They amassed some of the world’s biggest fortunes in the wild privatizations of Russia’s post-Soviet chaos and the oil boom that followed. Now some of Russia’s richest men are facing the choice of losing some of their empires or pleading at the Kremlin’s doors for a bailout.
Mikhail Fridman, one of the original oligarchs of the 1990s, was the first to come forward. His Alfa Bank said Friday it was seeking US$400 million in government loans to stave off foreign creditors.
The cash would allow the bank to avoid handing over its 44 percent stake in the major Russian mobile phone company VimpelCom, which it pledged to a group of foreign banks led by Deutsche Bank as collateral for a US$2 billion loan.
But to get the money, Fridman and the other oligarchs lining up for government loans are expected to have to hand over to the state as collateral the stakes in their companies that they used to secure the foreign loans.
And they may find the Kremlin attaching other strings as well.
Such moves could clear the way for the Kremlin to reclaim some of the prize assets it lost in the 1990s and further tighten its hold on Russia’s economy — or simply tighten its embrace of the business moguls.
It would be a reverse of the controversial privatization deals that gave the oligarchs their start. In the deals, known as “loans for shares,” the oligarchs took major stakes in state-owned oil and metals companies as collateral for loans to the government. The loans were never paid back.
In recent years, many of the wealthy businessmen borrowed heavily abroad, often using their firms’ stock as collateral. When Russian stocks plunged over the past few weeks, their creditors began demanding that they put up more collateral.
To prevent the shares from falling into foreign hands, the government offered a total of US$50 billion through state-owned bank VEB to help refinance the foreign debts. VEB, which said it has received applications for double that amount, announced on Wednesday that it had approved the first loans, totaling nearly US$10 billion.
Fridman is considered among the best positioned of Russia’s oligarchs.
However, James Fenkner, director of Red Star Asset Management, said that if the problems continue and Alfa is unable to pay back the loan, “the collateral has nowhere to go but back to the state.”
SEEKING CHANGE: A hospital worker said she did not vote in previous elections, but ‘now I can see that maybe my vote can change the system and the country’ Voting closed yesterday across the Solomon Islands in the south Pacific nation’s first general election since the government switched diplomatic allegiance from Taiwan to Beijing and struck a secret security pact that has raised fears of the Chinese navy gaining a foothold in the region. The Solomon Islands’ closer relationship with China and a troubled domestic economy weighed on voters’ minds as they cast their ballots. As many as 420,000 registered voters had their say across 50 national seats. For the first time, the national vote also coincided with elections for eight of the 10 local governments. Esther Maeluma cast her vote in the
Nearly half of China’s major cities are suffering “moderate to severe” levels of subsidence, putting millions of people at risk of flooding, especially as sea levels rise, according to a study of nationwide satellite data released yesterday. The authors of the paper, published by the journal Science, found that 45 percent of China’s urban land was sinking faster than 3mm per year, with 16 percent at more than 10mm per year, driven not only by declining water tables, but also the sheer weight of the built environment. With China’s urban population already in excess of 900 million people, “even a small portion
UNSETTLING IMAGES: The scene took place in front of TV crews covering the Trump trial, with a CNN anchor calling it an ‘emotional and unbelievably disturbing moment’ A man who doused himself in an accelerant and set himself on fire outside the courthouse where former US president Donald Trump is on trial has died, police said yesterday. The New York City Police Department (NYPD) said the man was declared dead by staff at an area hospital. The man was in Collect Pond Park at about 1:30pm on Friday when he took out pamphlets espousing conspiracy theories, tossed them around, then doused himself in an accelerant and set himself on fire, officials and witnesses said. A large number of police officers were nearby when it happened. Some officers and bystanders rushed
HYPOCRISY? The Chinese Ministry of Foreign Affairs yesterday asked whether Biden was talking about China or the US when he used the word ‘xenophobic’ US President Joe Biden on Wednesday called for a hike in steel tariffs on China, accusing Beijing of cheating as he spoke at a campaign event in Pennsylvania. Biden accused China of xenophobia, too, in a speech to union members in Pittsburgh. “They’re not competing, they’re cheating. They’re cheating and we’ve seen the damage here in America,” Biden said. Chinese steel companies “don’t need to worry about making a profit because the Chinese government is subsidizing them so heavily,” he said. Biden said he had called for the US Trade Representative to triple the tariff rates for Chinese steel and aluminum if Beijing was