Russia's super-rich might be getting bad publicity from the TNK-BP deal but what it really shows is that they can no longer be ignored, writes David Litterick
At this time of year, Cyprus is a holiday paradise. Millions flock to the Mediterranean nation's beautiful beaches. But last month it played host to a rather different set of guests. Some of the world's richest men gathered in an opulent room in the Four Seasons Hotel near Limassol, keen to wield their influence - and with it lay low one of the biggest names in corporate Britain.
Between them, Viktor Vekselberg, Mikhail Fridman and Leonid Blavatnik control a fortune worth more than $40bn, according to the most recent Forbes list of billionaires, and none of them is frightened of letting it show.
"They are the three oligarchs behind AAR, a consortium that owns 50 per cent of TNK-BP, an oil joint venture with the British corporate giant which is hitting the headlines for all the wrong reasons.
But if their extreme wealth is recognised, so too is their aggression when it comes to business.
The row between their consortium and BP is more than just a localised spat among joint venture partners. Its effects are playing out at government level and on the UK stock market, where political risk has prevented BP from enjoying the oil price boom.
Steven O'Sullivan spent nine years in Russia with United Financial Group and advised on the TNK-BP deal. He said the new breed of wealthy Russian businessmen have been increasingly influencing corporate Britain, without many people even realising.
"Russians have been in London for some time because it's close to Moscow and it's very international and you have seen them active in the property market," he said. "London is an attractive market to them."Between 1998 and 2004 more than $100bn flowed out of Russia, according to Forbes magazine. A substantial chunk of that is now being spent in the boutiques and estate agents of London, thought to be home to more than 300,000 Russians."Companies from the CIS form an ever greater part of the London [stock market] index,"
O'Sullivan said. "And Russian oligarchs are increasingly invested in it themselves through investment funds. Many of them practically operate as large institutions in their own right, playing the stock market, so they do have an enormous amount of influence - more so than previously - and I'm not sure everyone appreciates that.
"I think most Russian companies understand that good corporate governance enhances value but because of the size of the Russian resources industry there are many companies that are heavily influenced by the state. The shares of Mechel [a miner] fell by almost a half when [former president] Putin said he didn't like the management, so you have to deal with that kind of unpredictability.
As for TNK-BP, he said: "There are different agendas at play. BP shareholders have benefited tremendously from the deal but it looks like they will get less of the benefits of the joint venture in the future and more of the money will stay in Russia."
Although Vladimir Putin had been elected four years previously, it was the arrival of Roman Abramovich on the London social scene four years ago and his acquisition of Chelsea football club, that forced people to look eastward.
Regarded as a disaster area during President Boris Yeltsin's years of chaotic transformation, the Chelsea deal was the first sign that Russia had regained its status as a world power.
The story of how the oligarchs made their money is hard to credit.
As former communists, many were permitted during Perestroika to set up co-operatives, which later became lucrative trading businesses.
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