Parcours de Roman Abramovich

Money is no object for Roman Abramovich

By Yuri Govorushko

16-07-03 If money is no object, distance and time are, it seems, no problem. Roman Abramovich, the Russian multibillionaire who on 1 July brought the English football club Chelsea, plans to watch from the stands almost every match played by his new team, manage multiple businesses across Russia, and govern Russia's easternmost region, Chukotka, all at the same time.
A tough task, undoubtedly. Still, huge distances have been a feature of Abramovich's life, and one that he has used to his financial gain. At the age of 4 and already an orphan, Abramovich, who was born in the Volga town of Saratov, went first to Moscow to live with his grandparents, and then to the Arctic region of Komi to stay with his uncle, an oil official. After military service, he may or may not have graduated from the Moscow Institute of Oil and Gas.

By his mid-20s, he had made a fortune (initially, it is thought, in tires and commodities trading), then graduated from the Moscow State Academy of Law, and was rapidly building a business empire (now including a roughly 80 % stake in the oil company Sibneft, half of the aluminium monopoly RusAl, and a quarter of Aeroflot). An ability to spot opportunities regardless of geography helped, as too may have a willingness to seize illegal opportunities: In his mid-20s, he was supposedly implicated in the seizing of dozens of wagons of diesel oil en route to Kaliningrad.
His speed of travel was matched by the speed of his ascent. Somehow befriended in 1992 by Boris Berezovsky, then Russia's richest man and now wanted by the Russian police, he shared in some of Berezovsky's big projects, gained other massive holdings, wealth, and also influence in the coterie around President Boris Yeltsin, notably Yeltsin's daughter, Tatiana Diachenko. Unlike Berezovsky, this protege of the Yeltsin "family" has managed to avoid a fall, and is reportedly on good terms with President Vladimir Putin.

Abramovich seems to have an urge to span the world. As governor, since December 2000, of the desolate and remote region of Chukotka, he has looked even further eastward, floating the idea of building a hugely expensive 96 km tunnel across the Bering Sea to Alaska. (Roads, too, would have to be built.) Now, with the purchase of Chelsea, he is heading westward.
So is Abramovich just another Russian oligarch heading westward 'from Russia with money' to make his name -- and demonstrate their influence and opulence -- in Europe? Is he another of Russia's wealthy who would buy Ferrari if it were for sale?

Certainly, like other wealthy Russians who have invested in soccer, ice hockey, and basketball clubs, he has an interest in sports. He owns the hockey team Omsk Avangard, a convenient stopover as Abramovich returns from Chukotka to Moscow. Rumour had it that he was also interested in buying CSKA Moscow, who came in second in the Russian league last season. But his interest is partly a matter of business, not just patronage. Abramovich asserts that Russian teams are unprofitable.
But it is hard to tell quite what Abramovich wants from his empire. He is notoriously reticent, and it was only in 1999 that many Russians could answer the question that the British are now asking: "Who is Roman Abramovich?" Even now relatively little is known about the biography of this mysterious man, who at 36 is worth $ 5.7 bn (according to Forbes) -- the second-wealthiest person in Russia and the 19th wealthiest in Europe.

More generally, as shown by the arrest of a major shareholder in Yukos, soon to be Russia's largest oil company, it is hard to uncover what power struggles are raging among Russia's business and political elites.
Still, Abramovich's two-year governorship of the pitifully poor region of Chukotka, nine time zones from Moscow, perhaps offers some clues. Was his interest in politics, initially (from 1999) as deputy for the region in the State Duma, an attempt to create a defence against any possible prosecution for business crimes? That was a popular notion, as his entry into politics gained him parliamentary immunity. However, after immunity was lifted from governors in 2000, Abramovich pursued his interest.

So perhaps he sees Chukotka as a launch pad for a political career? Possibly, but governing Chukotka, with its population of just 73,000, is not much of a vote-winner. And while his position gives him the chance to control the exploitation of Chukotka's mineral wealth, Abramovich hardly needed more money to be able to bankroll a political career. In any case, the severe climate and undeveloped infrastructure has so far prevented much exploitation.
Instead, perhaps an explanation once given by Abramovich -- "It's a new endeavour for me. I've never run a territory. ... I've got to try it just to see whether I like it" -- really is true. Chukotka is a training ground, a test of skill for a man who has made his mark in business and is looking for a new challenge. (In fact, under a much-ignored law, a governor should not also run a company.)

The same urge to test his skills in a new place could partly explain his purchase of Chelsea. The boost to his profile might be another: According to the statement announcing the purchase of Chelsea, his long-standing ambition has been to buy a high-profile European club.
Whatever his reasons, one thing is clear: He is willing to spend liberally. The people of Chukotka, very poor even by the standards of Russia's remote regions, have been re-housed and given new roads, schools, shops, and (if state employees) their wages on time. Their children have, as a break from the raging winds in Russia's summerless Far East, been sent on holiday to the Black Sea. Much of this (roughly $ 200 to $ 300 mm) has apparently come at his own expense.

As for Chelsea, Abramovich has paid roughly $ 100 mm for the club itself, pledged to clear more than $ 155 mm in debts, and declared his willingness to spend $ 340 mm to bring in stars such as Andrei Shevchenko, Rivaldo, and Edgar Davids in his bid to turn the fourth-place English team into a European giant.
The people of Chukotka, who gave Abramovich 92 % support in the gubernatorial elections of December 2000, are largely grateful. Chelsea fans, too, could be thankful.

But while no one can doubt Abramovich's financial commitment, Chelsea fans, like the people of Chukotka, might come to question how he manages and spends his money. In Chukotka, the governor's purse may have been opened, but his team is seen by some as closed, and the up-to-date cinemas seem to have been built for himself and his circle. And partly because of the region's dreadful climate (the temperature falls to 50 degrees below zero), universal destitution and residents' apathy, his plans have often not worked.
But rather than the aim and nature of his imperial ambitions, perhaps the value of the empire to Abramovich could ultimately be simply its geographical spread. Could Abramovich find himself under the type of pressure that Mikhail Khodorkovsky, Russia's richest man, now faces? And, if so, could London provide the kind of refuge that it has been for his former mentor Boris Berezovsky?

All of this, and the fortunes of Chelski, as the British press has dubbed Chelsea, could pass the people of Chukotka by. For residents of Chukotka's remote settlements, Chelsea is a world away, materially as well as geographically. In fact, the majority of them have no possibility of reading newspapers or watching TV.
Abramovich may so far have been willing to spend roughly half the month in Chukotka's "capital," Anadyr, but many in the region are more interested in scraping together some money and joining the exodus from the exceedingly inhospitable lands of Russia's Far East.

Source: Inside Russia