Post-communist billionaires not all bogeymen

By MARY DEJEVSKY

Aleksei Mordashov strides into the room. He is tall, dark, good-looking and exceptionally well-coiffed, with a directness that seems to exude honesty and goodwill.

He is also very, very rich, although quite how much richer he will become depends on two things: the future of Severstal, the huge steel company he runs, and what happens to the Russian economy. Few are willing to bet on the latter.

Still only 38, Mordashov looks every bit the European executive of the rising generation. From the lightness of this room - at least some of the curtains are open, exceptional for Russia - and from Mordashov's cosmopolitan manner, it is hard to believe we are not somewhere in Western Europe.

Actually, we are in the far northwest of Russia, about 650km from both Moscow and St Petersburg. The city is Cherepovets, and Mordashov is an outstanding example of local boy made good.

He is also a fully fledged member of that mysterious Russian coterie known as "the oligarchs".

Oligarchs have not enjoyed good reviews lately anywhere in the world. Among Russians, these self-made billionaires have long been regarded with envious suspicion.

When Mikhail Khodorkovsky, head of the giant Yukos oil company at the time, was imprisoned on charges of large-scale tax evasion and fraud, there was scant sympathy from his fellow Russians.

The common perception is that such men are chancers who used their gambling instinct and privileged information to deprive ordinary people of their rightful share in post-communist Russia.

Those oligarchs who have settled abroad - such as Vladimir Gusinsky, who lives in Switzerland; Leonid Nevzlin, who has just been granted Israeli citizenship after fleeing to Jerusalem two months ago; and Boris Berezovsky, recently granted political asylum in London - are often seen as traitors, too.

The truth is, of course, much more complicated. The privatisation of Russia's natural resources in the early and mid-90s was ill-supervised and anarchic; but it could hardly have been otherwise.

Well-placed risk-takers reaped enormous rewards, often out of all proportion to the risks they were taking. But the situation was desperate. The old Soviet conglomerates, with their obsolete plant and cradle-to-grave social supports for their workers, were unsustainable.

Soviet central planning had failed. Millions of workers were threatened with the loss of their livelihood. Someone had to take over the bankrupt industries and there had to be plausible incentives for doing so.

After Khodorkovsky's arrest, a Yukos spokesman recalled that when he took over the concerns that he built into Russia's biggest oil company, they were insolvent. Workers had received no pay for months. The plant was hopelessly outdated.

Boris Yeltsin's Government was grateful to anyone who would take these liabilities off its hands. And for all the profiteering and sharp practice that undoubtedly took place, something else happened, too. Perhaps out of altruism, perhaps out of enlightened self-interest, some - even most - of the budding "oligarchs" started to take an interest in the debilitated communities that the Soviet collapse had left in its wake.

When Yukos - and companies like it - moved in, they brought with them improved transport connections, modern communications and a reliable supply of food and consumer goods. They set about improving the local infrastructure.

Involving themselves in politics was the logical next step. Roman Abramovich, now famous for buying Chelsea Football Club, was able to live down much of the negative implications of oligarchy by standing for election as governor of the remote, far eastern region of Chukotka, and then ruling as a benevolent autocrat.

Aleksei Mordashov returned to Cherepovets for his first job at Severstal, the steelworks he now owns and runs with such success that its share price has risen from $13 to $140 in four years.

Why did he return to what was an industrial ruin of a town? Out of local patriotism; because his parents were here and, he says, because "I believed in the future of Russian heavy industry".

Mordashov clearly felt - and feels - a special responsibility for the fate of Cherepovets. With his international contacts and sense of mission, he has attracted foreign investment to Severstal.

This has not only made the company into a going concern; it has also helped to make Cherepovets a tolerable place to live, perhaps for the first time for almost a century. It is well supplied, new services, shops and restaurants are opening and it has regular air links with Moscow.

Understandably, you will not hear a word said against Mordashov in Cherepovets. There, he is not thought of as an "oligarch", but lionised as a patron to whom the city is deeply indebted. Fortunately for Cherepovets, he seems too driven to exploit his position. For the less scrupulous, however, the opportunities are legion.

Last week, the Russian judicial authorities annulled the election of a certain Vasily Shakhnovsky to the upper house of the Russian Duma (parliament) from the remote Evenki ethnic district. It was alleged that he had not produced the necessary papers and had stood unopposed, which is illegal.

Nor was there any obvious reason why the previous incumbent should have given up his mandate with three years still to run. A closer look at the election suggests possible reasons for what may have happened. Shakhnovsky was a major shareholder in Yukos and - like Khodorkovsky - was wanted for tax evasion.

Were there not so relatively few billionaire "oligarchs", it would be tempting to speculate about the return of something like feudal baronies to Russia.

So far, President Vladimir Putin has avoided placing himself in hock to the oligarchs, picking off the more politically ambitious and reducing their ability to use their wealth to compete in the arena of national politics.

Khodorovsky's arrest showed that, in the contest between raw money and politics, politics in Russia is still just ahead.

- INDEPENDENT