Russia’s Unpopular Billionaires on Forbes’s List

A poll in July 2003 by the Russian Public Opinion and Research Group (ROMIR) Monitoring Service showed that 80 percent of Russians believe that the oligarchs—a small number of tycoons who control more than 60 percent of the economy and who exercised an inordinate degree of influence during Boris Yeltsin’s administration—had made their large fortunes dishonestly during the corrupt privatizations of the 1990s. At that time dozens of state-owned companies, including Yukos, were sold by means of insider deals at ridiculously low prices. As Yukos spokesman Hugo Erikssen himself has admitted: "It is no surprise that 70 percent of Russians say that to take out the oligarchs is a good thing. Most people think that privatization was unfair. Many people lost their money while only a few became rich." But while the Kremlin is busy pursuing political gains for the coming election season, it may be mortgaging Russia’s future, Mikhail Khodorkovsky warned in an interview with Business Week last month. "If we continue hounding rich people and kicking them out of the country, we will not move far from our primordial cave," he said.

Russia’s per capita GDP may be behind Costa Rica’s, but its headcount of billionaires is the fourth highest in the world, according to Forbes Magazine’s annual rating of the super rich (see table). The list of the country’s billionaires burgeoned to 17 during the past year—10 more than in 2002—thanks to high oil prices, a growing stock market that was up 35 to 40 percent last year, and greater corporate transparency. Worldwide the number of billionaires year-on-year fell from 497 to 476 and their combined wealth dropped from $1,540 billion to $1,400 billion. Microsoft co-founder Bill Gates, steadily number one on the Forbes list since 1998, ended up $12.1 billion poorer than the year before, his worth dropping to $40.7 billion. All but five of Russia’s billionaires are heavily involved in the oil sector.

The strongest showing was by Yukos, whose top executive, Khodorkovsky, retained his title as Russia’s richest man and shot up from his number101 spot on the Forbes list last year to number 26. Khodorkovsky’s estimated worth more than doubled from $3.7 billion to $8 billion. Of the 10 new tycoons on this year’s list, 5 earned their riches at Yukos or at affiliated banking and insurance conglomerate Menatep. Khodorkovsky, who says he owns 6 to 7 percent of Yukos, attributed the jump in his fortune to Yukos’s growing capitalization. He is now focusing on purchasing gas stations in Germany and integrating the Western and Russian oil markets more closely.

The second richest Russian after Khodorkovsky was Roman Abramovich, governor of the Chukotka Autonomous Region. His fortune swelled from $3 billion to $5.7 billion, boosting him from number 127 to number 49 on the Forbes list. His Millhouse Capital holding controlled the oil company Sibneft until its recent sale to Yukos in Russia’s first ever supermerger. Abramovich is also selling his controlling interest of metals giant Russian Aluminum, but he will still be left with major holdings in the automotive and agriculture sectors. He recently purchased the English football club Chelsea for about $100 million.

Russia’s number three for the second year in a row was Alfa Group Chairman Mikhail Fridman, whose company’s prize holding, the Tyumen Oil Company, signed a landmark $6.75 billion deal with British Petrol. Fridman’s worth nearly doubled over the past year, from $2.2 billion to $4.3 billion, hoisting him from number 191 to number 68 on the Forbes list.

The top newcomer to the list was major Tyumen Oil shareholder Viktor Vekselberg, who entered as Russia’s fourth richest man with $2.5 billion. Russia’s youngest billionaire was Oleg Deripaska, age 34, whose Base Element holding co-owns Russian Aluminum together with Millhouse. Deripaska’s worth edged up from $1.1 billion to $1.5 billion, propelling him from number 413 to number 278. He overtook LUKoil’s Vagit Alekperov and Surgutneftegaz head Vladimir Bogdanov, the only two Russian billionaires who saw their fortunes shrink over the past year. As Boris Berezovsky did not disclose his holdings in Russia and abroad, his name is missing from the list, although he recently estimated his fortune at $3 billion. He was declared the country’s richest man in 1997.

The 17 billionaires on this year’s list put Russia behind only the United States, Germany, and Japan.

Based on articles by Anna Badkhen in the San Francisco Chronicle and Natalia Yefimova in the Moscow Times. 

Russia’s Billionaires, 2002 and 2003

n.a. Not applicable.
Source: Forbes Magazine.