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.”
‘CONFESSED’: A court in Beijing said that former CCP member Ren Zhiqiang abused his power at a state firm and embezzled almost US$7.14 million of public funds A Chinese tycoon who called Chinese President Xi Jinping (習近平) a clown and criticized his handling of the COVID-19 pandemic was yesterday jailed for 18 years for corruption, bribery and embezzlement of public funds. Ren Zhiqiang (任志強) — once among the Chinese Communist Party’s (CCP) inner circle — disappeared from the public eye in March, shortly after penning an essay that lambasted Xi’s pandemic response. His outspokenness had earned the former chairman of state-owned property developer Huayuan Group the nickname “Big Cannon.” Yesterday’s verdict said that Ren embezzled almost 50 million yuan (US$7.4 million) of public funds and accepted bribes worth 1.25 million
AUSTRALIAN SITE: China has had a contract with SSC’s Yatharagga station since at least 2011, but the last time it used it was in June 2013. No final date has been given China would lose access to a strategic space tracking station in Western Australia when its contract expires, the facility’s owners said, a decision that cuts into Beijing’s expanding space exploration and navigational capabilities in the Pacific region. The Swedish Space Corp (SSC) has had a contract allowing Beijing access to the satellite antenna at the station since at least 2011. The station is located next to an SSC satellite station primarily used by the US and its agencies, including NASA. The Swedish state-owned company said it would not enter into any new contracts at the Australian site to support Chinese customers after
OFF BORDER ISLAND: The fisheries official disappeared from a patrol vessel wearing a life jacket and leaving behind his shoes, indicating an intentional move, Seoul said North Korean soldiers shot dead a suspected South Korean defector at sea and burned his body as a COVID-19 precaution after he was interrogated in the water over several hours, Seoul military officials said yesterday. It is the first killing of a South Korean citizen by North Korean forces for a decade, and comes with Pyongyang at high alert over the COVID-19 pandemic and inter-Korean relations at a standstill. The fisheries official disappeared from a patrol vessel near the western border island of Yeonpyeong on Monday, the official said. More than 24 hours later, North Korean forces located him in their waters and
The scarcity of commercial flights landing at Sydney Airport has been a disaster for airlines and workers, but for hobby pilots the COVID-19 pandemic has provided the opportunity of a lifetime. The quieter-than-usual runways mean that private pilots have been given the chance to land at the international airport for the first time. When Sydney Flight College club captain Tim Lindley put out a call, he received an overwhelming response. He eventually organized for 14 light aircraft to fly into Sydney airport on Sunday. “For a lot of the pilots involved, including myself, it was a childhood dream to land in a big