Kremlin targeting oligarchs

SUN JOURNAL

Russia: Critics see political motivations behind a crackdown on entrepreneurs who made billions buying state assets cheaply in the 1990s.

November 04, 2003

A tranquil, booming Russia was in a kind of political hibernation 11 days ago when authorities arrested Mikhail B. Khodorkovsky, head of Yukos Oil and the nation's richest man, on embezzlement, fraud and tax evasion charges.

Now, with Khodorkovsky submitting his resignation from his prison cell, Russians are wide awake, waiting for the curtain to open on the next dramatic act. Many working people, who felt fleeced in the 1990s, root for a further crackdown on Russia's so-called oligarchs, who made shady fortunes buying state assets for a pittance in the 1990s.

An opinion poll released over the weekend showed that almost three-quarters of Russians surveyed approve of President Vladimir V. Putin's handling of his job.

Academics, reform politicians and liberal intellectuals, who say the Kremlin was as culpable as entrepreneurs for the dubious privatization deals, warn of an erosion of the rule of law. The state, they say, is enforcing the law selectively to neutralize Khodorkovsky, a stubborn Kremlin critic who has been financing opposition political parties and a newspaper.

Putin has asserted repeatedly that he is not directing the prosecution of Khodorkovsky, but few here doubt that the Kremlin has the power to halt or soften the investigation.

For the West, the stakes are significant. Russia remains a formidable military force, and exports more oil and gas than any other country on Earth.

At the time of his arrest, Khodorkovsky, 40, was apparently on the verge of selling 40 percent of Yukos to Western investors for $25 billion. Prosecutors have frozen his one-third stake.

Meanwhile, the British newspaper The Guardian reports that Roman Abramovich, a Russian oil tycoon who recently purchased Britain's Chelsea soccer club, is the Kremlin's next target. Abramovich has moved to Britain, as have a half-dozen top Yukos executives.

Here is a brief history of events leading to the arrest of Khodorkovsky:

March 30, 1995: A small cadre of Russia's tycoons, who become known as oligarchs, sell the Kremlin on a loans-for-shares scheme, under which they lend President Boris N. Yeltsin's cash-strapped government hundreds of millions of dollars. The loans are secured by shares in 44 state-owned enterprises, including Yukos Oil. If the government fails to repay, lenders can auction the shares to cover the loans. (The government duly defaults and buyers eventually sell off the shares, to themselves.)

Dec. 8, 1995: Khodorkovsky's Menatep Bank auctions off Yukos Oil, one of the choicest state properties. Menatep wins the bidding, paying $309 million. By 2003, Khodorkovsky's 36 percent share of Yukos helps make him Russia's richest man, worth about $8 billion.

Early 1996: Oligarchs underwrite Yeltsin's re-election campaign. He wins re-election June 16.

August 1998: Apparently under pressure from oligarchs, Yeltsin dismisses a government led by Prime Minister Sergei V. Kiriyenko, who has been cutting spending and increasing taxes. The ruble collapses, wiping out many small businesses and banks, along with the savings of many Russians.

May 24, 1999: A truck carrying 607 boxes of Menatep documents plunges into the Dubna River, northwest of Moscow. All records are lost.

1999-2000: Khodorkovsky launches reforms, making Yukos more transparent, and becomes one of Russia's biggest philanthropists. Yukos stock price more than triples.

August 1999: Putin, a former KGB agent, is named prime minister. Most oligarchs agree to help him succeed Yeltsin, but Vladimir Gusinsky, whose NTV network is often critical of the Kremlin, refuses.

New Year's Eve 1999: Yeltsin resigns, turning the presidency over to Putin.

Winter 1999-2000: With Putin in charge, Kremlin begins to restrict media access to the war in Chechnya. NTV and others step up criticism of Putin.

March 18, 2000: Putin says that, in the future, "There will be no oligarchs of this kind as a class."

March 27, 2000: Putin is elected president with 52 percent of the vote.

May 11, 2000: Three minibuses filled with masked men, claiming to be tax police, raid Gusinsky's Media-Most headquarters in Moscow.

May 30, 2000: Oligarch Boris A. Berezovsky, who helped Putin win election, criticizes the new president for "demolishing some democratic institutions." Berezovsky is a key shareholder in the Russian airline Aeroflot and ORT television.

June 13, 2000: Gusinsky is arrested and accused of fraud in the purchase of a St. Petersburg television company, then released after three days in Moscow's Butyrskaya prison.

July 27, 2000: Gusinsky leaves Russia for voluntary exile, reportedly after secretly agreeing to sell his media interests for $300 million. NTV alone was worth at least $1 billion.

Summer 2000: Putin tells the oligarchs that if they pay their taxes and stop trying to run the country, they can keep their businesses.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.