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How Roman Abramovich Became the Second-richest Israeli

Perhaps best known for owning Chelsea FC, he had a modest start in business during Russia's perestroika era, went on to wield political power in the post-communist Yeltsin and Putin periods – and has gone on to amass wealth estimated at $13 billion

Nathan Lipson
Nathan Lipson
Nathan Lipson
Nathan Lipson

Total worth in 2019: 13,000,000,000

The wealth amassed by one of Israel’s richest citizens could buy more than 200 million barrels of oil. Or, if he were to transfer his capital to the Israeli government, it could buy 150 F-35 Adir stealth fighter planes. The list of his assets is no less impressive. Among them is the world’s second-largest privately owned yacht, which is 162.5 meters long, has two helicopter landing pads and is estimated to be worth $400 million. He owns a huge home in London’s upscale Kensington neighborhood, valued at around $120 million; the street on which the mansion is situated in known as Billionaires’ Row. He has also invested some $100 million in three adjoining townhouses in the Upper East Side of Manhattan, which he intends to turn into one huge estate.

This person in question is Russian-born Roman Abramovich, 52, who last year became an Israeli citizen, becoming the richest person ever to immigrate to the country. His total wealth is valued at $13 billion. It wasn’t difficult for him to get citizenship, since as a Jew, it is granted to him automatically under the Law of Return.

Roman Abramovich.Credit: Doron Flumm

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For 16 years he has been the owner of the Chelsea Football Club, worth around $2 billion, and for some years resided in the United Kingdom thanks to an investor’s visa. According to The Guardian newspaper, the British government granted such visas to some 700 Russian oligarchs during the years 2008-2015. British media outlets reported that Abramovich’s visa expired a year ago, around the same time as he became an Israeli citizen; according to associates he never tried to become a resident of the United Kingdom. With an Israeli passport, he can enter Britain in any case without difficulty.

Abramovich’s story is one of the most fascinating and frightening of those told about Russians who got wealthy during their country’s transition from a communist regime to an oligarchy. His family’s roots are in Lithuania, a country that was once relatively heavily populated by Jews. His life began with tragedies: His mother died when he was a year-and-half old, his father died when he was 4 and he was raised by relatives. Like many up-and-coming Russians, Abramovich exploited the period of perestroika – the reforms enacted by the Soviet Union’s last leader, Mikhail Gorbachev – to try his luck in an economy that was less restricted than the Soviet one. His beginnings were modest – selling imported rubber ducks, retreading tires – but he subsequently set off on a path that many other oligarchs followed.

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In 1995, with the help of Moscow-born Jewish tycoon Boris Berezovsky and his Jewish-Georgian partner, businessman and politician Badri Patarkatsishvili, Abramovich acquired the controlling interest in Sibneft, one of Russia’s largest oil companies. According to associates, he did that in stages: At first he gave the Russian government a $100 million loan in exchange for shares, and later went on to buy the entire company by winning a series of tenders.

The business relationship between the three men deteriorated into a lawsuit that Berezovksy filed in Britain in 2007, in which he claimed ownership of part of Sibneft. On August 31, 2012 the British High Court of Justice dismissed the lawsuit, claiming that Berezovsky was not a credible witness and adding that it wasn’t sure the court had been given the full picture of the business ties between him, Patarkatsishvili and Abramovich.

During the trial it emerged that the price that Abramovich actually paid for the huge oil producer was higher than what had been publicly reported. In his defense, Abramovich admitted that he had paid Patarkatsishvili and Berezovsky, who was nicknamed “the godfather of the Kremlin,” $1.3 billion for krysha (Russian for “roof”) – “political patronage," or protection money, which was indispensable during the 1990s in building and succeeding in major business ventures.

The British court ruled that indeed the relationship between the three was one of krysha and not a partnership per se, and even accepted the distinction Abramovich made between commissions and consulting fees (to Patarkatsishvili) and payment of protection money. According to Justice Elizabeth Gloster, “The evidence relating to this issue supports my conclusion that the relationship between Mr. Berezovsky and Mr. Abramovich was based upon a protection, or krysha, type relationship and not on any contractually binding agreement between the two men.”

Over the years, Abramovich entered Russia’s aluminum market, characterized at the time by fierce competition over control of the profitable mines. He testified in November 2011 to the London Commercial Court that, as a result, “every three days someone was being murdered.” According to the Irish Independent newspaper, some 100 people were killed during the “aluminum wars.”

Nowadays Abramovich’s primary holdings are his investment company, Millhouse Capital, the 31 percent of the shares he owns in the mining and steel production company Evraz, and the 5 percent of shares he has in the nickel and palladium mining company Nornickel. Over the years he has sold off some of his investments; for example, in 2005, he sold his holdings in Sibneft. A large part of his wealth is liquid – apparently more than in the cases of his fellow oligarchs.

Of course, one cannot be a Russian oligarch without having a particular political orientation. The earliest generation of them was identified with Boris Yeltsin, Russia’s first president after the communist regime fell. This group included Anatoly Chubais, Yegor Gaidar, Mikhail Fridman, Vladimir Gusinsky, Mikhail Khodorkovsky, and others. Abramovich and Berezovsky were part of this group, but different: Many of those called “Yeltsin’s boys” lost the power they once had. For his part, Berezovsky, who fled Russia in 2000 because he feared Vladimir Putin, was found dead under unclear circumstances, hanging in the bathroom of his London home in 2013. Patarkatsishvili died in his home in southern England in 2008. By contrast, Abramovich not only survived the transition from Yeltsin’s regime to Putin’s – but has continued to flourish.

In the late 1990s, as Yeltsin was fading from the political scene because of illnesses due to his uncontrolled drinking, it was Abramovich who suggested that he appoint Putin as his heir, according to a 2018 Guardian report. Richard Sakwa, a professor of Russian and European politics at the University of Kent, noted in his 2010 volume “The Crisis of Russian Democracy: The Dual State, Factionalism and the Medvedev Succession,” that there were actually two people who recommended Putin to Yeltsin: Abramovich, and Alexander Voloshin, who was Yeltsin’s chief of staff and stayed on in that role when Putin became president.

When Putin was forced to leave the presidency, Abramovich entered the picture again. According to Sakwa, Putin took Abramovich’s advice to name Dmitry Medvedev as his preferred successor, while Putin would go on to serve as prime minister. Sakwa said the source of that information was Russian political analyst Stanislav Belkovsky, who even informed Sakwa that the meeting between Abramovich and Putin took place on Friday, December 7, 2007. Sakwa notes, however, that he had no other source to confirm this.

Abramovich is also one of the few oligarchs to have established a constant, relatively scandal- and opposition-free presence in the West. The asset that helped him more than anything in this regard is his ownership of Chelsea FC.

Abramovich has been married three times and has seven children. His first marriage lasted only three years, from 1987 to 1990. In 1991, he married a former Aeroflot flight attendant; they stayed together until 2007. The press reported then that as part of the divorce agreement, Abramovich agreed to pay his ex $1 billion and transfer title to four homes to her, in what was described in the most expensive divorce ever. He and his third wife, Daria Zhukova, a businesswoman and daughter of another tycoon, Alexander Zhukov, separated in 2017.

Abramovich’s ties to Israel didn’t begin with his citizenship. In 2007 he was unsuccessful in an effort to purchase a home in Neve Tzedek in Tel Aviv. Eight years later he purchased the 1.5 dunam (.37 acre) Varsano Hotel compound, also located in that neighborhood, for 150 million shekels ($38.6 million), from Yaron Varsano, husband of actress Gal Gadot, and his brother Guy Varsano.

Abramovich has also invested in Israeli high-tech companies, including StoreDot (fast charging for electric cars); Via (public transportation); Kidoz (apps for children); and BrainQ (technologies for rehabilitating people with paralyzing injuries). He has also donated a total of $60 million to Sheba Medical Center at Tel Hashomer for various projects, among them a center for nuclear medicine, plus he contributed about $30 million to set up a nanotechnology center at Tel Aviv University.

Abramovich is not the only Russian tycoon with Israeli citizenship. Since the first of these oligarchs began to arrive in the country, they have made a few investments, but their contribution to the Israeli economy has been negligible. Arkady Gaydamak invested a great deal, but in an undisciplined fashion and with an eye to gaining personal publicity. As a group, it seems their interest in contributing to the economy has been marginal, certainly when you consider the extent of their wealth.

The wealth that Abramovich and his colleagues have amassed is significantly different from that of the individuals and families who made their fortunes here, reside here, pay taxes here and fulfill all the obligations that go with living here. Apparently what interests some of his peers is the passport – and perhaps the protection and refuge it can provide. Questions still remain, however, as to their motives and the way the State of Israel is meant to view their aliyah.

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