Oleg Deripaska

Engineer, Billionaire and

President of Russian Aluminium

 

Oleg Deripaska
Oleg V. Deripaska is President of Russian Aluminium.

In 1994, he was appointed Director General of Sayansk Aluminum Smelter. In 1997, he was elected President of Sibirsky Aluminium Group. In 2000, he was appointed Director General of Russian Aluminium Corp. Mr. Deripaska is also vice-president of the Russian Union of Industrialists and Entrepreneurs, Chairman of the Board of the Russian National Committee of the International Chamber of Commerce, member of the Entrepreneurship Council of the Government of the Russian Federation. In 1999, Oleg Deripaska was awarded an Order of Friendship by a decree of the President of the Russian Federation. The newspaper Vedomosti (published jointly with Wall Street Journal and Financial Times) declared him "The Entrepreneur of the Year 1999". Mr. Deripaska was born in 1968. He graduated from the Lomonosov Moscow State University with honors, and later got a master's degree from the G.V. Plekhanov Russian Academy of Economics.

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Oleg Deripaska is one of the controlling shareholders of Russian Aluminum (Rusal), which he shares with Roman Abramovich and the Sibneft group. It isnít clear with whom he shares control of Base Element, the holding that includes Ingosstrakh Insurance, Aviacor the aircraft builder, the GAZ automobile company, several bus builders and paper and pulp interests.

Of all the oligarchs for whom the elections of parliament and president pose serious risks, Deripaska is the most vulnerable, and this has begun to show already. He has failed to secure privileged access to cheap electricity for his metal production. He lost the tussle he started with rival Siberian Ural Aluminum (Sual) over the Nadvoitsk smelter, and in the process demonstrated that Abramovich may have more clout on the Rusal board than Deripaska does.

His insurance and paper-pulp acquisitions face difficult legal challenges in the Russian courts, while in foreign courts Rusal is facing multimillion-dollar breach-of-contract awards, and the grave possibility that the federal U.S. court in New York will rule that it has jurisdiction over a billion-dollar fraud and racketeering claim against Rusal. He has made numerous attempts to establish and expand his foreign assets. A Romanian alumina refinery has been a costly failure. He has done moderately well in the bauxite-rich Central African republic of Guinea, but he has been rejected in most countries, including China, which is a strategically vital market for his metal.

Deripaska is far from losing his jacket, but, compared to other oligarchs, he is further from securing the access to international capital that he would like. To that end, the toys he has acquired arenít quite what he wants or needs.

Mikhail Fridman, the oligarch who controls Alfa Bank and Tyumen Oil Co., has been trying for some time now to sell a stake of about 20 percent in both the bank and the oil company to what is known in polite circles as a "strategic investor" (thatís someone whose fortune exceeds their intelligence). It didnít help that one of the foreign victims of his acquisitions, Norex Petroleum, decided to sue on similar grounds and for similar damages as Deripaska faces in the same place.

That suit helped expose Fridmanís hidden ownership of the proceeds of his businesses. The sinking of the oil tanker Prestige, chartered by one of Fridmanís oil-trading networks, spilled more than oil on the beaches of France and Spain, and, by threatening the way in which Tyumen Oil Co. conducts its offshore business, it forced Fridman to dispose of the asset as quickly as he could.

He and Abramovich did well to acquire control from the Russian government of oil producer Slavneft, but that transaction only reinforced the appearance that heís vulnerable to the political changes that may follow the new elections. If Fridman has been planning on a clean getaway by election time, he looks likely to be frustrated.

Fridman is not the only Russian oilman who has been hoping for a 20 percent share sale or a stock market listing in New York, only to be nabbed by the alarm that is being raised by the American war machine. In the short term, this has raised the value of oil assets, only to make them appear at the same time to be too volatile and risky for investors to value. The Russian oilmen have also done their best to court American, as well as Japanese and Chinese, money, with lavish promises to convert their growing reserves into expanding deliveries.

However, to make good on those promises they depend on the Kremlinís control of the pipelines and ports to export the oil. But even the prime minister, Mikhail Kasyanov, canít let that out of the governmentís hands.

And thatís why we find the oligarchs in the metaphorical shrubbery, counting what they have and what they havenít gotten away with. Unlike Tyapkin Ė the name in Russian suggests he digs like a farmer hoes his potato patch Ė the heroes of our time canít contemplate trying the alternative of armed robbery. Thatís how we got here from our unfunny past.

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