The billionaire, the banker – and a bit of birch-thrashing

view gallery VIEW GALLERY

A libel case is shedding light on the secretive world inhabited by the super-rich – and Lord Mandelson. Jerome Taylor reports

When a Russian oligarch, a peer of the realm and a British banking scion lay on their stomachs at a Siberian sauna to be thrashed with birch twigs, before plunging together into an invigorating ice bath, none of the men had business on their minds. Nor could they have envisaged, through the steam of the Russian banya in which they submitted to the traditional spa treatment, that their business dealings would be unpicked by lawyers seven years later as part of one of the most surprising libel battles to be heard in a British court.

This week, Nathaniel Rothschild, the investment banker and heir to the Rothschild dynasty, went to the High Court to sue the Daily Mail for its investigation into the January 2005 trip in which a group of business figures stayed at the Siberian chalet of Oleg Deripaska, the billionaire owner of Russia's largest aluminium plant.

Mr Rothschild, 40, claims the story damaged his reputation by suggesting that he invited Lord Mandelson to Siberia to help smooth the way for a £500m deal with Mr Deripaska.

Hugh Tomlinson, QC, who represents Mr Rothschild, said the Mail's article portrayed Lord Mandelson – then an EU trade commissioner in Brussels – as "a poodle that [my client has] wheeled out to impress Mr Deripaska". He added: "This is an article in relation to Mr Rothschild that makes a clear accusation he has done something wrong. That is the sting of the libel."

The piece described how Mr Rothschild persuaded Lord Mandelson to fly to Moscow for the weekend after they met at the World Economic Forum in Davos. The story alleged that the peer attended a dinner which resulted in a £500m deal between a company owned by Mr Deripaska and Alcoa, America's largest aluminium manufacturer.

Mr Tomlinson said the story portrayed Mr Rothschild as "a puppet-master" who made sure Lord Mandelson was at the dinner to reassure all parties that EU import tariffs for aluminium would not rise over the coming years.

Last month, the Daily Mail's owner Associated Newspapers, admitted it could not prove that Lord Mandelson attended the Alcoa dinner. Mr Rothschild's lawyers insist that he was at a separate dinner in the same restaurant with a Russian minister, though the former Business Secretary was not called to the court to give evidence. But the Mail said there was a "reasonable suspicion" that aluminium tariffs were discussed during the visit and that the nature of the trip had created a "perception of a conflict of interest".

The original Mail story made no mention of the trip to Siberia, which became public knowledge only after the case came to court. Lord Justice Tugendhat, who is hearing the case, was told that following the visit to Moscow, Mr Rothschild and Lord Mandelson were whisked in a private jet to the Siberian town of Abakan, where Mr Deripaska owns a chalet and smelting plant. Peter Munk, a Canadian gold magnate, and Sebastian Taylor, a friend of Mr Rothschild, also joined the group.

Taking the stand earlier this week, Mr Rothschild said his friends were taken to a traditional sauna, where they were whipped with birch leaves before plunging themselves into icy water.

"It is the best way in the world to beat jet lag and everything else," he said. "It was incredibly enjoyable. Everyone woke up the next day feeling revitalised and excited about the day."

Over the next 24 hours, the party spent time skiing, visiting an aluminium smelter, playing football and listening to a traditional Cossack band. Lord Mandelson then returned to Brussels and the rest of group went on to central Asia to visit more of Mr Deripaska's industrial plants in Tajikistan and Kyrgyzstan. Mr Rothschild insisted the Siberian part of his trip was entirely recreational and that the peer was invited because he was a friend.

"The presence of Lord Mandelson and Mr Taylor on the trip was purely social," he said. "No EU tariffs or other matters of that nature were discussed. The only business was to take place in central Asia, after Lord Mandelson had returned to Brussels."

He added: "I have never sought to exploit my friendship with Lord Mandelson to further my relationship with, or impress, Mr Deripaska or any other person with whom I do business. Lord Mandelson was and remains a good friend. Our relationship is no more than that."

But the case has also shone light on the powerful political circles in which Mr Deripaska, who went from being the manager of an aluminium plant to one of the world's richest men, now moves.

On Wednesday, the co-chairman of the Conservative Party, Lord Feldman, told the court he and George Osborne, who was then Shadow Chancellor, were invited to a party at a villa on Corfu owned by Mr Rothschild.

Mr Deripaska was also at the party, which eventually moved on to his luxury yacht moored nearby. The party caused huge media interest over allegations that Mr Osborne solicited a party donation from Mr Deripaska.

But according to Lord Feldman, it was Mr Rothschild who first suggested that the Russian was looking to make a donation through one of his UK-owned companies.

"I said that I was not sure if such a donation was appropriate," he told the court. "I told Mr Rothschild I would have to seek advice. It was decided after consulting senior party officials that it would not be appropriate."

Mr Justice Tugendhat is expected to give his judgment in a fortnight.

Who? What? Where?

The "puppet master": Nathaniel Rothschild

According to Rothschild's counsel, the Eton-educated banking heir and hedge fund boss was libelled by the Daily Mail in May 2010 when they painted him as a "puppet master" willing to exploit his friendship with Mandelson to smooth Deripaska's £500m aluminium deal.

The guest of honour: Peter Mandelson

The court heard the then European Trade Commissioner attended a restaurant in Moscow in 2005 as a guest of Rothschild.

The oligarch: Oleg Deripaska

The Russian aluminium tycoon, who has an estimated £6.5bn fortune, is the centre of the story, with claims Rothschild tried to "impress" him by bringing Mandelson to the dinner. Deripaska provided the jet which took Mandelson and Rothschild to Siberia.

The fundraiser: Lord Feldman

The Conservative party co-chairman denies soliciting a donation for the party from Deripaska when he and George Osborne visited the oligarch's yacht in August 2008. He went aboard the Queen K, he said in court, because he "had never seen a boat that size close up".

The birch whipping at the spa

After visiting a Siberian smelter, the party went to a Banya spa, where the men were thrashed with birch twigs by a 25-year-old before jumping into icy water to improve circulation. "It was incredibly enjoyable. Everyone woke up feeling revitalised," said Rothschild in court.

The villa in Corfu

Lord Rothschild's villa on the Greek island has long been known as a place where plutocrats and politicians mingle, and it is here, Feldman claimed, that Rothschild suggested Deripaska was interested in making a donation to the Tories. Rothschild denies this.

Samuel Muston

Start your day with The Independent, sign up for daily news emails
The two faces revealed by the ultraviolet light
newsScholars left shaken after shining ultraviolet light on 500-year-old Welsh manuscript
Rosamund Pike played Bond girld Miranda Frost, who died in Die Another Day (PA)
Arts and Entertainment
newsHow do you get your party leader to embrace a message and then stick to it? With people like this
Have you tried new the Independent Digital Edition apps?
ebooksA special investigation by Andy McSmith
  • Get to the point
2015 General Election

Poll of Polls

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 General

Recruitment Genius: In House Counsel - Contracts

Negotiable: Recruitment Genius: This leading supplier of compliance software a...

Recruitment Genius: Associate System Engineer

£24000 - £30000 per annum: Recruitment Genius: The Associate System Engineer r...

Recruitment Genius: Executive Assistant

Negotiable: Recruitment Genius: An Executive Assistant is required to join a l...

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Day In a Page

General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat