Berezovsky claimed that Abramovich had intimidated him into selling a major stake in the giant Russian oil company Sibneft at a dramatically reduced price. He demanded compensation worth $6.5 billion. The court sided with Abramovich, who, in addition to his Russian holdings, owns Chealsea FC of the English Premier League. The judge agreed that his payment of $1.3 billion to Berezovsky in 2002 was not for a stake in the company, but for political protection.
Though the ruling won’t disrupt the financial status quo in Russsia, the Financial Times asserts that the country is just as much a loser as Berezovsky.
In the first place, the fact that two of Russia’s richest tycoons opted to settle their dispute in a British court testifies to the condition of the Russian legal system. This will have a negative effect on foreign investment and the confidence of businesspeople currently working in Russia.
Secondly, the public nature of the trial has exposed the ugly inner workings of Russian business in the 90s. The moguls who made their millions – sometimes billions – during that era did so through violence, extortion and political connections. They exploited unclear laws and hoarded assets in the country’s privatizations.
Now, the linen must be ruthlessly washed. And that spells paperwork and litigation for those who wish to regularize their finances. It might be worth it, though: Because Russian laws are so murky, President Vladimir Putin will continue to have a grip on those who don’t.
“The wealthy know that their ownership rights can be very easily undermined by officials questioning the basis on which they were acquired,” the Financial Times reports.
In short, it behooves Putin to keep the shadowy 90s alive. He has demonstrated that he is fearless in attacking political adversaries with the force of law, as in his assault on the former of head of Yukos oil group Mikhail Khodorovsky, and he won’t hesitate to shine a spotlight on more alleged wrongdoings.
As for Abramovich and Berezovsky, the only money changing hands will be for legal fees. According to reports, Berezovsky will have to pay upwards of $160 million.
