© The Financial Times Ltd 2016
FT and 'Financial Times' are trademarks of The Financial Times Ltd.
The Financial Times and its journalism are subject to a self-regulation regime under the FT Editorial Code of Practice.
July 16, 2010 5:20 pm
It is a sunny summer afternoon in London, and the courtyard of St John restaurant is bright and airy. Inside the dining room, however, things are much darker. There is little natural light, the walls are white, the lamps are black and the waiters pad silently around in the gloom.
St John has a reputation as a restaurant for people with a serious interest in food – which makes me wonder why Oleg Deripaska has arranged to meet there. Deripaska, a 42-year-old tycoon who made his fortune by dominating Russia’s aluminium industry, is known for many things: his enormous wealth, his prowess as an industrialist, his political connections and the rumours about his past that have seen him denied visas to visit the US.
But he has never been noted for an interest in food. I had been briefed that he is a man of few words, who eats and sleeps very little and seems to survive on a diet of green tea.
As I wait for this phenomenon to make an appearance, I study the menu. St John is favoured by the most enthusiastic of carnivores and the choice is Dickensian and sounds slightly stomach-turning: devilled kidneys, beef mince on dripping toast, smoked eels. In a dark corner, a Japanese tourist is eagerly scooping out the marrow from an ox-bone.
I look up to see Deripaska striding into the room. There are no bodyguards in evidence, although I assume that they must be stationed outside. It is a hot day and the photos I have seen of Deripaska suggest that he favours the “smart casual” look, so I am not wearing a tie. But Deripaska is dressed formally: blue suit, blue shirt, blue tie, blue eyes – all slightly different shades. He is around 6ft tall, well-built, lean and with closely cropped brown hair.
Most entrepreneurs like to talk about the old days and how they got started. It is usually a safe, relaxing way to begin an interview. With Deripaska, however, the origins of his business empire are the most sensitive topic of all. At the beginning of the 1990s, just as the Soviet Union was collapsing and the old state-run industrial behemoths were being sold off, he was a student. By the mid-1990s, aged 25, he had acquired a stake in a smelting factory. By the end of a turbulent and bloody decade in Russian business and politics, he had emerged as a tycoon controlling a huge swathe of the Russian aluminium industry.
In 2008, Forbes magazine listed Deripaska as the ninth-richest man in the world, worth about $28bn. He was hit badly by the global financial crisis and by the collapse in the demand for commodities. But even now, after a near-bankruptcy and a restructuring of his debts, Forbes estimates his fortune at about $10bn.
As we settle back in our chairs, I ask him what qualities he had needed to prevail in the industrial struggles of the 1990s? He points out that he was a star student at school in southern Russia – “I was very good in maths and physics. In the Soviet time, we had a lot of Olympic-style competitions for different disciplines: I was always winning in my region.” Deripaska went on to study nuclear physics at Moscow State University. He says that in the height of the Soviet era, he would probably have ended up doing military research. But the old system was breaking down as he was graduating. Like a lot of his contemporaries, he went into business.
Deripaska says that from an early age he was fascinated by factories: “My mum brought me to my first job when I was 12. I started electrical work at her plant. She was an engineer, a technical expert, at one of the plants in the south, and in the summer she brought me in and I learnt how industrial things work: casting, electricity, maintenance, everything.”
Deripaska is not feigning his interest in industrial processes. Few doubt that he has hugely improved management at all the Soviet-era plants he has owned and invested in. And yet more than energy and intelligence were needed to emerge at the top of the pile in the chaos that was post-Soviet Russia. The aluminium industry was particularly noted for violence and many people involved in the business ended up dead. I ask Deripaska if he had known what he was getting into, when he first got involved. “Not in the beginning,” he laughs, “it was my nice surprise. Don’t forget I’m from a military family. I was in special training in the army. I am tall, sporty and – how do you say – you can always protect yourself ... I have very strong security. Even now.” He says he triumphed over the criminal elements as he rose to the top.
Many of Deripaska’s critics will take issue with that version of his rise. Michael Cherney, one of his most important business associates in the 1990s, is currently suing Deripaska in court in London, claiming that he was defrauded out of a significant chunk of his metals empire. Deripaska denies owing Cherney anything and denies that he was an associate. Another associate of both men was Anton Malevsky, who has been described in court as the leader of an organised crime gang. Deripaska has said that he was forced to work with Malevsky and Cherney, who extorted money from him. Cherney denies this allegation. Deripaska also insists his aim was to clear out crime in the industry.
But in 2001 Malevsky died in a parachute accident in South Africa. Malevsky’s death sounds like something from a crime thriller or a Bond movie. I ask Deripaska, as pleasantly as I can, whether he believes that Malevsky’s death was a genuine accident. He blushes, glances down at his table napkin and laughs softly – “I have no idea,” he replies.
I blunder onwards – “Because it sounds like something out of a movie. This guy dies in a mysterious parachute accident.” I ask whether Malevsky was a criminal. Deripaska’s manner is pleasant but cagey: “It’s very difficult for me to go into detail”, he says, “because of the case. I think my lawyer will try to have a hearing in court. It will be open; and I’m prepared to be open.”
Our conversation is interrupted by the arrival of a waiter. Deripaska ignores the starters and chooses one of the less gory items on the menu – lemon sole. I opt for a pork chop with fennel. Defying the usual clichés about Russians, Deripaska is a teetotaller, so we order some sparkling water. After a little while, the food arrives. I wait for my guest to tuck in but he makes no move towards his fish. After about 10 minutes, hunger gets the better of me and I cut into my Gloucester Old-Spot chop. A few minutes later, Deripaska seems to notice that I am eating and says, slightly absently, “Bon appétit.” Without evident relish, he slices off a small piece of white flesh.
It is clear that Deripaska is a highly disciplined survivor. He got through the aluminium wars of the 1990s. When other Russian oligarchs fell out of favour, he survived again. Mikhail Khodorkovsky is in prison and Boris Berezovsky is in exile in London, but Deripaska is still in business. The financial crisis of 2008 posed another mortal threat. I ask Deripaska how close he was to going out of business – “Very close”, he replies. “I remember certain bankers in February 2009, trying to explain to me that there was no chance.” He points out proudly that, in fact, no debts have had to be written off.
The strain of the financial and economic crisis in Russia seemed to sour his relations with Vladimir Putin, who by then was prime minister. In a famous confrontation in the small Russian town of Pikalyovo in June 2009, Deripaska was subjected to a televised humiliation, as Putin ordered him to sign a document, safeguarding the future of a local factory, and then added caustically – “And give me my pen back.”
Some regarded the confrontation as a sign that Deripaska’s days were numbered. Others saw it as a carefully staged mock confrontation between close allies. Deripaska insists that neither version of events is right. Putin, he says, was simply misinformed about the facts. “But he called you a cockroach on television,” I protest. “That is exactly the point,” Deripaska replies, “it was not against me. It was against other people who were trying to run away from the business.”
Certainly, any misunderstanding appears to have been cleared up. A few months later, the Russian government agreed to prolong vital loans that kept Deripaska’s business empire intact, when many analysts were convinced that it was on the brink of breaking up. As Deripaska sees it, the government simply realised that he was far better able to rescue a precarious situation than any state-appointed bureaucrat – “They have no idea what to do to restructure the company ... Because, if you’re bankrupt, afterwards you lay off automatically more than 2m people ... You can’t just kill a big white elephant and say, OK, I have done the right job.”
Some analysts put Deripaska’s remarkable survival down to his impeccable political connections. He is married to the daughter of the chief-of-staff of a Russian former president, Boris Yeltsin. (They have two children.) He is also reputed to be close to both Putin and the new president, Dmitry Medvedev. In Britain, he befriended Lord Mandelson, the godfather of New Labour, and hosted George Osborne, now chancellor of the exchequer, on board his yacht. But Deripaska denies being particularly well-connected. He says he was bewildered by the fuss that the British press made over his connections with Mandelson and Osborne, and professes never to see either Putin or Medvedev socially.
I ask him about the big question in Russian politics – whether Medvedev is really independent of Putin. He chuckles and skirts the question but adds that the two men represent different generations and have different outlooks. Will Putin and Medvedev run against each other for president in 2012? Deripaska says that nobody really knows – “I think at some point they will discuss this,” he says, laughing heartily.
With his business empire safe, Deripaska’s worst worries seem to be over. But there are still problems on the horizon. There is the London court case. And there are his continuing problems with entry to the US. Last year, he was allowed to visit the country twice. But these seem to have been specially arranged visits. I ask him whether his visa problems are over – “I don’t know. I don’t care,” he replies. I remark that it must be annoying “because it’s very damaging to your reputation”. “History will judge,” he replies quietly. Hasn’t it been damaging to his business interests, I ask, not to be able to travel freely to America? “Yes, but it gives you more opportunity ... When they started making a problem, I just went to Japan and I got much more.” His companies are also taking an increasing interest in China.
Despite his problems in the US, Deripaska has powerful friends and allies in the west too. Bob Dole, a former US presidential candidate, has lobbied on his behalf. Nat Rothschild, a scion of the famous banking family, is a close confidant. James Wolfensohn, a former head of the World Bank, has also been a business partner. Deripaska’s western defenders portray him as a great industrialist and a patriot. Questions about his past tend to be brushed aside – or dealt with by references to the murky origins of the fortunes of some of the great American industrialists and philanthropists of the 19th century. (Deripaska is also a big donor to charity.)
Deripaska himself, although he has a ready laugh, is earnest and ascetic. I notice that he has eaten just one half of his fish. The waiter reappears. I am feeling a bit peckish and hope that my guest will order a pudding. But Deripaska just asks for a black tea without sugar and I settle for a coffee.
As the lunch draws to a close, I ask him if he is ever tempted to go into semi-retirement and just enjoy life, like his friend, the London-based Russian oligarch Roman Abramovich, who has bought a football club, acquired a new girlfriend and dabbles in modern art. Why not cash out, I ask? Deripaska looks faintly indignant – “And do what?” he asks. As well as his current industrial interests, he wants to invest in nuclear power and in space exploration.
We walk out into the sunshine together. A large black car is waiting for him, just outside the restaurant, and a large man in a black suit is holding the door open. Deripaska steps in without a backward glance and the car moves silently off. I still feel vaguely hungry, so I walk down to Pret a Manger and buy myself a fruit salad.
Gideon Rachman is the FT’s chief foreign affairs commentator
26 St John Street, London EC1
Lemon sole £18.40
Old Spot chop £20.80
Double espresso £2.50
Assam tea £2.50
Bottle sparkling water £3.00
Total (including service) £47.20
The rise of a metals magnate
1968 Born January 2 and raised in a Cossack village near Krasnodar by grandparents after his widowed mother moves to seek work.
1993 After serving two years in the Strategic Missile Forces, he graduates from Moscow State University with a degree in nuclear physics. Of that time he has said: “We had no money. It was a very practical question every day. How do I get to buy food and keep from starving?”
1994 Buys 20 per cent stake in Sayanagorsk Aluminium Smelter, a Siberian aluminium factory. Forms alliance with London-based Transworld Group part-owned by Michael Cherney. Appointed director-general of Smelter in same year, Deripaska sometimes sleeps on the floor of the factory to protect it from hostile takeovers.
1996 Gains degree from Plekhanov Russian Academy of Economics.
1997 Splits with Transworld and creates Sibirsky Aluminium Group, which three years later is one of the world’s top 10 producers of aluminium products. Michael Cherney sides with him, but they later split in 2001 when Sibirsky Aluminium is renamed Basic Element.
2000 Roman Abramovich buys most of remaining shares in Russian aluminium market from Transworld and merges with Deripaska’s company to form Rusal, which Deripaska is to run as chief executive.
2001 Marries Millfield-educated Polina Yumashev, whose father Valentin was Boris Yeltsin’s former chief-of-staff.
2003 Buys house in Belgrave Square, for estimated £25m. Asked for his view of the British, Deripaska says: “They are very honest and decent people, very well-educated.” In the same year, buys Abramovich’s stake in Rusal to take control of company.
2007 Rusal, Sual Group and alumina assets of Glencore International AG merge to create United Company Rusal, the world’s largest aluminium and alumina producer, in which Deripaska has a controlling stake.
2008 Invites Peter Mandelson, then EU trade commissioner overseeing metal tariffs, to his yacht, the Queen K, in Corfu. George Osborne, also invited, is later accused by banker Nathaniel Rothschild of using the occasion to seek donations for Britain’s Conservative party. Asked what happened, Deripaska says: “We had a good dinner, there were many people and I’m surprised they picked on these poor guys and screwed them in the press.”
2009 Named in 2008 by Forbes magazine as the richest Russian, Deripaska loses much of his wealth in the financial crisis. He restructures more than $16bn in debts and by March 2010 is again listed as one of top 100 billionaires.
2010 Pledges two-thirds of $70m flotation bonus (earned from Rusal’s $2.2bn flotation in Hong Kong) to his Volnoye Delo charitable fund.
Copyright The Financial Times Limited 2016. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.