate agent, and not a high-class escort that Oleg thoughtfully provided to his guests.
"For Mr. Abramov, for instance, I provide what we call the Oligarch Package. We advise him on the best-selling yachts, and who's buying them. We also offer the most elite property on the market and things like security."
"Got it," Alexei replied, hoping to end her sales pitch. "Thanks."
But as any great sales person, she refused to take no for an answer, continuing with her canned speech, "DeLux has a don't-call-us-we'll-call-you philosophy. We don't need to advertise in golfing or yachting magazines. Our customers are usually well-known people, who socialize in the same circles. They're at least multimillionaires. Most of them are Russian, and the number of those wanting to be invited keeps growing."
"Like club for members only?"
"Precisely. We publish what we call a Catalogue of Very Expensive Things. As a matter of fact, Mr. Abramov wanted his copy right off the presses, so here I am, his delivery girl. It's purely for the ultra-rich. Our slogan is, if you've only got ten million, you can't afford it. Jets, collection cars. Just place your order and our consultants guarantee the rest. So when your time comes to invest into planes and vacation villas in the South of France, just call me."
"Maybe later. Excuse me." Alexei turned his back and walked off to the opposite side of the deck. He did not feel comfortable with the pushy saleslady, especially since he was not prepared to spend as lavishly as she wanted him to. Had she known the truth, in her eyes Alexei would be merely a millionaire, practically a nobody. Unfortunately, Alexei had no choice but to agree. After seeing Oleg's display of wealth, he knew that they were in different leagues, and he did not like it.
A few minutes passed. Curious, Alexei turned to see if the blond was still there, but she disappeared. Instead, a plump, elderly gentleman stepped out from Oleg's private museum. He approached Alexei and introduced himself. "Hello, I am Eduard Safran," he said. "And I hear you are from Ukraine?"
"Well, yes," Alexei admitted reluctantly. "And you are..."
Safran smiled modestly. Apparently the young Ukrainian fellow did not know that he was on Forbes Magazine's list of the top 200 wealthiest individuals in the world. In fact, Safran's total worth of $2.5 billion was in large part due to Mr. Abramov. "I am in private banking," Safran explained, "and my business is to know all the secrets of the financial planet. These days, I work with Mr. Abramov. For the Yelstin family."
"Really?"
"Yes. As a matter of fact, Mr. Abramov suggested that I introduce myself to you. Perhaps we could do business together, he said. After all, many governments use my banks' services. Russians and Americans, Panamanians and Colombians, you name them."
Impressed, Alexei said with interest, "and what services does your bank usually offer to governments?"
"In your case, we could clear any amount of foreign aid without a trace. For instance, Russia received more then twenty seven billion dollars worth of aid from the World Bank and IMF, some in grants, but mostly in loans.
Seventeen billion went through my New York Bank alone."
"Nice haul," Alexei whistled, impressed.
"Plus, each of my clients has independent projects. In Russia, part of the money flows from over-abundance of natural resources: aluminum, steel, oil and gas, precious metals and minerals. And everything is extracted on industrial scale, if you can imagine that. Ukraine is a different animal altogether, one without the natural resources, not that I have to tell you that. But if you manage to become someone like Mr. Abramov, and end up coordinating the various advisors to the President, then you should definitely call me."
"Very interesting," Alexei replied. "May I have your business card?"
"Naturally," Safran gently wrapped up hispresentation. "Incidentally, I spend most of my time in Monaco these days. If you're ever in the neighborhood, please drop by for a glass of wine."
"Thank you, Mr. Safran," Alexei smiled and shook the old man's hand. "I will be in touch." Alexei remained on the sunny deck long after Safran shuffled off and retreated into Oleg's office. Having consulted a vacation guide before arriving, Alexei expected that the host would offer to take him on a short cruise down the coast, or maybe even a day trip to St. Tropez. The island of Ibiza was a long-shot possibility. Anticipating the upcoming trip, Alexei patiently waited outside while Oleg conducted business with the private family banker to the governments.
At last, the meeting was over. Oleg appeared from the main stateroom, looking somber, and said, "listen, Alexei, I wanted to spend some more time with you, but there's a situation developing that requires my presence in Moscow."
"Nothing terrible, I hope."
"Potentially, worse then terrible. But that's not your problem. If you want to, feel free to hang out on this boat as long as you wish. Or if you have urgent business back in Kiev, my Bandit will fly you out there today."
"What bandit?"
"It's one of my airplanes," Oleg explained. "It will get you back to Kiev in comfort. By the way, if you want to borrow it anytime, or use any of my yachts, just give me a call. Everything I own is open to my partners."
Alexei was disappointed, but he knew that business takes precedence. Especially when a president is personally involved. "Thanks for everything, Oleg, but frankly, I don't want to stay here all by myself if you're not here," he smiled sadly. "It just wouldn't be the same."
"I can certainly understand that. Let me call you when I'm done with Moscow, and we'll do it again. Maybe even next week?
"Maybe. I'll check my calendar."
Escorting Alexei to the helicopter pad, Oleg offered, "and when the time comes, I'll show you everything you need to know about structuring a web of ownership. Companies nested within companies within companies."
"Great," Alexei responded without enthusiasm.
As the helicopter blades picked up speed, Oleg gave Alexei one last bit of advice, "try to get into your Parliament's Anti-Corruption Commission. Or the National Security Council. At least the government won't be coming after you. And remember, the most important investment you can make is your contribution to the President. You've got to keep close to him."
"Thanks, Oleg, I'll keep it in mind," Alexei said loudly over the smooth churning of the rotors. "And don't worry, I'll let you know in a couple of days. Thanks for everything. It was really useful."
The look of suspicion was written all over Oleg's face. He backed away from the helicopter, half-scowling, still hoping to do business with the sly Ukrainian politician. Alexei waived goodbye and waited. Finally, the helicopter lifted from the super-yacht. That is when a dreadful thought occurred to Oleg for the first time, that perhaps he made a strategic error by sharing his confidential business secrets with a potential competitor.
Fifteen minutes later the helicopter landed on the territory of Nice airport. Alexei looked in awe at a commercial passenger wide-body jet with a name The Bandit plastered on its side in huge black letters. Oleg even had a scull and bones painted on the tail for maximum effect. It was an adapted one hundred eighty million dollar Boeing 767, an airplane designed to carry up to three hundred and sixty passengers.
The interior was decorated with mahogany and gold-plating. Since he was the sole passenger traveling directly from Nice to Kiev, Alexei had at his full disposal a large master bedroom with a huge bathing area, an office, a cinema room, a fitness room, and lots of spacious cabins for guests, personal assistants and bodyguards. Of course, there was a plasma screen TV in every bedroom, and other amenities for a long flight.
During the guided tour, one of the pilots explained to Alexei, "this custom-made bird even has its own anti-missile system. It's the next best thing to the U.S. President's Air Force One in terms of security, and far superior in terms of comfort."
"But who really needs an anti-missile system?"
"You'd be surprised, sir," the pilot replied, a little too seriously for Alexei's comfort.
The open area inside the plane, the comfortable, sturdy furniture was screwed tightly to the floor boards. The dark wood, the luxurious carpet on the floor, all somehow reminded Alexei of Sergei's club for members. Sipping a glass of Krug Grande Reserve, Alexei looked out of an over-sized window on the world beneath him and thought about Oleg's offers.
On the one hand, Oleg's love of the good life, pride in his political reach, and undying loyalty to the President, were truly inspiring. On the other hand, Alexei did not feel obligated to go into business with a new partner. Especially a dangerous one, who had Gurkha soldiers, helicopters, mega-yachts and Boeing airplanes.
Besides, Alexei did not need Oleg. He was doing quite well on his own. In fact, Alexei was well ahead of his time. When most Ukrainians were too naive to understand what was going on, he purchased his factories for almost nothing, and managed to turn it into a profitable company. Inept managers and alcoholics alike were quickly dismissed. The best young executives were hired, including several Americans. With their help, Alexei capitalized on the huge difference between state-subsidized and western, market prices for raw materials. The factories' output and profitability soared, making its shareholders very rich men.
And after listening to Oleg's words of wisdom, Alexei was plotting to take charge of the remaining steel mills. He wanted to take his portfolio to the next level. Not only would he set up a vertical integrated firm, one that extracts, refines and sells steel products -- in another few years, his shares would be traded on the London Stock Exchange. Billions upon billions of dollars would follow. While other Ukrainian billionaires-to-be were not yet dreaming of the riches they would acquire, Alexei was well-positioned to take his chunk of wealth.
. Flying high in the clouds above Germany, he remembered a delightful decoration on one of the yacht's walls: an oil painting of Lenin in the Finland Station, his arm waving toward the future. Smiling at the irony, Alexei could not wait for his ultra-capitalistic future to arrive. Meanwhile, Alexei's official monthly salary as a deputy to the Ukrainian Parliament would not have bought a business lunch at a nice restaurant in Manhattan.
In all, the day trip to the South of France was an eye-opening, life-changing experience. In the beginning, Alexei half-expected to see a street bruiser who muscled in on his billions. But Abramov did not steal anything. He was able to take billions of dollars out of Russia in full public view, with the blessing of his president. Oleg's exuberant lifestyle and spending practices left Alexei dizzy with the unlimited possibilities. These billionaires have everything to excess, he thought. God, it's fantastic! The partnership between government and business could be extremely lucrative, he concluded, no doubt about it.
|
