Many of the Russian Oligarchs have become extremely well-known after investing heavily
in foreign companies.
People like Roman Abramovich, Alexander Lebedev and the now dead Boris Berezovsky are all
extremely well-known, if not household names in the UK but who are the Russian Oligarchs,
what does the term mean, and how did they become so stinking rich?
Let's start with the basics, an oligarch is someone who's part of an oligarchy - that's
a form of government where power is in the hands of an elite few.
Now the Russian Oligarch's don't hold political office, but they do have a lot of political
influence.
The term 'Russian Oligarch' basically refers to extremely wealthy business magnets from
Russia, naturally, who made a hell of a lot of money out of the collapse of the Soviet
Union.
After the Soviet Union disintegrated in the late 80s and early 90s with the economy in
disarray the then president Boris Yeltsin had to sell off some state-owned industries
in order to raise some cash.
That meant oil companies, media companies, engineering companies, steel companies, and
many many more.
In 1994 President Yeltsin and his government turned to a bank for help to raise that money
and that bank was called ONEXIM.
ONEXIM was the only Russian bank to have accreditation with the Swiss Central Bank which in the most
basic of terms means it was respectable to the outside world and it was able to open
up a Swiss affiliate.
That plan was called 'Loans for Shares' and it meant Russian banks lent the government
money in exchange for temporary ownership of a company, when the Russian government
paid back the money, it would resume control but if the government failed to pay it back,
the stake in the company stayed with the banks.
And yup, you guessed it, the government did default on its loans.
Now this is where the oligarchs really started to cash in because the bank started an auctioning
off process, a process that was so corrupt that the Russian people began to call it "grabification".
Things started to smell a bit fishy after the government assigned the auctions to various
banks.
Foreign investors were banned from bidding for the most valuable companies and for some
reason, the banks organising the auctions always seemed to win them.
And things begin to look really bad when you start looking at the prices that they pay
for them.
They were generally just over the minimum asking price.
Now this sort of thing went on across the board and the Russian government actually
only bought in half of the 2 billion dollars that it wanted to.
The oligarchs meanwhile went on to run more and more successful businesses and form their
powerful elite.
People like Vladimir Potanin, ONEXIM's then president who was already Russia's fourth
richest man became so rich it would make you sick and there wasn't much reason for Yeltsin
to stamp down on the corruption from a personal point of view.
He knew he would gain political support from the wealthiest people who would fund his reelection
campaign in 1996.
In return for their support the successful President Yeltsin allowed his funders to get
away with paying a teeny-weeny amount of tax and watched their profits and personal fortunes
skyrocket.
They carried on making vast amounts of money while the Russian economy just stumbled along
and normal people struggled to survive or even to pay for basic things like food and
clothing.
Then in came Vladimir Putin and a crackdown started, well sort of anyway.
He introduced new laws and banned some of the tax schemes that gave the oligarchs ridiculous
profit margins.
A lot of them couldn't get down with the new way of doing things so they either fled like
Abramovich, Berezovsky and Lebedev, or they went to jail like Mikhail Khodorkovsky.
He was the 16th richest man in the world, the richest man in Russia, and owned the oil
conglomerate, Yukos.
But he was arrested in 2003 and then sentenced to a prison term for fraud and has since had
his assets frozen and much of his wealth has just dripped away.
But the ones who left the country are still worth a huge amount.
The Chelsea owner, Roman Abramovich is thought to be worth $13.4 billion, Mikhail Prokhorov
who owns the Brooklyn Nets is thought to be worth $13.1 billion and Alisher Usmanov, a
major shareholder at Arsenal is worth around $20 billion.
And the oligarchs who stayed behind and played the political game correctly with Putin, well
they're still reaping the rewards.
Many people thought the credit crunch would bring a few of the oligarchs down but even
if the financial crisis slowed their growth, Russia still has one of the worst wealth distributions
in the world.
According to a credit report from 2012, only the tax havens in the Caribbean are worse
and 12 of the top 100 richest people in the world come from Russia.
Anyway let us know your thoughts about how the Russian Oligarchs went about amassing
these vast personal fortunes.
Let us know if you think the Russian people deserve any of that money back and if realistically
if that's ever going to happen.
While you're mulling it over check out these two videos over here and if you haven't done
already please subscribe to the channel there's a button up there somewhere.