Putin may Use Credit Squeeze to ‘Destroy’ Oligarchs (Update1)
By Torrey Clark and Henry Meyer
Oct. 17 (Bloomberg) — Vladimir Putin came to power in 2000 vowing to destroy Russia’s oligarchs “as a class.” Within two years, he’d driven two into exile and imprisoned another.
Now, he may use the global markets meltdown to finish the job.
The $50 billion that the prime minister and President Dmitry Medvedev have pledged to lend cash-strapped companies will extend state control over business leaders. Billionaires seeking bailouts — including Oleg Deripaska, Russia’s richest man, and Mikhail Fridman — will have to give authorities veto power over their companies’ financing decisions.
“This will give the state more leverage over the country’s biggest companies and main industries,” said Chris Weafer, chief strategist at UralSib Financial Corp in Moscow. “In 2008, there is only one real oligarch: the state.”
All this marks a reversal from a decade ago, when oligarchs bankrolled Boris Yeltsin’s almost-insolvent government. As recently as April, Russia’s 100 wealthiest citizens had a combined fortune equivalent to about a third of the economy, Forbes magazine estimated.
The nation’s 25 wealthiest businessmen have seen their worth shrink by $230 billion, or 62 percent, according to Bloomberg calculations. And Putin controls the strings on the biggest remaining purse — $531 billion in government reserves, which he is doling out through state-run Vnesheconombank, or VEB, where he presides as chairman of the supervisory board.