He is not afraid of attacking foreign companies. Photo: Bloomberg.
Thanks to strong management of his affairs, Mikhail Fridman became the 4th richest man in Russia, with a personal fortune estimated at 6.3 billion US dollars by the magazine. Forbes.
“At first glance, he looks friendly, composed and serious. His apparent calm actually conceals a vindictive character, which betrays a strong propensity for aggression. Master of his emotions, he is nonetheless sensitive and resentful. In business, he tends to choose partners who are less capable than himself. ” This is the profile of Mikhail Fridman outlined in an internal note from the Russian Secret Service (FSB). A profile that explains well how he was able to experience such a rapid social rise, when he was starting from nothing …
Russian secret service on the back
Originally from Lviv, Ukraine, Mikhail Fridman went to study in the 90s at the Institute of Steel and Alloys in Moscow and quickly turned to entrepreneurship, taking advantage of the first cracks in Gorbachev’s perestroika. . He first set up a student window washing cooperative, then created three companies: Alfa-Foto, Alfa-Eco and Alfa-Capital.
These companies brought him money by importing rare commodities, such as jeans and computers, and especially raw materials such as sugar, into Russia. But now, in 1995, Russian police discovered drugs in train cars parked in a Siberian station. Chartered by Alfa, they were supposed to contain sugar, according to Novaya Gazeta …
After a search of the premises of Alfa-Eco, FSB officers told Russian media that they had enough evidence to lock up Mikhail Fridman. However, nothing happened. An internal FSB memo, according to Novaya Gazeta, indicates that Alfa would have benefited from political protections since he had paid US $ 500,000 for the appointment, in 1992, of Igor Gaidar as Prime Minister of Boris Yeltsin …
Having become an influential financier with Alfa, Mikhail Fridman contributed to the re-election of Boris Yeltsin in 1996. A year later, when the Russian state decided to privatize 40% of the capital of the Tyumen Oil Company (TNK), the one of the jewels of the Russian oil industry, he pocketed the lot at a low price. And he got his hands on the remaining 60% in 1999, at such an indecent price that the Duma passed a resolution calling for the sale to be canceled. In vain…
Master of Judicial Tights
Alfa then grew with often aggressive acquisitions, resorting to the trick of the forced bankruptcy of its target to subsequently buy back its assets at a low price, according to the testimony of an FSB officer to the Russian media. An example is revealing, that of Kondpetroleum …
Alfa created a group of creditors who suddenly began to demand immediate payment of their debt. The governor of the region where Kondpetroleum’s head office was located, apparently in the pockets of creditors, then launched bankruptcy proceedings against him, deeming the company to be insolvent, and appointed a receiver chosen by Alfa. And the latter to propose to sell the assets, a decision approved by a commercial court acquired in the cause of the group of creditors led by Alfa. The Fridman conglomerate would thus have got hold of Kondpetroleum at a third of its value.
Difficult to believe that such a scenario could occur, accompanied by acts of corription at all levels? Not at all. On October 21, 2009, Russian President Dmitry Medvedev summoned several Russian oligarchs to the Kremlin to lecture them on the matter. “I suspect that many business people pay bribes to the courts to have decisions made in their favor. I want to tell you that from now on any act of this kind will be severely repressed by the law, ”he told them bluntly!
A Canadian company victim of its actions
A Canadian company has paid the price for Mikhail Fridman’s insatiable appetite: Norex Petroleum. In 2002, it sued Alfa in a New York court for seizing a Russian oil company, Yugraneft, in which it had a 60% stake.
What happened? The remaining 40% of Yugraneft was held by Tchernogorneft, a subsidiary of Sidanco, then one of the largest Russian oil companies. However, Alfa managed to get hold of Tchernogorneft for a pittance, after having bankrupted it, to the detriment of Sidanco’s shareholders. And by the same process, took control of the whole company, according to the management of Norex.
Norex’s lawsuit against Alfa is still pending, with the case going from appeal to appeal for all these years.
Stronger than BP
Such a showdown with foreign companies in no way impresses Mikhail Fridman, far from it. He has just led one, impressive, with none other than British Petroleum (BP), and won with a masterly hand!
In 2003, as part of a bilateral energy agreement signed by Tony Blair and Vladimir Poutime, a joint venture between TNK and BP was born, simply called TNK-BP. Considered then as the third Russian oil company behind Rosneft and Lukoil, it was owned 50% by the British company and 50% by Russian billionaires Mikhail Fridman (Alfa), Len Blavatnik (Access Industries) and Viktor Vekselberg (Renova Group), together within the AAR consortium. From the start, the British executives of the joint venture expected a difficult partnership, as Putin had launched a massive operation to take back state control of the country’s main oil and gas assets.
Very quickly, TNK-BP had to cede the huge Kovikta gas field on Lake Baikal to Gazprom, a gas giant run by Putin’s henchmen. Then, it found itself deprived of substantial projects on Russian territory.
A shareholders’ war then took shape, which erupted in 2008 when the three oligarchs openly opposed BP executives over what strategy to follow. They demanded the head of chief executive Robert Dudley, whom they accused of working for the benefit of BP only and not of other shareholders.
Result: Dudley had to pack up with his team a few months later, with Russian immigration officials claiming their employment contracts had expired. And it was none other than Fridman who took up his post. In the end, the British would have lost some US $ 7 billion invested in waste in their attempt to partner with the Russians.
“His passion for accumulating wealth is insatiable. And at the same time, he has a panic fear of losing what he has, ”indicates the note from the FSB which draws up his psychological profile. We have to believe that the man Forbes considers to be the 71st richest on the planet has a strategy of doing to others what he would not like to be done to him …