How Dead Oligarch Boris Berezovsky Impoverished Himself Fighting Putin And Losing A Lawsuit Against His Old Friend

Boris Berezovsky and Roman Abramovich
Berezovsky and Abramovich in 2000

There’s speculation that Russian billionaire Boris Berezovsky was murdered in his estate outside London this weekend.

But there’s also a great argument for suicide. He was found unconscious in his bathroom with the door locked from the inside. Authorities found no trace of third party involvement in his death either, and they even tested for radioactive materials (they’ve been used to kill anti-Putin agitators before).

According to close friends, Berezovsky was increasingly depressed in his last days. In part, he regretted being the king-maker that put Vladimir Putin in line to succeed Boris Yeltsin in 1999.

Even more importantly, Berezovsky felt deeply betrayed by the man he mentored, Russian billionaire Roman Abramovich. Last year, Berezovsky sued Abramovich for $5 billion in London, alleging that Abramovich had intimidated him into selling his stake in their oil company, Sibneft, at a rock bottom price.

Abramovich argued that Berezovksy’s stake was imaginary, that he was running Sibneft, and Berezovsky had only been the equivalent of a fundraiser, or an initial investor.

In fact the word in Russian is krysha — the man who provides protection, like a godfather.

It all goes back to the rise of the oligarchs during the privatization of Russian state-owned companies back in 1994.

That year, Abramovich and Berezovsky and met on a mutual friend’s sailboat in the Carri bean. Berezovsky had already made his fortune in the auto business, media, commodities, and more industries. He was a high profile guy in Moscow’s social scene known to have then-President Boris Yeltsin’s ear.

That’s why Abramovich needed him. Abramovich was wealthy in his own right, but super secretive. In fact, even after his meteoric rise to an advisor to the Kremlin, it was years before the Russian media released pictures of his face. In his early days, Abramovich lacked Berezovsky’s connections, but he wanted to take advantage of the new Kremlin program to jump start the economy called “loans for shares.”

Essentially, the program was an attempt to jump-start the privatization of Russian state-held companies. Banks lent the government money in exchange for shares in these badly managed companies. If the government defaulted on the loan, banks got to keep their stake.

Abramovich and Berezovsky had their sights set on Russian oil producer Sibneft. In his lawsuit, Berezovsky alleged that Abramovich agreed to give him 25% of the company. He also said the Abramovich agreed to give another 25% to his most trusted partner, Badri Patarkatsishvili.

That’s why, according Vanity Fair, Berezovsky used his government connections and his control of Russian TV station O.R.T. to make Yeltsin a deal he couldn’t refuse.

Berezovsky said he’d deliver the 1996 election for Yeltsin if Yeltsin ensured that he and Abramovich would win their bid for Sibneft.

And they did, but naturally there’s no documentation detailing any of these agreements — not with the Yeltsin regime and not between Abramovich, Patarkatsishvili and Berezovsky.

From Vanity Fair:

No document shows that either Berezovsky or Patarkatsishvili owned any part of Sibneft. Abramovich says that this is because they did not in fact own any part, while Berezovsky says that this is because, given how deep his own involvement in politics was, an off-the-books arrangement was necessary. Abramovich made annual payments to Berezovsky and his partner, but this clarifies nothing: Berezovsky claims that these were dividends, while Abramovich objects that Sibneft never showed a profit in the 1990s, so there would have been no basis for dividends. In Abramovich’s account, these were essentially payments to Berezovsky for his political influence. 

Then Vladimir Putin came to power in 1999 and Berezovsky fell out of favour with him and moved to London. From London, Berezovsky openly used his vast fortune to take down Putin. Abramovich, on the other hand, stayed friends with the regime.

More from Berezovsky’s testimony in Vanity Fair:

“In early 2001, Badri reported to me that Mr. Abramovich had told him he was being squeezed by the Kremlin to stop his relations with us, and that if we did not sell our interest in Sibneft, President Putin would expropriate it,” Berezovsky said in his prepared witness statement before the trial. “I understood Mr. Abramovich to be threatening that Badri and I could either sell our interest in Sibneft and receive some money (albeit at a gross undervalue), or he would ensure that we would lose our interest in any event.” Abramovich’s version is different.

He says that Patarkatsishvili approached him in January 2001, demanding a final payment that would serve to close the long-running relationship between Abramovich, the owner of Sibneft, and Berezovsky, the godfather. Whatever the truth, Berezovsky and Patarkatsishvili received $1.3 billion. Two years later, Sibneft merged with the oil giant Yukos; at that time Yukos paid $3 billion for 20 per cent of Sibneft’s shares.

So Berezovsky felt like he’d been had. Unfortunately, the Judge Elizabeth Gloster did not agree. She said Berezovsky “had deluded himself into believing his own version of events,” and ordered him to pay the trial’s legal fees.

It was the trial of the century too. Abramovich’s lawyer, Jonathan Sumption, alone took home $12 million in legal fees. The entire bill reportedly wo totaled around $160 million.

Boris Berezovsky estate
Boris Berezovsky’s Berkshire estate

Meanwhile, Berezovsky was already in a tough spot financially after living a lavish life of properties in France and England, fancy cars (he had a 1927 Rolls Royce), and tons of security for himself and the 6 children he had with three different women.

In 2011 he paid his ex-wife, Galina Besharova, a $152 million divorce settlement (no prenup). His former mistress Elena Gorbunova was suing him for $7.6 million when he died too.

From The Guardian:

One Russian lawyer, Alexander Dobrovinsky, said Berezovsky “was in a dreadful, horrendous state; covered in debt, almost broke.

In 1997, Forbes estimated Berezovsky’s fortune at $3 billion. In 2009 it had shrunk to $1 billion. This year he was not on the list.

He did, however, give Forbes’s Russian magazine his last interview on Friday night (from the Telegraph):

lya Zhegulev, a commentator with the Russian edition of Forbes magazine, met the 67-year-old oligarch in the restaurant of the Four Seasons hotel on Park Lane on Friday evening.

Mr Berezovsky said had had lived through “many disappointments” in London. He said: “I’ve lost the point… there is no point [or meaning] in my life. I don’t want to be involved in politics. I don’t know what to do. I’m 67 years old. And I don’t know what I should do from now on.”

He said he wanted to return to Moscow: “I want nothing more than to return to Russia. Even when they opened a criminal case against me, I wanted to return to Russia… that was my main miscalculation: that Russia is so dear to me that I cannot be an émigré.”

Those are, perhaps, the words of a heart-broken, suicidal man at the end of his wits.