Publication: Monitor Volume: 7 Issue: 89

The business empire of Roman Abramovich has reportedly made another major acquisition. The newspaper Vedomosti, citing an unnamed Russian government official as its source, reported today that structures “close” to Sibneft, the oil company Abramovich reportedly controls, and to Russian Aluminum, the giant holding he co-owns, have acquired 29.3 percent of the state airline Aeroflot for some US$120 million. The state owns 51.17 percent of Aeroflot.

Last year, Abramovich became governor of the region of Chukotka, in Russia’s remote Far North, but is widely believed to remain in control of Sibneft and retain his co-ownership of Russian Aluminum, which was formed last year by Sibneft and Siberian Aluminum and is estimated to control three-quarters of Russia’s aluminum production.

Vedomosti quoted an anonymous government official as saying that Sibneft had acquired the Aeroflot stake from various private shareholders, among them Andava, a Swiss company set up by Boris Berezovsky which at one time managed Aeroflot’s hard currency revenues. The paper quoted a financial analyst as estimating that Berezovsky-linked companies own 2-7 percent of Aeroflot. Vedomosti also quoted Berezovsky, however, as denying that any business structures linked to him either owned or managed any Aeroflot shares. Swiss prosecutors and the Russian Prosecutor General’s Office have reportedly implicated Andava in embezzling funds from Aeroflot. Several of Berezovsky’s associates have been charged in that case, but Berezovsky has not.

While Abramovich refused to comment to Vedomosti concerning the alleged purchase of Aeroflot shares, a Sibneft spokesman told the paper that the company holds no Aeroflot stock. Abramovich’s spokesman in Chukotka called the reports of the purchase “complete nonsense.” However, the paper also quoted an unnamed “partner” of Abramovich as confirming that the Aeroflot stake had been purchased by Abramovich-controlled structures, which had carried out the purchase using the same “scheme” used to purchase 51-percent state-owned Russian Public Television (ORT) channel. Earlier this year, Boris Berezovsky sold off a 49-percent stake in ORT to Abramovich, (reportedly for US$80 million), who then reportedly handed over the stake to the state. According to one account, in exchange for handing the ORT shares over to the state, Runicom, a Swiss-based oil trading company reportedly controlled by Abramovich, was granted the right export oil from the state-owned oil company Slavneft, which could bring Runicom some US$700 million in revenues a year (Vedomosti, May 8: see also the Monitor, February 8, March 14).

If it turns out that structures close to Abramovich have indeed purchased more than a quarter of Aeroflot, it would be just the latest sign that his business empire is blossoming under the putatively anti-oligarchic reign of President Vladimir Putin. Indeed, as the Polit.ru website noted today that such a deal would have required the approval of Aeroflot’s main shareholder–the state. The website also suggested that the apparent participation of structures close to Boris Berezovsky in the deal would also have required the state’s approval–which looks somewhat anomalous given the fact that the Kremlin has ostensibly driven Berezovsky out of the country and is ostensibly keeping him at arm’s length (Polit.ru, May 9).

Not surprisingly, the Chukotka affiliate of Sibneft last month received licenses to develop three oil/natural gas fields in the republic (KMnews.ru, April 29).