David Conn: Behind Abramovich's dream lurks a nightmare of Russian intrigue

Snug in his seat in the Highbury directors' box as his Chelsea side stole joyfully into the Champions' League semi-final, Roman Abramovich was smiling his familiar wan smile, the boy with the golden ticket. Yet while he has spent a barely imaginable £250m transporting Chelsea from the brink of insolvency last summer to the cusp of glory, for all the fame the game has reflected on Abramovich, we still know painfully little about why he came here - the unfeasibly rich 36-year-old owner of Russia's fifth largest oil company - and bought one of our football clubs with his small change.

In the only interviews he has given, immediately after buying debt-ridden Chelsea from Ken Bates for £17m, Abramovich rolled out the modern football entrepreneur's stock-in-trade rationale, that he had "fallen in love with the beautiful game" one floodlit night at Old Trafford. But reporters also came away with a more tantalising remark. Asked what advice he would give to young people aspiring to make a business fortune in Russia, Abramovich cited what is apparently a wry saying among his peers: "Do not imagine that you will never go to jail."

His timing turned out to be icily acute. While Abramovich was riding the tsunami of global celebrity after he spent £111m on players for Chelsea with the transfer market everywhere else asleep, his fellow Russian oligarch, Mikhail Khodorkovsky, with whom he had planned a merger of their two huge oil companies, was arrested by security agents on a plane refuelling in Siberia. Khodorkovsky was charged with fraud, theft and tax evasion, and dumped into the overcrowded Matrosskaya Tishina prison in Moscow, where he awaits trial.

Hardly dominating the news here, Khodorkovsky's humbling by Moscow's General Prosecutor's Office was a huge event in Russia, widely seen as a symbolic show of strength by Vladimir Putin's government against the power wielded by the tiny group of men, including Abramovich, who emerged from the Boris Yeltsin-era privatisations of the mid-1990s owning vast tracts of Russia's resources.

Abramovich, who had bought the Omsk oil refinery and Siberian oil production plants under the umbrella of a new company, Sibneft, alongside his then hugely influential senior partner, Boris Berezovsky, was one of this new oligarch class, but not the most powerful. Khordorkovsky, the owner of Yukos, a larger oil company than Sibneft, was laden with a larger fortune, and better known.

How these individuals came to own these vast resources, which had all belonged to the state before communism collapsed, has become the dominant, bitterest issue in Russian society. As millions of ordinary Russians suffered extreme poverty and economic crisis in their new market economy, the oligarchs were instantly lifted into lists of the world's richest people.

Abramovich's rise from scrapping in early businesses, to running an oil trading company, Runicom, then to taking over Sibneft with Berezovsky in 1995 while still in his twenties, is salted with the usual lurid stories which poured out of Russia during its "bandit-capitalist" era. But it is a mistake to confuse the rise of the oligarchs with the emergence of the mafia; the deals which outraged much of the Russian population - once they understood what had happened - were, at the time under President Yeltsin, legal.

The small group of opportunists around Yeltsin became oligarchs through the now notorious "loans-for-shares" device. They lent money, and support, to Yeltsin's creaking, enfeebled government, in return for him granting them, by decree, the right to manage huge state concerns. These were then sold off in what were effectively closed auctions. The same businessmen bought them for a fraction of their true value and became billionaires overnight.

John Mann, Abramovich's and Sibneft's spokesman, told me it was accepted that the auction was not open and that Abramovich bought the oil company, at $200m [£109m], well below its real worth: "Was the process perfect? No. The investors lent money to the government in return for managing the company, then later when the company was privatised they had an advantage in buying the shares. But it was not illegal; they played according to the rules of the time. Everything in Russia was undervalued then, and Mr Abramovich was still taking a huge risk. He has since turned the company round by investing in modern equipment and management."

That rationale has never satisfied the majority of Russians, who have become more resentful as the years have passed. Part of the appeal of Vladimir Putin, Yeltsin's successor as President, was that he was seen as a politician who might reverse the privatisations, or at least act against the oligarchs and create a more equal distribution of Russia's available wealth.

Putin held back, keen to be seen by the west as capitalism's friend. It has become accepted that he made a pact with the oligarchs: he would leave them alone if they stayed out of politics. Abramovich did become the governor of the far-flung, desperately impoverished region of Chukotka, on which he has lavished a pin-prick of his fortune, $200m [£109m], in good works, but he declined involvement in any national politics which could challenge Putin.

Not so Khodorkovsky. He funded two liberal political parties which were opposed to Putin, and, sources say, Yukos' bosses infuriated the government further by lobbying hard in the fringe areas of the oil industry which the state still controlled, export pipeline routes and taxes.

Life heated up for the oligarchs on 2 July last year, when one of Yukos' major shareholders, Platon Lebedev, was arrested, imprisoned and accused of tax evasion and embezzling $300m [£164m] in the privatisation of a state-owned fertiliser company during the mid-1990s. His trial is scheduled to begin on Thursday 15 April.

The state prosecutor moved against Khodorkovsky, a huge target, last October, and since then Khodorkovsky has continually been refused bail. Earlier this month the prosecutors unveiled a raft of charges against him. Yukos itself faces a $3bn [£1.64bn] claim for back taxes, which the authorities claim the company evaded. Both men say they are innocent, as does the company.

After the arrest of Khodorkovsky, Abramovich moved to reverse his company out of the Yukos merger, which had stood to make him, personally, $7.5bn [£4.1bn]. In another financial practice alien to mature economies, Sibneft distributed its whole corporate profit last year, $1.2bn [£655m], in a dividend to its shareholders. Abramovich, who is a 50 per cent owner of the company, pocketed $600m [£327m].

With Russia's political climate hardening, Abramovich went shopping for a major Western European football club. He said he did not fancy Italian football and discovered that no one person can buy Real Madrid or Barcelona because they are owned by their members.

However, in England he found that our great football clubs can be traded like, well, fertiliser companies. While Abramovich may indeed have fallen in love with the game - millions of thirtysomething blokes can relate to that - many observers of the Russian political scene believe his move on Chelsea was a brilliant, strategic way of protecting himself from suffering a fate similar to his fellow oligarchs.

Putin won his landslide re-election for a second term last month, partly on a platform of moving more strongly against the oligarchs. This week a spokesman for the Russian embassy in London told me there is to be a "review" of the privatisations: "If they were all legal, then nobody has a problem. If there were breaches of the law, then they must be dealt with."

Khodorkovsky, for all his riches, was still grabbed in his first-class airline compartment and marched off to prison. Abramovich, now a global sporting icon - of a strange, smirking kind - would be rather more difficult for his government to finger without major international embarrassment and negative publicity.

Mann says this was not his motivation: "Roman Abramovich has never been accused of any criminal offence, and he has no need of an escape hatch from Russia. He continues to do what the government asks of its businessmen, to provide jobs and be responsible in the community. He bought Chelsea because he wanted to buy a football club."

At the end of last year, Abramovich sold off chunks of his assets in Russian companies, the airline Aeroflot, Russian Aluminium and his 37.5 per cent stake in Ruspromavto, the car company. However, Mann said Abramovich is still a Russian resident and has no plans to leave the country yet.

In the next few weeks, Abramovich will be flying around Europe, luxury class, to see if his football club can pull off a Champions' League triumph that we will all be expected to regard as romantic. Meanwhile, Khodorkovsky, until recently his senior partner, is rotting in a Moscow prison cell, awaiting his fate.