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Abramovich: The Billionaire From Nowhere
Introduction: A book review of the only biography written on Roman Abramovich
Roman Abramovich became a household name in Britain when he purchased the London-based football team Chelsea FC. Before that, he had been a complete unknown in the West and the rest of the world.
To some extent very little is known about Abramovich and the inner workings of his business empire. And to most people looking in from the outside he is a shadowy businessman.
But with that perception of him changes greatly after learning a little of his background. Indeed, Abramovich's story is a truly incredible and inspiring one. Just how did an orphan born into relative poverty go on to become one of the wealthiest people in the world.
Abramovich: The Billionaire From Nowhere explains.
Like most people I knew very little about Roman Abramovich. I knew he was the owner of Chelsea FC and had changed the face of football (or soccer) in Britain by pouring millions of his own money into buying the best players.
Like many I had the perception that he was some kind of evil Russian villain who had made a fortune through dodgy deals. Having read this biography of him, it seems that this is not entirely true.
I first became interested in reading more about Abramovich after he was mentioned in a excellent book by William Davies called The Rich: A New Study Of The Species. A chapter in this book about the super-rich who had made their money through oil talks briefly about Abramovich's background as an orphan who set up a market stall in Moscow in the 90s selling rubber ducks and dolls while living in a shabby one-bedroom flat. From that situation he went one to become a multi-billionaire oligarch.
Interesting... so I ordered a copy of the only biography available on Abramovich. The fact that there has been only one comprehensive book written on the oil tycoon speaks volumes about how secretive he is, how little is known about him, and how difficult it is to find out any information about Abramovich.
In that respect, the authors Dominic Midgley and Chris Hutchins, have done a fantastic job in compiling 331 pages of his life story in a fluent, well-researched and compelling book.
There are two short chapters at the start of the book that deal with Abramovich's early life. The first tells how he was orphaned aged three after his father died in an industrial accident and his mother died after a bodged back-street abortion. There is a saying in Russia that orphan's are 'baptised into greatness' because they do not have the over-bearing presence of their parents as they grow up. This certainly appears to be true with Abramovich.
Abramovich was taken in by his uncle in Uktha who was relatively comfortable financially but by no means was he rich. As one of the line managers at an industrial plant he was able to give the young Abramovich an education into commerce.
Abramovich later moved to Moscow to live with his grandparents, and the impression is of a child who was sociable, happy and polite, but by no means academically gifted.
One of the most touching insights into Abramovich's personality - and indeed his kindness - is from his two years national service with the Russian army. In this institution it was normal for the older recruits to bully the younger ones, take their money and generally make life tough for them. Abramovich, however, went out of his way to help them.
When one arrived from the countryside he would appeared to have been an easy target. But Abramovich helped the teenager to learn Russian, and when the boy's mother died, Abramovich (still poor at this time )gave him all the money he had and organised a collection for him from the other troops.
It was after leaving the army that Abramovich lived in Moscow and continued his studies. The book tells how he supplemented his income by selling designer goods and clothes, then later sold dolls on a market stall and launched a factory making the dolls. Before reading this book, I'd read elsewhere that Abramovich had sold rubber ducks (which were stored in the bathtub of his flat) and toiletries such as toothpaste and deodorant that had been banned in Communist Russia.
But this biography deals very little with Abramovich's early business career. It was certainly not lucrative, although he and his first wife were able to live in relative comfort with a bigger wage than others. This is one part of Abramovich's life I would have liked to have known more about. Even though Abramovich did not co-operate with publishing, accounts from ex-wives, girlfriends and friends could have provided more detail.
The Big Break
Abramovich's big break came in the 90s under former Russian President Boris Yeltsin. The leader needed desperately to raise money as the country's economy had been decimated by Communism. He began selling off state assets.
Abramovich relaised that the market price for oil in Russia was much, much lower than in the West. He acquired an oil export licence. The big leap was how he bought his first shipment of oil... and the book touches on this and makes reference to a report from a Russian newspaper that Abromivich spent a couple of days in jail after a shipment went missing. The response from Abramovich to this suggestion: 'It never happened'.
Quite how Abramovich made the leap from market trader to oil dealer we'll probably never know. But within a short space of time he had amassed $30million is cash, and was able to put together a bid with his mentor Boris Berezovsky for a 50% stake in the oil company Sibneft.
Their bid succeeded and they later acquired the remaining 50% from the state under Yeltsin's controversial loans for shares scheme, in which wealthy oligarchs could buy company's buy lending money to the government. To put into perspective what an incredibly good price was for Abramovich, a few years later in 2003 the company was valued at $15billion. Overnight, Abramovich had become a billionaire.
Politics and Putin
While a small number of Russians became vastly wealthy under the state privatizations of the 1990s, many had also began interfering with politics. Most notable was Abramovich's partner Boris Berezovsky who had political ambitions of his own.
Abramovich himself doesn't appear to have shared these. He was governor of the Chukotka region, and lavished vast sums on getting elected and spending money on the locals, but the book suggests that this was mainly as was to benefit his business through getting tax breaks in the region.
When Vladimir Putin was elected President of Russia the fortunes of the Oligarchs looked set to change. One of the first things he did was call them in for meetings to lay down the law and tell them that they would not be calling the shots at the Kremlin any more. Understandably, may were outraged and rebelled. But Putin, a former KGB agent, had secret information on them and was able to use that as a powerful weapon against them. Putin closed down the newly-formed independent TV and radio stations that were critical of him, one of which was owned by Boris Berezovsky, and had several arrested and thrown in jail, including Mikael Korodkovsky.
That Abramovich managed to avoid this fate is explained partly by his pragmatic character, partly that he did not challenge Putin. The book also reveals that he held interviews for Putin for positions within the government.
Abramovich though does not feel entirely safe, and it's suggested that his purchase of Chelsea FC in 2003 was 'the cheapest insurance policy in history'. The reason being that by taking up residence in a foreign country he could use it as a safe-haven should Putin suddenly turn on him. the purchase was of course also motivated by Abramovich's love of sport.
This is an excellent book for anyone interested in business, football or politics. It is written in a fluid style that is easy to read. It details the complex tax and business arrangements that Abramovich uses within his companies and web of holding companies, that have helped to keep him safe and shroud his dealings in mystery.
The book gives a general insight into his vast wealth, his character and his family life, portraying the picture of a relatively humble, calm and happy man, who has achieved his fortune not necessarily through hard work, but opportunism and taking advantage of loopholes.