...Berezovsky claims his biggest project was pouring as much as $50 million
into the Orange Revolution to counter the Kremlin's campaign to keep Ukraine
within Russia's orbit. (President Viktor Yushchenko denied getting any money
from the London tycoon--it would have been illegal under Ukrainian law--but
Berezovsky's people say the Kremlin was spending "billions" on the other
side.) His support for the Orange Revolution was directed not at Ukraine, he
says, but to inspire Russian activists "to help Russia move to
democracy."...



The New Republic, April 2, 2007
https://ssl.tnr.com/p/docsub.mhtml?i=20070402&s=murphy040207

THE POISON-AND-CAVIAR WORLD OF RUSSIAN OLIGARCHS IN LONDON.
Ruble Rousers
by Kim Murphy 

Kim Murphy is a London correspondent for the Los Angeles Times.

London, England

One night last June, 400 A-list guests and several packs of wolves descended
upon Althorp, the ancestral home of the late Princess Diana. The guests--who
included Orlando Bloom, Elle MacPherson, and Salman Rushdie--had been
invited to attend a fund-raiser for the Raisa Gorbachev Foundation, which
helps childhood cancer victims in Russia. The wolves, who were led about the
estate on leashes, had been hired to provide ambiance--specifically, that of
a "Russian midsummer fantasy." Creating a tableau that, according to the
London Times, not even "Keith Richards at the creative summit of his
hallucinogenic powers could have conjured up," the wolves and celebrities
were joined by a bejeweled camel, Cossacks on dancing horses, people in
eighteenth-century costumes sitting in trees like a "scene from a Watteau
painting," and--for a touch of contemporary flavor--U2's Bono, via video
link from Dublin, and the hip-hop group the Black Eyed Peas. After a dinner
that included jellied borsch with smoked sturgeon and golden Osetra caviar,
the guests took part in a charity auction, bidding for prizes: a private
dinner with co-host Mikhail Gorbachev in Moscow; a flight in a MiG fighter
jet; and, for those yearning to experience the tough love of the Putin
regime, a night in a Russian maximum-security prison.

This extraordinary party, wolves and all, was underwritten to the tune of
$2.3 million by Alexander Lebedev, a former KGB spy who now owns one-third
of Aeroflot-Russian Airlines. The elder Lebedev maintains his primary
residence in Moscow, but his 26-year-old son Evgeny went to British schools
and now lives in the upscale neighborhood of Knightsbridge. The Lebedevs are
part of a new generation of Russians who have invaded London, rippling
Britain's aristocratic classes more than any group since the Arab sheiks
arrived in opec-fueled limousines in the 1970s. These days, the main dining
rooms at the Ivy and Cipriani are as likely to be tinkling with Russian as
English. London real estate agents have estimated that 20 percent of all
houses sold for over $10 million are sold to Russians. Of those sold for
over $30 million, the figure climbs to 50 percent. "Today, effectively, the
Russians are the richest buyers we've got," says Trevor Abrahamson of
Glentree Estates.

But, while London is awash in Russian oligarchs, the party at Althorp
wasn't. Among those missing was 40-year-old Roman Abramovich, Britain's
second-wealthiest resident, who bought the Chelsea football club for $233
million in 2003 and is underwriting its $200 million-a-year payroll. The
perpetually unshaven college dropout, known as "Roma" among his fellow
Russians, shuttles between Moscow and a $54 million townhouse in Belgravia,
a $10 million townhouse in Knightsbridge, and a 440-acre estate in West
Sussex that once belonged to the late King Hussein of Jordan, complete with
two polo fields, a rifle range, and a go-kart track.

Also absent was Abramovich's former business partner, Boris Berezovsky, who
presided over a vast automobile and media empire until President Vladimir
Putin charged him with fraud and embezzlement and he fled the country for
political asylum in Great Britain. Berezovsky's own list of posh
properties--which include an $8 million flat in Belgravia (registered to his
daughter); two more in Kensington Gardens; an eight-bedroom,
seventeenth-century Stanley House in Chelsea; and another estate in
Surrey--puts him in the same rarefied billionaires' club as Abramovich. But
the two are unlikely to appear together at a party. In 2005, Berezovsky
accused the younger oligarch of buying out his shares too cheaply in
Sibneft, the Siberian oil company, after he was forced to leave the country.
These days, they communicate mainly through their lawyers. There is also a
political subtext to their feud--one that highlights the astonishing degree
to which these Russians remain intimately involved in life back home.
Abramovich remains, on Putin's nomination, governor of the northeastern
Russian region of Chukotka, and he is on cordial terms with the Russian
leader. Berezovsky, on the other hand, has morphed into Putin's biggest
nightmare: a sworn enemy with a big mouth, wads of cash, and a liberal
agenda.

The strained relationship between Abramovich and Berezovsky is not unique.
In fact, according to Alexander Terentyev, a former Russian TV editor who is
researching the Russian migration phenomenon at the London School of
Economics, the oligarchs move in separate, often secretive circles. They can
frequently be seen traveling the city in blacked-out Mercedes, surrounded by
coteries of ex-SAS bodyguards. Because of this factionalism, Evgeny Lebedev,
who chairs the Raisa Gorbachev Foundation and co-hosted the party at
Althorp, said he didn't succeed in persuading a single Russian oligarch to
attend the benefit. "Russian wealthy people seem to be quite interested in
their own causes, and not very helpful toward others," the younger Lebedev
explained to me after returning from Oscar-night partying in Los Angeles.
"That seems to be a problem with Russian society as a whole, not just
philanthropy. People, at best, don't help each other; and, at worst, they
make it worse for each other. They compete with each other."

But, as with Abramovich and Berezovsky, the reasons why London's Russian
oligarchs tend to go their own ways range deeper than disputes over cheaply
purchased oil shares or divergent preferences for charities. In many ways,
they are competing to shape Russia's future.

Eight months ago, I arrived in London after three years of living and
working as a reporter in Moscow. I was lonely for pelmeni dumplings with
sour cream, for the soul-scorching folk songs of Zhanna Bichevskaya, and for
long winter nights drinking and smoking and arguing at kitchen tables till
dawn. Although cool Britannia seemed like an unlikely setting for these
emotion-filled Russian pastimes, I had heard that perhaps 300,000 Russians
now lived there, at least part-time, and so I held out hope. But what I
quickly realized was that London's Russians eagerly blended in with the
culture of their British hosts. They had created no ethnic enclaves (unlike,
say, the Pakistanis or Somalis), gravitated toward quintessentially British,
upscale areas like Bond Street or Ascot Park or neighborhood financial pubs
in the City, and were more likely to be eating sushi than borsch. In fact,
it was easy to forget they were even there until last November, when former
KGB agent Alexander Litvinenko died after ingesting, apparently at a piano
bar in Mayfair, a colossal dose of radioactive Polonium-210.

Suddenly, the biggest Russian news story of the past several years, one that
shined a harsh new international spotlight on the character of the Putin
government, was taking place not in Russia, but in London. London's hidden
Russian community began to come out of the woodwork: The newspapers were
filled with quotes from resident ex-KGB spies like Oleg Gordievsky, and
there was speculation that Litvinenko had been killed because of his
associations with Berezovsky or because he had been involved in dealings
with London's Chechens. The Litvinenko murder revealed that Britain has
quietly become not only the single greatest center of Russian capital
outside Moscow, but a turbulent seat of Russian opposition.

This isn't the first time London has played host to Russians dreaming of a
new political era. On a winter day, I went to visit Highgate Cemetery, where
Litvinenko's grave lies in a locked, fenced-off quarter. Highgate's winding
byways, with their mossy tombstones and spooky Gothic mausoleums, seem
destined to act as paths of pilgrimage for those with a point to make in
faraway Russia. First, there is the towering monument to Karl Marx, who
spent the latter years of his life in London, penning the revolutionary
tomes that eventually helped bring down the czarist government. Vladimir
Lenin would have paid his respects here as a young revolutionary; the office
where he briefly edited the Russian Social Democratic Labor Party journal
was only a few miles away. Now in a slightly less imposing locale, but
already greening under the relentless drizzle of a London winter, there is
the grave of Litvinenko with its lead-lined coffin, attracting its own
sporadic stream of family and friends.

Litvinenko was no Marx; the Kapital that the communist ideologue warned
about is thriving in today's Russia. Thanks to the booming oil market, last
year Russia had the largest state budget surplus of any nation in the world,
and it is sitting on gold and currency reserves that have now reached $303
billion. But by last year, according to the Bank for International
Settlements, Russian citizens had stashed $220 billion in banks abroad,
particularly in Great Britain--more, in fact, than all the money on deposit
inside Russia itself. The fact that so many are heading for the exits--or,
at least, setting up their children or spouses abroad and putting their
capital in British banks--says much about the level of confidence among
those whose billions Russia needs for rebuilding its disastrously crumbling
infrastructure, building new production in less oil-dependent sectors, and
maintaining a robust tax base.

Looked at another way, though, it may be that the growing links between the
Russian power elite and one of the most liberal, international cities on
earth will ultimately lead to a more democratic Russia. "So many people now
have this double life between Britain and Russia," explains Terentyev. "This
experience can't help but influence the Russian development, and in a
Western direction."

In 2004, not long after the Russian government arrested Mikhail
Khodorkovsky, the CEO of Yukos, then Russia's biggest private oil company,
London was treated to the spectacle of 100 silver limousines parading past
the Russian Embassy. Timed to coincide with the preliminary hearings in
Khodorkovsky's case, they tied up traffic in the central city for an hour.
The only man with enough money to spend hundreds of thousands of dollars to
annoy the Russian government, and the motive to do so, was the original
limousine liberal, Boris Berezovsky.

Berezovsky has used the elegant confines of his office in Mayfair as a
platform for waging war on Putin's government. And it is a war. In an
interview with Russia's Echo of Moscow radio station in January, the tycoon
announced he had been working on a coup plan for the past 18 months to
replace the "anti-constitutional regime" in Russia with "a coup, a forced
seizure of power." (Later, he backtracked, saying he was talking about a
bloodless seizure of power like the Rose and Orange revolutions in Georgia
and Ukraine, which, of course, the Kremlin fears even more than a military
coup.)

On a recent afternoon, I went to Berezovsky's heavily guarded office. Traces
of Polonium-210 had been discovered there, and, after the clean-up, his
staff had reupholstered two deep, pillowed chairs in front of his desk. I
avoided the chairs and sat on the sofa instead, next to a statue of a small
bronze panther leaping at three terrified horses.

Berezovsky is a dark, intense, balding man with a seemingly endless supply
of murky conspiracies up his sleeve. He speaks in broken English, fractured
partly by his heavy accent and partly by the cell phones and urgent knocks
on the office door that continually distract him. During our visit, he told
me he is convinced the Kremlin is behind Litvinenko's murder.

Berezovsky isn't the only one who subscribes to this theory. Putin has
created a state so intolerant of opposition that it is possible to imagine
that a dissident was murdered by his government in the heart of London with
a radioactive isotope. He has presided over the greatest rollback of human
rights since the communist era. His government has sanctioned the arrest,
torture, and murder of countless Chechens, while leveling their capital
virtually to the ground; it has rolled over the press and failed to convict
anyone for the murders of at least 13 journalists since Putin came to power
in 2000. He has installed KGB veterans at nearly every significant level of
government and allowed the security services to become a massive, corporate
empire. And, in doing so, he has made himself and his government a target
for reform-minded London oligarchs like Berezovsky.

But Putin's motives--and missteps--are more complicated than their portrayal
in the Western press. Often forgotten in the international outcry over
Khodorkovsky's arrest is the fact that the former Yukos executive, like some
of the oligarchs currently living in Britain, made his billions by
plundering the nation's industry after the collapse of the Soviet Union. In
1995, Khodorkovsky's Menatep Bank acquired Yukos from the state for a mere
$350 million; two years later, the company was valued at $9 billion. Putin
had the support of many ordinary Russians, living subsistence-level
existences, when he rose up against the oligarchs and reasserted state
control over key sectors of the Russian economy. He also rebuilt much of the
nation's tax base and checkmated Khodorkovsky's plan to sell off Yukos, and
possibly Sibneft, to Western oil companies.

Putin's attempts, however, to keep Russian capital in the country--and in
state hands--backfired. The government takeover of Yukos was just one in a
series of rollbacks on private investment that made foreign banks and London
real estate look like comparatively safe cocoons for Russian capital. In
addition, the ruinous $27.5 billion tax bill imposed on Yukos--and the shady
sale of its main production facility to state-controlled Rosneft--sent
troubling signs to Western investors. In the end, the government's
across-the-board moves against private property rights had the opposite of
their intended effect, nearly quadrupling capital flight in 2004. (In 2005,
the trend had reversed and Russia had a net positive capital inflow for the
first time in years.) Great Britain became an especially attractive
destination because it allows foreign residents to structure their accounts
so that they can ferment offshore, unmolested by British taxes.

Russia is currently a rich country, with oil at $60 per barrel. The oil
stabilization fund alone stands at $103 billion, and Russia has paid off its
$22 billion foreign debt on a stepped-up schedule. A few oligarch billions
in Britain represent barely a speck of dust on Putin's lapel. But, if oil
prices fall to $25 or $30 a barrel, Russia's geopolitical heft could
evaporate overnight--and the billions parked in Russian oligarchs' London
real estate, yachts, Boeings, and helicopters, and in their bank accounts
and investments around the world, could leave the country without the tax
base or productive capacity to dig itself out of a calamitous hole.

Abramovich, the reigning czar of London's emigre community, is trying to
prevent this scenario by continuing to invest in Russia. And, while he
spends an increasing amount of time in Great Britain and has installed his
children in British schools, he says he considers Moscow his primary
residence. Although most of his oil and aluminum holdings have been sold
off, last year his London-based Millhouse Capital acquired a 41 percent
stake in the Russian steel smelting conglomerate Evraz Group, effectively
returning $3.1 billion in capital to Russia and setting the stage for
assembling a major new Russian metals conglomerate with the Kremlin.
Abramovich, unlike Berezovsky and Khodorkovsky, has been careful not to step
over the clear line Putin drew for Russia's oligarchs shortly after his
election: Keep your illgotten gains, but stay out of politics. In his rare
public statements, he is careful not to criticize the state of Russia's
democracy. When Putin early this year signaled his desire for the oligarch
to continue pouring millions of dollars of his own money into the
impoverished Chukotka province as its governor--an effective social tax of
mammoth proportions--Abramovich did just that. His skillfully managed
relationship with the Kremlin has allowed Abramovich to not only continue
investing in Russia but to magnify his holdings by stunning proportions.

For Berezovsky, on the other hand, Great Britain serves as a secure--and
even inspirational--launching pad for his reform movement. "This country is
the greatest world democracy today, where you feel really independent of the
executive and court system," he tells me. "It's completely different from
Russia. So many businesspeople in Russia are under pressure of the state,
under pressure of security services, and so on."

Like Abramovich's position, Berezovsky's is not without a large element of
self-interest. As illustrated by a photo on his office wall of himself
talking confidentially into Boris Yeltsin's ear, Berezovsky was once the
godfather of the oligarchic family that helped launch Yeltsin and select
Putin as his heir apparent. Though he clearly has come to believe in the
importance of democratic reform, he also stands to regain much of his lost
financial empire if he succeeds in undermining Putin's powerful grip.

The Litvinenko murder has provided Berezovsky with the perfect shiv to
attack his former protege. During our interview, he advanced the theory that
Andrei Lugovoy, the former Russian KGB agent who had tea with Litvinenko on
November 1, poisoned him at the Kremlin's behest. (Lugovoy claims he is a
fellow victim, not a perpetrator.) "One day before the first of November, on
the thirty-first of October, Mr. Lugovoy--who now is suspected to be the
killer--he was sitting in this room in front of me, and we drank wine with
him. And he had no less chances to poison me in this office where we are
present now than to do the same in the hotel, putting polonium to a cup of
tea of my friend Alexander," Berezovsky says, leaning forward intensely and
nodding toward the poisonous chairs.

Why then, I ask, didn't Lugovoy try to kill him? Wasn't he a meatier target?
"It's very good question," Berezovsky says, lapsing into characteristic
mystery. "I have more or less clear answer ... myself to this question. But
I can't tell you what it is right now."

Berezovsky has very real reasons to fear the Putin government. Not least
among them is that extraditing him and forcing him to face trial on charges
of fraud and embezzlement has held one of the top places on Russia's
diplomatic agenda with Great Britain. Putin's rush to get Berezovsky back to
Russia may also have something to do with the zeal of his reform movement
activities. From Great Britain, Berezovsky has funded a series of human
rights groups, soldiers' mothers groups, and press-freedom organizations
inside Russia. He adopted the name of the nineteenth-century dissident
Alexander Herzen's newsletter, Kolokol, or Bell, for the Internet newsletter
he published until recently through his New York-based International
Foundation for Civil Liberties, though he claims it's not a direct reference
to Herzen. In March, a major opposition protest broke out in St. Petersburg,
with several thousand demonstrators chanting "Shame!" as they marched
through the streets, before many were clubbed and dragged away to jail by
the police. Some were carrying banners in support of Berezovsky, news
agencies reported.

Berezovsky claims his biggest project was pouring as much as $50 million
into the Orange Revolution to counter the Kremlin's campaign to keep Ukraine
within Russia's orbit. (President Viktor Yushchenko denied getting any money
from the London tycoon--it would have been illegal under Ukrainian law--but
Berezovsky's people say the Kremlin was spending "billions" on the other
side.) His support for the Orange Revolution was directed not at Ukraine, he
says, but to inspire Russian activists "to help Russia move to democracy."

Berezovsky is one of a trio of figures--Litvinenko was another, along with
Chechen resistance leader Akhmad Zakayev--who have formed the backbone of
the London-based opposition to Putin's government that seeks to discredit
the Kremlin and mobilize international support against the war in Chechnya.
"People say that we're out to make trouble for Putin. But we're saying that
of course we're here to promote democracy and human rights. And what that
means is in the eye of the beholder," says Alex Goldfarb, a longtime
Berezovsky aide and friend of Litvinenko who is co-writing a book about the
former KGB agent's death with his widow, Marina.

Litvinenko supplied the names, birthdates, and photographs of the skeletons
in Moscow's closets to Berezovsky and others, thanks to his contacts with
former colleagues at the FSB. He made his first big splash in London with a
book claiming that the FSB had engineered a series of deadly apartment
bombings in Russia during the run-up to the 2000 elections, an allegation
Kremlin spokesman Dmitri Peskov has said was "a product of an ill brain."
Lately, however, his revelations about corruption and violence in the
Russian halls of power had become so frequent, and often so outrageous, they
had begun to fade into background noise. Last July, Litvinenko amazed even
his friends when he riffed off the much-photographed kiss Putin had planted
on the bare belly of a five-year-old boy, publishing an article on a website
linked to the Chechen rebels claiming that videotapes existed within the
FSB's internal security directorate of Putin having sex with underage boys.
No hint of documentation supported the claim. Most people ignored it. But
Goldfarb believes it could have been the last straw, the one final
irritation out of London that, only a little more than a year before
Russia's crucial 2008 presidential elections, put a teacup full of polonium
in Litvinenko's hands.

The Litvinenko episode may have done more than just thrust London's shy
Russian community into the spotlight. Berezovsky, for one, believes that
it's contributed to a newfound sympathy for his gospel of undermining Putin
and making sure he isn't able to hold onto power, or handpick a successor,
in 2008. "When I came to London in 2001 and made a lot of public
presentations, trying to explain that Putin was starting to destroy Russia,
ninety-five percent of the audience didn't believe me," he says. "And, now,
I present the same arguments, the same understanding, for sure based on new
facts, and ninety-nine percent of the audience accepts now my position."

But Berezovsky tends to play much better in London than he does in
Russia--or even, for that matter, among the rest of the Russian expatriates,
many of whom see his campaign for "reform" as a bold front for
rehabilitating his financial empire and big business domination of the
government back in Russia. Putin encourages this view. When asked recently
about the Litvinenko case, he turned almost immediately to the London
oligarchs. "They are people hiding from Russian justice for crimes they
committed on the territory of the Russian Federation--first and foremost,
economic crimes," he told reporters. Many in Russia likewise see the forays
of Berezovsky and other businessmen into Great Britain (and the United
States and Israel) as leaving home with the household icons in their
suitcase. "Tell me this. Is it good for Nigeria whether its millionaires are
all in London? Is it? Then why do you ask me if it is good for Russia that
its millionaires are in London?" says Boris Kagarlitsky, director of the
Institute of Globalization Studies in Moscow. "This is an excellent liberal
idea--that what is good for the money is good, full stop, even if people
have to die for it. They keep saying, 'There is no good way to use this
money in Russia.' And that's exactly right: Let people die and not spend a
penny, because it is more profitable [to spend it] somewhere else," he said.
"What we need in Russia is we need to rebuild the entire infrastructure of
this country, which was totally neglected for twenty years. The electricity
systems are falling apart, even the elevators in the apartment houses are
falling apart. Will you make a lot of profit out of rebuilding that? Of
course not. Where if you go to the London stock exchange, you will make
millions."

What Kagarlitsky has put his finger on is not all that surprising: The
oligarchs are ultimately less interested in shaping Russia's future than
their own. London has become a place where they can play out their
fantasies, preferring to run with the wolves on English estates rather than
from Putin back at home. But they're not the only ones. Many of those who no
longer have the Kremlin's ear, including even former members of Putin's own
administration, are quietly stashing their nest eggs in London. "Most
Russians don't want to be identified as having a safe haven," said one
banker familiar with the Russian community. "They all want to be seen as
happy patriots in their own country. But ... they're all scared. Because, in
Russia, one day you're in, and the next day you're out. There's no rule of
law. Anything could happen."