From The Times:
Russia's prosecutor-general was preparing a case to seize back Roman Abramovich’s oil company over an allegedly rigged privatisation while investigating a string of other Kremlin scandals when he was ousted from office.
Mr Abramovich, the oligarch and owner of Chelsea Football Club, risked losing the prime source of his £7.5 billion fortune as investigators looked into his financial and political links at a pivotal stage of his high-flying career. The prosecutor was acting on a report from Russia’s highest auditing body which said that the privatisation, among others, should be declared invalid because of multiple legal violations.
Mr Abramovich was also being investigated over allegations of unpaid company tax and the possible misuse of a $4.8 billion loan from the International Monetary Fund to Russia.
In a curious twist, The Times has established that some documents purporting to link the oligarch with the loan scandal are crude forgeries. The forgers’ motives remain unclear.
The investigations were dropped after Yuri Skuratov, the Prosecutor-General, was removed from office following an apparent "honey trap" operation. A videotape surfaced showing a man resembling the middle-aged official in bed with two young women. The grainy video failed to show the man’s facial features although the tubby physique might have been his.
The episode casts fresh light on Mr Abramovich’s fortune, his relationships with Boris Yeltsin and Vladimir Putin, and the jealousies provoked by his swift rise to influence and fortune.
Mr Abramovich’s fate stands in contrast to Mikhail Khodorkovsky, Russia’s richest oil baron, who challenged President Putin while the Chelsea football club owner remained a Kremlin loyalist. Mr Khodorkovsky is now on trial for alleged tax irregularities and has lost control of his Yukos company.
The disclosure that a prosecutor almost brought a case to renationalise Sibneft shows how vulnerable Mr Abramovich’s empire is to the Kremlin’s mood.
Asked about the former prosecutor-general’s disclosures, Mr Abramovich issued a statement to The Times through his lawyers Skadden, Arps, Slate, Meagher & Flom. "The allegations concerning Mr Abramovich have been strongly denied," they stated. "It has been pointed out that allegations of this nature have been made before and no reliable evidence supporting them has been produced. Indeed, certain of the allegations are plainly based upon forged documents and made by people with obvious personal or political grudges."
A tale of sex, intrigue and blackmail was divulged by Mr Skuratov, now a law professor at Moscow State Social University. "It might be that today England regards Mr Abramovich as a good businessman because he was very smart to choose such an investment resource as a football team, so he now is a good guy for all the football fans in Great Britain," Mr Skuratov said. "I am afraid that these so-called ‘New Russians’ will soon buy everything that Great Britain has, if their Government continues to be so passive."
Sibneft, combining Russia’s finest refinery with a prime oil production company, was created by President Yeltsin’s decree in August 1995.
In December 1995 a tender was held by the cash-strapped Kremlin for a substantial loan. President Yeltsin offered as security a 51 per cent stake in Sibneft. Companies controlled by Mr Abramovich or his partners won the tender at a price of just over $100 million. Higher bidders complained that they were excluded.
The Government’s 51 per cent shareholding was sold by auction in May 1997. A company part-owned by Mr Abramovich was the winner.
The Audit Chamber, in a 1998 report criticising four major privatisations, said the allocation of Sibneft shares involved blatant legal violations and should be considered invalid. The shares had been worth $2.8 billion, so the state lost $2.7 billion.
"The prosecutor’s office prepared the official lawsuit in order to terminate this transaction," Mr Skuratov said. "There was no open tender. There was rather a conspiracy back at that period of time. We prepared all the documents (to) prove that the transaction carried out was void. However, I had not enough time to do this."
Mr Skuratov said that he examined Sibneft’s premises over alleged tax evasion but the Kremlin halted the investigation. A third probe into the oligarch involved the possible misuse of an IMF loan to support the rouble in 1998.
The Times has already disclosed that the Swiss investigated whether Mr Abramovich might have channelled IMF money through their country but dropped the case when Russia declined to help.
The oligarch’s spokesman has pointed to statements by the IMF and the Russian Central Bank saying a PricewaterhouseCoopers audit had determined that the IMF funds were used properly.
Mr Skuratov believes Russia refused to assist Swiss investigators "because high-ranking officials were involved". Mr Skuratov said: "When the governmental circles felt I went too close to the President, to Mr Abramovich (and others) there was an illegal criminal investigation against me and I was suspended so I didn’t have time to finish what I had begun."
Mr Skuratov was alerted to possible corruption at Russia’s highest levels by Carla del Ponte, a Swiss investigator, now chief United Nations war crimes prosecutor. "The fact that we both left our offices naturally had a negative impact on the co-operation between the prosecutors’ offices and basically the investigations were not finished," he said.
A member of the Russian Parliament passed Mr Skuratov papers purporting to prove Mr Abramovich was linked to the loan’s misuse. He said that he ordered an examination of the data contained in the documents. "However I don’t know the results of this examination," Mr Skuratov said.
The Times has seen the papers and it is clear that some, including a Foreign and Commonwealth Office letter filled with misspellings and bad grammar, are forged.
As Mr Skuratov probed allegations of wrongdoing among powerful figures in the Kremlin, Mr Yeltsin suspended him.
Hours after the Russian Parliament refused to confirm Mr Skuratov’s dismissal, in March 1999, television viewers were shown the three-in-a-bed film. "I knew that this video existed before it was aired and Mr Yeltsin tried to use it to put pressure on me so that I would agree to resign," Mr Skuratov said. He neither admits nor denies being the man on the video but suggests the person might be a lookalike.
He blames Mr Putin, then head of the KGB’s internal successor, the FSB, for the film: "They were thinking in panic what to do in order to make me leave and they chose this way." The prosecutor was accused of accepting prostitutes as bribes but the case was dropped.
Press coverage at the time linked the removal of the prosecutor to his inquiries into alleged corruption by senior officials renovating the Kremlin.
The Chelsea owner’s lawyers told The Times: "Mr Abramovich had nothing to do with Mr Skuratov’s improprieties, nor with the fact that they were exposed and publicised. He was also not involved in Mr Skuratov’s dismissal from office."
Mr Skuratov was prevented from standing in elections last year on a technicality. The Organisation for Security and Co-operation in Europe complained that the ban on Mr Skuratov "suggested an inconsistent and selective" use of rules.
Observers have wondered why Mr Abramovich has thrived while Mr Khodorkovsky is on trial. "I believe that Mr Abramovich is exempt of Russian laws," Mr Skuratov said.
Challenges have persisted to Sibneft’s privatisation. In 2003 a Duma member asked the Prosecutor-General to investigate Mr Abramovich. But Alfred Kokh, the official responsible for privatisation, said that Sibneft "was one of the most painless privatisations and least scandalous".