Newspaper article The Christian Science Monitor

Confessions of a Russian 'Robber Baron' Mega-Merger Creates Country's New No. 1 Oil Firm Led by Billionaire Tycoons

Newspaper article The Christian Science Monitor

Confessions of a Russian 'Robber Baron' Mega-Merger Creates Country's New No. 1 Oil Firm Led by Billionaire Tycoons

Article excerpt

Mikhail Khodorovsky, a young Russian tycoon, sounded either naive, hugely cocky, or extremely frank. It was hard to tell which.

Billionaire financier George Soros had just been talking critically at lunch about Russia's "robber baron capitalism." And Mr. Khodorovsky, a few minutes later in an interview, admitted to having been a robber baron from 1994 to 1996.

During the first round of privatization of state companies in Russia, private entrepreneurs supporting President Yeltsin had taken them over in "insider auctions" at bargain prices. That's when Khodorovsky bought his state-owned Yukos oil company. It's also when another Russian tycoon, Boris Berezovsky, purchased Sibneft, another major oil company, from the government. The two magnates merged these companies Monday, with Khodorovsky becoming the majority owner and chief executive. Speaking of the government's bargain-basement sales, Mr. Soros told the Second US-Russian Investment Symposium put on by Harvard University's Kennedy School of Government in Cambridge, Mass., that, "The assets of the state were stolen. It was quite repulsive. I didn't want to have anything to do with it." The conference Jan. 9-11 attracted more than 500 Russian and American business people, with 300 turned away, indicating a vibrant interest in dealmaking. Khodorovsky was asked about Soros's comments. "When I hear that from George Soros, I want to give him a mirror," he replied with a smile, perhaps joking, perhaps not. His American facilitators cringed. Khodorovsky was scheduled to meet with Soros later. For one thing, Khodorovsky is seeking a Western partner to join Yukos in bidding for Rosneft, another state-owned oil company that may be sold as soon as March. A "modest" price would be $2 billion, Khodorovsky indicated. With the Yukos-Sibneft merger into the renamed Yuksi, Khodorovsky becomes head of Russia's No. 1 oil company, and the 11th largest in the world. The acquisition of Rosneft would make it the largest private oil company in the world, beating out Netherlands-based Royal Dutch/Shell. …

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