Publication: Monitor Volume: 6 Issue: 40

Lev Chernoy, the one-time reputed king of Russia’s aluminum industry and at one time connected with the London-based Trans-World Group (TWG), confirmed in an interview published today that he has sold off his stakes in some of Russia’s largest aluminum factories and several related industrial enterprises. He has, he said, fully divested himself of his Russian aluminum holdings (Nezavisimaya gazeta, February 25).

Earlier this month, Russian media reported that the Sibneft oil company, which is said to be controlled by Kremlin insiders Boris Berezovsky and Roman Abramovich, had gained possession of the aluminum industry stakes belonging to Chernoy and TWG. Berezovsky subsequently confirmed these reports, saying that Sibneft and LogoVAZ, Berezovsky’s used-car company, had purchased “large stakes” in the Krasnoyarsk, Bratsk and Novokuznetsk aluminum factories, as well as in the Achinsk Alumina Combine and the Krasnoyarsk hydro-electric station. These purchases, according to some media, mean that Berezovsky and Abramovich now control two-thirds of Russia’s aluminum industry and billions of dollars in potential yearly profits. Some media later reported that the deals had not in fact been consummated. Chernoy dismissed those reports in his interview, however, calling them “nothing more than a cheap provocation” by defeated competitors (Nezavisimaya gazeta, February 25). Earlier this week, Krasnoyarsk Governor Aleksandr Lebed was quoted as saying that negotiations over the sale of the Krasnoyarsk factories were ongoing but had not been completed, and as claiming that Abramovich was the main purchaser in the deals, and Berezovsky only a “middleman” (Vremya-MN, February 23).

While it is hard to know exactly what has happened with these deals, Oleg Deripaska–head of the Siberian Aluminum company and the Berezovsky-Abramovich tandem’s main rival in the aluminum industry–has called on Russian’s antimonopoly ministry to investigate the deals (Reuters, February 21). The appeal by Siberian Aluminum, which is allied with United Energy Systems head Anatoly Chubais, suggests that Berezovsky and Abramovich have trumped Deripaska and Chubais.

The Berezovsky-Abramovich aluminum takeover puts a question-mark over Acting Prime Minister Vladimir Putin’s promises to level the economic playing field. It also puts into doubt the predictions from various observers and analysts that Putin, if elected president on March 26, will move against Berezovsky. The Berezovsky-Abramovich tandem would appear to have monopoly control over one of Russia’s most lucrative industries. This is particularly significant given their powerful positions in two related industries–oil (Sibneft) and automobiles (LogoVAZ).

What is more, Berezovsky is reportedly moving toward regaining control over Aeroflot, the Russian state airline, which is also linked to oil and aluminum. According to some observers, he may succeed in driving out Valery Okulov, who is Aeroflot’s general director and Boris Yeltsin’s son-in-law, while putting Aleksandr Krasnenker, a Berezovsky ally, back into Aeroflot’s management structure (Moskovsky komsomolets, February 23; Moscow Times, February 10). Krasnenker was forced out as Aeroflot’s vice president a year ago, when the Russian authorities were investigating alleged embezzlement from the state airline. Berezovsky subsequently fled abroad after a warrant was issued for his arrest, but returned after Yevgeny Primakov was fired as prime minister. The Swiss authorities are still investigating charges that two Swiss companies allegedly controlled by Berezovsky laundered hard currency revenues from Aeroflot.