Business View: From Siberia to the Shed - Chelsea's Russian takes route one to respectability

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The Independent Online

Say what you will about Russian business, with its powerful oligarchs, political shenanigans, legal jousting and sporadic violence. But at least, after a decade of trying to pick their way through all manner of Hong Kong-based, Guernsey-registered trusts and management vehicles, Chelsea fans will now know who actually owns their football club.

Experts in the mercurial world of Russian commerce tell me that - by local standards - Roman Abramovich is one of the good guys. Being a billionaire by your mid-30s may be unusual in the West, but the pace of change in the Wild East has thrown up all sorts of anomalies.

Last week may have been unusual for Mr Abramovich because he had to face the glare of publicity for buying Chelsea, a deal which will use up less than 5 per cent of his fortune. But back at home, one of Mr Abramovich's business associates, Platon Lebedev, found the police surrounding his hospital bed. Mr Lebedev's alleged crime is stealing shares in a formerly state-owned fertiliser plant nine years ago. More likely his real crime is supporting the political ambitions of Michael Khodorkovsky, chief executive of Yukos - the oil company that is in the process of merging with Mr Abramovich's Sibneft - and an outspoken critic of President Putin. Mr Khodorkovsky found himself being question by police for two hours on Friday.

The new Chelski boss is no Putin critic. Indeed he is one of the few oligarchs to have grabbed his cake during the Yeltsin era and still eaten it while Mr Putin has been trying to rein in the power of the so-called robber barons. MrAbramovich's mentor, Boris Berezovsky, fled from Mr Putin and is currently in the UK fighting extradition to Russia to face fraud charges. He says these are politically motivated and turned up to court wearing a Putin face mask. Given this background, it is not clear whether Mr Lebedev's detention is good or bad news for Mr Abramovich. What is clear, though, is the race for respectability among Russian oligarchs. A financier who has been dealing with Russia since the communist days told me Russian capitalism is moving out of its rough and murky stage, when your greatest assets were a thick hide and tough bodyguards, and into an era of transparency and legitimacy.

This is manifesting itself in many ways. Mr Khodorkovsky has been giving large sums to charity. Oleg Deripaska, who helped Mr Abramovich turn RusAl from two controversial companies in the aluminium industry into an internationally recognised metals giant, is sponsoring a chess and art exhibition in London at the moment and is hoping to set up a Russian cultural centre here. And, of course, Mr Abramovich is buying Chelsea.

The route to legitimacy via owning a sports team is well trodden. Silvio Berlusconi's ownership of AC Milan has been a great asset to him during his transformation from being a media and property mogul with colourful tactics to a top-flight politician with a colourful turn of phrase. George W Bush's emergence from obscurity to first the governorship of Texas and now the US presidency was helped no end by owning the Texas Rangers, a baseball team.

Of course this tactic doesn't always work. Robert Maxwell owned both Oxford United and Derby County football clubs and became involved in Tottenham Hotspur. And he never became legit.

Bonds beat a retreat

Readers of the Expert View column will remember that Mark Tinker issued a grave warning about the bond market two weeks ago. And so it has come to pass, with heavy selling of government securities on both sides of the Atlantic. This puncturing of the so-called "bond bubble" should give a stark warning to the trustees of pension funds to keep a close eye on what the managers of their funds are up to.

There has been a flight to bonds over the past couple of years as those custodians of our happy retirement have become worried about the risks of investing in equities. While this has been a good short-term tactic, it is not a sensible long- term strategy. Over 20 years or so, a mixed portfolio of equities should be no more risky that a portfolio of bonds. In fact, in a low-inflation, low-interest and, even, low- growth world, you could argue that equities are safer and should give a better return.

The cult of the equity is not dead.