Roman Abramovich: Premier League oligarch

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1:52Welcome to Good Bad Billionaire from the BBC World Service. Every episode, we pick a billionaire and we find out how they made their money. Then we judge them. Are they good, bad or just another billionaire? My name is Zing Zing and I'm a journalist, author and podcaster. And I'm Simon Jack. I'm the BBC's business editor. And on this episode, we have a very well-known billionaire. Indeed. A hero to Chelsea fans everywhere. But someone with what I would describe as a colourful past. Yeah, colourful is one way of putting it. Murky. He is a big football fan, likes his boats. He really does. And he is currently worth a cool$9.7 billion.

2:30It is Roman Abramovich. So Roman Abramovich is 58 years old. He's one of the many oligarchs who made their fortunes from the post-Soviet privatisation of public utilities. And we'll delve into that, specifically in oil and aluminium. He got into the latter during the infamous bloody aluminium wars. More on that later. But for years, he was never heard from or seen in public, and a Russian newspaper even offered one million rubles for a photo of him. In fact, he became known as the stealth oligarch. Behind the scenes, though, he was a powerful figure, allegedly very close to Vladimir Putin from the early years of his presidency.

3:06But he did lose seven billion of his assets when they were frozen by the self-governing British crown dependency of Jersey in the wake of the Russia-Ukraine war. Yeah, a lot of sanctions applied to a lot of people in Russia, and he was caught up in that. He became famous in the West when he bought Chelsea Football Club in 2003. I remember that well. People were punching there. They said, finally, we've got some money. Finally, the big spenders rolled in. Yeah. And in fact, he kind of set an example for billionaires buying football clubs. Now, the club cost him a core$233 million, but then he kept spending.

3:40He spent around $900 million paying off the club's debt and bringing in very new and very expensive players. Yeah, it was called Chelsky, I remember, in those days. But football's not his only passion. He's thought to have 16 yachts. The biggest of which cost, get this,$427 million. How many yachts does one man need? At 533 feet, the biggest one was then the largest in the world. Two helicopter pads, two swimming pools and a disco hall. And it also had bulletproof windows, a missile detection system and an escape submarine. That tells you something, I think. Very security conscious. It's also reported he had a 40-strong security team, 20 in the UK, 20 to help him when travelling.

4:20It cost him around$2.4 million per year. So you might be asking at this point, why does a guy who's just in business need to spend so much money on protection, including, remember, that escaped submarine? Yeah, well, being a Russian oligarch is a pretty dangerous business. Quite a lot of them end up dead and sometimes in suspicious circumstances. So in this episode, we'll try to find out why Roman Abramovich has stayed so rich and so alive for so long. Although could a recent suspected poisoning suggest his luck and his friends might be changing? Now, before we get into this story, it's worth saying that tracing the money of Russian oligarchs can be quite tricky.

4:58Yeah, and we're indebted to some fantastic and some brave journalists. So the biography Abramovich, the billionaire from nowhere by Dominic Midgley and Chris Hutchins was especially helpful. As was the transcript from a 2012 British High Court case. That case was brought against Roman Abramovich by his former mentor, a man known as, quote, the godfather of the Kremlin. Yeah, Boris Berejofsky. Because of the case, Roman was forced to tell the world in his own words how he made his fortune. And in the courtroom, he took the stand and said, I never made any public statements. At least I tried never to make any public statements.

5:32I know I don't do it so well. I become very nervous. And if you scour the internet, it's impossible, I found, to find any footage of him actually talking. Which is so odd because his name has loomed so large in the public consciousness because of his football purchase for so many years. So, nervous public speaker or powerful political operative? Is he good, bad or just another billionaire? there.

5:59Roman Abramovich was born in 1966 in Saratov in what was then the Soviet Union, now southwestern Russia. He had Jewish grandparents. They'd fled to the USSR, as was then, from Lithuania and Ukraine during the Second World War. His mother died when he was only young from blood poisoning of an abortion. Then his father died two years later in a construction accident. So Roman was orphaned at three years old, but he doesn't call his childhood bad. He said he had the support of an extended family. He was actually adopted by his paternal uncle, Lieb, moving over a thousand miles north to Ucta to live with him.

6:32So how were they living? Well, they weren't rich. Lieb and his wife actually gave up their bedroom for Roman and slept on the sofa in the living room. And as the only male cousin, Roman had a certain level of status in the family. But his adoptive dad's job as a supplies manager gave him privileged access to food and clothing, some of which Lieb resold on the black market. So the family lived comfortably despite the harsh rationing of the time. In fact, we're told that Roman was the first boy in his neighbourhood to own a Western-style cassette player. For our younger audiences, this is something like a Sony Walkman that people used to walk around with.

7:02It's a museum piece now. And at the time, it would have made him a very popular person in the neighbourhood. Yeah. Aged eight, Lieb sent Roman to Moscow to live with his other paternal uncle, Abraham, because the capital offered more opportunities, he says, for a business career. Roman studied at a place called School Number 232, which kind of gives you an idea of the pecking order there. He was an academic, but he worked hard and he was eager to learn. Yeah, friends remember he was quick on the uptake. He liked efficiency. You could feel energy in him. And teachers remember that his uncle, Abraham, was more doting than most fathers because he rushed to school the minute Roman's results were published.

7:35They were big influences on him because a close business associate of Roman's has commented that Roman is the synthesis of his two uncles. From Lieb, he inherited discretion and business acumen. From Abraham, altruism and vitality. So Roman left school at 17 and he was studying highway engineering at the Uctur Industrial Institute when he was drafted for military service. Yeah, life was tough in the Red Army. Roman, though, is remembered as a very social person. He organised a football team, for example, and an amateur art group. And quite common to a lot of our billionaire stories, he was also always on the lookout for ways to make money.

8:09So one fellow soldier remembers Roman coming up with a scheme in which delivery drivers would allow fuel to be siphoned off from their vehicles and then sold to other drivers at a reduced price. Yeah, hustling to make a buck is definitely something that's common among our billionaires. One person said of him he could make money out of thin air. After leaving the army at 20, Roman worked as a mechanic in Moscow while returning to study before dropping out. A lot of our billionaires drop out of their studies, don't they? Yeah, it's funny. Even in Russia. It's not something you want to hear as a parent who wants their child to do well financially, but it does seem like dropping out is a common through line.

8:44Around this time in his personal life, he'd met his first wife, Olga, who was a divorcee three years older than him. Her parents gave them 2 ,000 rubles as a wedding present, which was at the time roughly 10 months of the average Russian salary. And they used that money to start a new business. They made rubber ducks and other plastic children's toys. And soon they were earning 3 ,000 to 4 ,000 rubles a month. So that kind of works out to 20 times the average Russian's monthly salary. And we should say here, we often put things in dollar terms, but it's quite difficult when it comes to Russian rubles to dollars because there were strict capital controls.

9:18It wasn't that easy to tell how many rubles were to the dollar in those days. And that's changed a lot over the years. Roman threw himself into work, so much so that Olga said it was a reason for the divorce just two years later. She says he would get up early and go straight to work and not be back until midnight. I was convinced he was a workaholic. It seemed he loved his business more than he loved me. To understand the Roman Abramovich story, we need to understand what's going on in the Soviet Union as it was then. And once again, not for the first time, we're looking at people who've made money as the world around them was changing.

9:49Sort of Jack Ma in China. We talked about Mukesh Ambani in India. Russia is going through some massive changes. So rewind back to 1985. Mikhail Gorbachev became head of the Communist Party and introduced what was called perestroika or restructuring. to boost the then flagging Russian economy. This was a huge change. And in a way, this marked the end of the Cold War. And a lot of people said this sort of arms race of the Cold War, the US's wealth had essentially bankrupted Russia and they realised there had to be a change. So there had been strict price controls, but now some businesses could decide for themselves which products they wanted to make, how much to produce and what to charge, which before was basically determined by the state.

10:30Yeah, so Roman, among others, began to take advantage of some of these new rules. He travelled between his uncle's homes. He would fill his suitcase with Western goods, which were coming into Moscow, things like jeans, perfume, chocolate, and then sell them at a profit a thousand miles away in Uktar. And then on the 9th of November 1989, a seismic event happened, the fall of the Berlin War. By December 1991, the USSR, the Union of Socialist Soviet Republics, was formally dissolved. Gorbachev resigned and Boris Yeltsin became president of Russia. And at the start of 1992, Yeltsin's government removed more price controls on products.

11:06And this sudden adoption of the free market and rapid privatisation, that's key, was called shock therapy designed to jolt Russia into embracing capitalism. So really, we talk about the end of the Cold War in America, essentially bankrupting Russia. But, you know, it's not just about money or arms. It's also about ideology. And in this case, America triumphed. Yeah, and it created the perfect environment for the rise of Russian oligarchs. Suddenly, there was this kind of new frontier to sort of to prosper, basically. Basically, the Wild West. It was freewheeling. I remember that time really well, actually.

11:42Within months, Roman Abramovich is said to have launched nearly 20 different businesses, trading timber, sugar, food, tyre repairs, pig breeding, even bodyguard services. They'll be needed later. Basically, throwing everything at the wall and seeing what's done. Exactly. Many failed, but they offered him a steep business learning curve and his reputation, his portfolio of businesses was growing. But what Roman Abramovich really wanted to get into was oil. Yeah. The pre-Yeltsin Soviet regime had made money by selling Russian produced oil at a discount to traders that was sold on the global market.

12:14The profits then went back to the state. But now profits could go to private operators and Roman was one of the many people who spotted this potential. So he had a company called Petro Trans, which started with the Russia domestic market sourcing oil from a government-owned refinery in Western Siberia. He then transported and sold that throughout Russia. It's around this time, which is 1992, that it said he was accused in Russia of, quote, procuring financial gain by means of fraud. He was also, by the way, only 25. Yeah. And this period was very murky. As you say, there were claims, counterclaims.

12:46And it's alleged he was arrested as the main suspect for stealing a consignment of diesel from a train going from Uktar to Moscow, valued around 4 billion rubles. The exchange rate was moving a lot in those years. So that could be anywhere between nine and 35 million dollars. It is really Wild West cowboy stuff. So a document detailing this was shown in a 2012 court case and it was reported in a 2022 BBC Panorama episode that he was arrested, but later that this case kind of disappeared without a trace. And his lawyers told the programme it was all a misunderstanding and the matter was resolved.

13:20So over the next few years, he grows his oil business and he launches various companies trading in petroleum products. Yeah, his network of companies quickly becomes one of the largest petroleum trading networks in all of Russia. And crucially for his growth, he expands rapidly into international exports. In 1993, his companies were trading 400 ,000 tonnes of petroleum. Just a year later, that increased to 3 million. That's a 650 % increase within a year. That's serious numbers. And in his own words, Roman Abramovich became a, quote, first-class international negotiator. So how much is he worth at this point?

13:54It's hard to know when he made his very first million. but we've got some numbers from his own testimony in court documents. By the mid-1990s, he said he was generating around$40 million per year through his trading company. So in his late 20s, Roman Abramovich, successful oil trader, he's almost certainly a multi-millionaire. But he's also about to be introduced to a man who will change the course of his life and Chelsea Football Club and someone he'll end up going head-to-head with in court.

14:37Enter the scene, Boris Berezovsky, a connection who the New York Times Athletic magazine puts it, turns Roman from wheeler-dealer wannabe to the seriously rich. So who is this man and mentor who will help Roman Abramovich become a billionaire? Let's rewind back to December 1994 and set the scene. We're at a party, we're on a yacht, we're in the Caribbean, and Roman is here as a guest of the president of Russia's largest privately held bank. I'm getting the vibes of this atmosphere already. On the yacht, Roman is introduced to Boris Berezovsky. He was a power broker. He was nicknamed Godfather of the Kremlin, apparently even described himself as one of the most influential oligarchs in Russia and a billionaire to boot.

15:19Billionaire meet billionaire. Now, Boris Berezovsky was 48 compared to Roman's 28. He was a former car salesman who had made his fortune by capitalising on the early years of Jeltsin's privatisation process. Yeah, and Berezovsky was impressed with Roman's ambitious idea to create this new vertically integrated oil company. Vertically integrated means capable of managing the entire production chain. The problem was that the companies Roman would need were actually owned by the state and Roman had no political connections. In his own words, he says, I was not a well-established, well-known business figure at that stage.

15:51That doesn't reflect whether I had a big business or a small business. It's just I created little noise around myself. He moves in silence like the wind. Yeah, and you needed this kind of, you know, cover. There's a Russian word for it, krisya. It literally means roof. And what it means is political influence and cover and insurance, basically. And Boris Berezovsky had that in spades. So he was very close to the president, Boris Yeltsin. In fact, Berezovsky had paid for the publication of Yeltsin's memoirs, befriended his daughter, helped bankroll his re-election campaign, All of this gave him great access to Yeltsin's inner circle.

16:24And Roman said of Borazovsky offering him Kresha. At the time, Borazovsky was already known to me as someone who had big political influence in Moscow. I realised he could provide me with important contacts. Moreover, I was aware that he was believed to have strong connections to Chechen elements, which exerted a powerful influence in Moscow at the time. Now, Boris Borazovsky has denied any links to organised crime. But at this time, there was a real free-for-all where people were trying to get their hands on what previously had been national assets. There was this kind of gold rush. Berezovsky knew of another national asset for sale, the Russian oil company Sibneft.

17:01So Berezovsky, if you remember from that chat on the yacht, had been impressed by Roman. Brought to you by Progressive Insurance. Do you ever think about switching insurance companies to see if you could save some cash? Progressive makes it easy. Just drop in some details about yourself and see if you're eligible to save money when you bundle your home and auto policies. The process only takes minutes, and it could mean hundreds more in your pocket. Visit Progressive.com after this episode to see if you could save. Progressive Casualty Insurance Company and Affiliates. Potential savings will vary.

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20:07Shop now at washablesofas.com. Authors are subject to change and certain restrictions may apply. Abramovich's plan to create a big new oil conglomerate that could manage the entire production chain, the extraction, the refining, the selling, and the Sibnef deal could make that become a reality. But the details of any deal between the two men have been disputed, so much so that they later went to court. But it is widely reported and documented in the trial that for substantial cash payments to Boris Boris Borisovsky, Abramovich would get his political patronage and influence. So according to Roman himself, he paid Borisovsky between 50 to 80 million dollars a year through the 90s, plus personal expenses that paid for, you know, like trifling things like Borisovsky's French Riviera home, chartering yachts in a private jet, even occasionally his girlfriend's credit card bills.

20:56So Sibneft was auctioned off in 1995. Together, Abramovich and Berezovsky spent months negotiating with the government. And this would have been a huge deal because the Russian state was essentially just having a fire sale of all their assets. Yeah, and a Yeltsin advisor said Berezovsky was ready to sleep on the Kremlin floor to get his hands on it. But they had one problem. So at the centre of Sibneft was an oil processing plant, and that was run by Ivan Litskovich, a very influential figure in the region. Now, they needed to get him on side, but he was actually against the privatisation of the company, and he remained firmly so, even after he received several letters urging him to change his mind.

21:37And then, just days before the new Sibneft was established by presidential decree, Ivan Litskovich drowned in a River One swimming, apparently from a heart attack, according to the official death report. His driver, the only witness, later died in a fight. Now, when Roman was asked if it was true that Ivan Litskovich died in, quote, difficult circumstances, he simply replied, he drowned. Ultimately, though, punchline of this story, Roman Abramovich takes control of 88 % of Sibneft for about$240 million. It's thought he may have put in as little as 19 million of his own money with the remainder coming from bank loans.

22:13And thanks to his oil trading connections, he soon turned the refinery around. In 1995, when he first got involved with Sibneft, it hit losses of$206 million. But within two years, it was making a profit of$68 million. So until now, Roman hadn't been a public figure. He kept well away from the media. He was the oligarch no one had ever heard of and no one had seen. There weren't even photographs available. Anytime he was reported in the press, they had to use a sketch like the Wall Street Journal. Very old school. But the Sibneft auction captured the media's attention. So it was getting harder and harder for him to stay out of the spotlight.

22:47In 1998, he's referred to on Russian TV as Yeltsin's wallet, meaning a good chunk of the money he was paying to Boris Berezovsky was used for Yeltsin's re-election campaign. And this idea of being the president's wallet is something that will come up with the current president. And in 1999, one Russian newspaper offered a million rubles for a photograph of him. That's around$40 ,000. Wow. This blurry photograph was taken. It was used for the next few years until Abramovich paid a photojournalist to take a selection of proper photos for the press. So as with many of our billionaires, Roman Abramovich next looked to diversify his portfolio and he did that into aluminium.

23:25Yeah. This is the thing that makes him very seriously rich. The competition, to control this area of the metal markets was really fierce. From the mid-1990s, Russian oligarchs were involved in what was called the aluminium wars. Now, this wasn't a kind of metaphor. It's not a boardroom war of anything. It was literally genuinely... Armed conflict. Exactly. It was genuine physical conflict. So, for instance, when an entrepreneur would buy aluminium smelters or processing plants, they would become a target for others who would hire criminals to pressure them into selling. Yeah. One oligarch told the BBC he lived under constant threat.