Vekselberg quits war over Rusal

The oligarch's decision to walk away from the chairmanship of the world's largest aluminium company ends a long-running dispute with Oleg Deripaska. Shaun Walker examines the egos behind the conflict

A long-simmering conflict between two of Russia's wiliest oligarchs came to a head yesterday when Viktor Vekselberg walked away from his role as chairman of Rusal, the world's largest aluminium company.

He said the company, controlled by Oleg Deripaska, is in crisis. Mr Vekselberg's departure is the latest development in a complex chain of oligarchic rivalries and personality clashes in the Russian metals sector that show no sign of abating.

"I regret to say at this time that Rusal is in a deep crisis, caused by the actions of the management," said Mr Vekselberg in a statement in the early hours of yesterday morning.

The billionaire, who is said by Forbes magazine to be Russia's eighth-richest man with a fortune of $12.4bn (£7.88bn), owns a 15.8 per cent stake in Rusal along with his investment partners.

Rusal responded yesterday that Mr Vekselberg was simply jumping before he was pushed, after the board had got irritated by the oligarch's non-attendance at meetings over the past year.

"In this respect, the decision of Mr Vekselberg to resign as chairman of the board pre-empted the anticipated consideration of this matter by the board," said Rusal.

One of the main bones of contention between the two men has been Rusal's quarter-share of Norilsk Nickel, another metals giant.

Mr Deripaska bought a 25 per cent stake in the company through Rusal four years ago, as part of a long-term strategy to create a mega metals company by merging the two. Then the financial crisis hit, making the loan-financed purchase appear foolhardy, and Mr Deripaska was only bailed out by huge state loans.

Since then, Mr Deripaska has refused to consider selling Rusal's stake in Norilsk back to the company, despite an offer from Norilsk and calls from Mr Vekselberg to do so.

Rusal has not paid out dividends as it seeks to reduce its £7.2bn debt, and its shares have lost 43 per cent of their value since its initial public offering in Hong Kong in January 2010.

Selling the Norilsk stake would flood the company with cash, something that Mr Vekselberg has been keen to see happen.

"Deripaska is a strategic investor whereas Vekselberg is a financial investor," said Robert Mantse, metals and mining analyst at Otkritie, a Moscow-based brokerage. "There has been a number of disagreements between them, but the two main ones are over the stake in Norilsk and the dividend policy. As a financial investor, Vekselberg is looking to monetise his ownership."

Ultimately, many of the disputes come down to personality clashes among men who often have egos to match their wallets.

Aside from Mr Deripaska's dispute with Mr Vekselberg, he also does not see eye to eye with Vladimir Potanin, whose Interros company controls Norilsk Nickel. In turn, Mr Potanin had a long and acrimonious falling out with his long-standing partner in Norilsk, Mikhail Prokhorov, with the two men now operating separately, and Mr Prokhorov picking up a 17 per cent stake in Rusal.

Mr Prokhorov, who has a playboy reputation and also owns a US basketball team, stood for the Russian presidency against Vladimir Putin in elections earlier this month, winning around 8 per cent of the vote. Many speculated that his candidacy was aimed at sponging support away from the street protests that have grown up in Moscow recently and diverting them towards a "reliable" opposition candidate.

After the election, Mr Putin said he may well consider giving Mr Prokhorov a role in government.

Mr Vekselberg has also been busy with a government-assigned role in recent years, after being appointed by President Dmitry Medvedev to head the Skolkovo project, which is meant to emulate California's Silicon Valley in Russia, and wean the country off dependence on exporting natural resources.

But while the lives of Russia's richest men are often influenced by behind-the-scenes squabbles or orders from the Kremlin, analysts said this latest dispute was unlikely to involve the hand of the Russian government.

"I don't see any government involvement here at all. This is a dispute between two core shareholders," said Mr Mantse.

Despite emerging a winner from the ruthless "aluminium wars" of the 1990s and at one stage the richest man in Russia, Mr Deripaska has had a rough ride of things in recent years, especially in the aftermath of the financial crisis.

In 2009, he was on the receiving end of a public dressing down from prime minister Mr Putin, as he was summoned to a meeting in the town of Pikalyovo and forced to sign a contract to ensure that an idling factory in the town renewed operations. Mr Putin likened the oligarchs to "cockroaches" and threw a pen down for the meek Mr Deripaska to sign the paper.

Analysts have also forecast possible tough times for metals and mining companies when Mr Putin returns to the Kremlin in May. The Russian leader's election programme featured a number of generous social spending promises that may be difficult to fund without increasing taxes. With plans to cut levies in part of the oil sector, this leaves metals as a vulnerable area.

Yesterday's news may not have too much effect on Rusal in the short term, as the differences between the two men have long been public knowledge. Shares fell 1.3 per cent yesterday before trading was suspended.

In the longer term, however, Mr Deripaska still has a number of challenges to face, including a battle in the London courts with Israel-based businessman Mikhail Cherney.

Mr Cherney claims that he was a shareholder in Rusal, and is demanding the equivalent of one-fifth of the company in compensation.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Day In a Page

Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee
World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

Max Brooks honours Harlem Hellfighters

The author talks about race, legacy and his Will Smith film option to Tim Walker
Why the league system no longer measures up

League system no longer measures up

Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
Valentine's Day cards: 5 best online card shops

Don't leave it to the petrol station: The best online card shops for Valentine's Day

Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste
Diego Costa: Devil in blue who upsets defences is a reminder of what Liverpool have lost

Devil in blue Costa is a reminder of what Liverpool have lost

The Reds are desperately missing Luis Suarez, says Ian Herbert
Ashley Giles: 'I'll watch England – but not as a fan'

Ashley Giles: 'I'll watch England – but not as a fan'

Former one-day coach says he will ‘observe’ their World Cup games – but ‘won’t be jumping up and down’
Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness