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Page last updated at 21:27 GMT, Friday, 24 October 2008 22:27 UK

Oligarchs and aluminium wars

John Sweenet
by John Sweeney

Oleg Deripaska
Oleg Deripaska was listed as Russia's richest man

Lord Mandelson and George Osborne have yet to fully explain why they wanted to hang out with Oleg Deripaska, the marmoset-eyed Russian plutocrat, on his ocean-going bling, the Queen K.

But the man at the epicentre of 'yachtgate' hit the headlines Deripaska played it cool. The question is who is Deripaska, where did he come from and how did he make so much dosh?

Deripaska's extraordinary story is one of a poor Russian boy who married into the Kremlin and made billions in the aluminium business - an industry so cut-throat that 100 people ended up dead.

Brilliant student

Oleg Deripaska was born 40 years ago in southern Russia in Dzerzhinsk - a closed city named after the first KGB boss which manufactured chemical weapons. It's so polluted it is reputed to be the dirtiest town on the planet.

His mother was an engineer, but little is known about his father, and young Oleg was brought up his grandparents. A brilliant student, he made it to Moscow State University to read physics.

When the Soviet Union collapsed, Oleg found himself poverty-stricken. "We had no money. It was a very practical question every day. How do I get money to buy food and keep studying?" he told The Guardian newspaper.

While Boris Yeltsin steadied Russia, Oleg studied theoretical physics and set up as a metal trader.

Aluminium Wars

The aluminium business in Russia's Wild East in the 1990s was not for the faint-hearted.

Mr Deripaska's superyacht
Mr Deripaska's yacht - at the centre of a British political row

In Krasnoyarsk and across Siberia, several industry executives ended up dead, buried in Krasnoyarsk's own version of 'boot hill'. This was how they did hostile takeovers in the metal trade.

Managers, bankers and journalists bit the dust. They called it the 'Aluminium Wars'.

One of the metal men was Anatoly 'The Bull' Bykov. He made millions when Krasnoyarsk's aluminium smelter came up for grabs.

But, according to Deripaska's office, Bykov was a 'high profile organised crime figure'. In 2005 Bykov told me that, like all metal entrepreneurs, he lived under constant threat.

"They tried to blow up my car. They shot at me. Well, they planted car bombs. Another time they tried to assassinate me by shooting me, but I think God is with me."

Although he concedes, "I can't tell you exactly who these people were."

Faked murders

Mr Bykov then found himself the focus of police attention. "I was arrested twice, once for an attempted murder, and the second time for a conspiracy to murder. The murder was staged."

He was arrested for murdering two men, neither of whom were dead. In October 2000, Moscow prosecutors admitted they had faked the murders.

It is not suggested that Oleg Deripaska had any hand in the 'Aluminium Wars' or the violence which went with them, but while Mr Bykov was out of play in jail, Mr Deripaska seized his chance and the Krasnoyarsk aluminium business was taken over by a consortium called Russian Aluminium.

At the time, Mr Bykov says, Russian Aluminium owners included, "Roman Abramovich and Boris Berezovsky, and Oleg Deripaska."

'Blood trail stopped'

Soon, Mr Berezovsky fell out with Russia's new president, Vladimir Putin, and moved to London.

Russian prime minister Vladimir Putin and Mr Deripaska
Mr Deripaska is a friend of Russia's former president Vladimir Putin
And perhaps most striking about the rise of the Deripaska/Abramovich consortium is that the metal murders ended.

According to prominent Russian television journalist and presenter Yvegeny Kiselyov, "the blood trail stopped," and he says, Abramovich and Deripaska, "may be more powerful than the gangsters."

Deripaska's office dismisses one story from the nineties that he was once ambushed by a gang with a rocket launcher, but they do say that he received threats from organised crime groups and that his deputy was the subject of an assassination attempt.

In April, Mr Deripaska was rated Russia's richest man, worth $28bn - but he's reportedly lost billions in the last few months. In an interview last year he denied that he was anywhere near as rich as everybody said he was.

$4bn court case

He may indeed be down to his last billions, but the oligarch is feared and hated by business rivals who have lost out to him. Michael Cherney, once a metal man, now in exile in Israel, was granted the right to sue Mr Deripaska for $4bn in the British courts - money he claims Mr Deripaska owes him.

Controversy continues to dog Mr Deripaska.

After an expensive lobbying campaign by ex-Presidential candidate Bob Dole, Mr Deripaska got a visa to the United States. In 2006, the Americans revoked the visa, citing unspecified 'concerns'.

As ever with Russia, the narrative is shrouded in fog, but the question for George Osborne and Lord Mandelson of Foy is simple: do they really think it was wise to be the guest of a man whose wealth comes from such a murky industry and what's more one who remains banned by the United States? Never mind his yacht, some people might think twice about stepping on his lilo.

Michael Cherney
Former metal trader Michael Cherney is to sue Mr Deripaska
In a statement, Deripaska's company, Basic Element, told Newsnight: "The most serious of the misleading impressions created by your report is through the repeated juxtaposition of the name of Mr Deripaska alongside serious incidents with no evidence, or indeed any explicit allegations made by the BBC of his involvement.

"It is our strong belief that this is being driven by the partial views of Michael Cherney with whom you note Mr Deripaska is involved in litigation.

"It is a pity that in this case the high standards of the BBC appear to have been set aside. We believe your viewers deserve better which is one of the reasons we don't think it is worth our time or theirs appearing on your programme."

Profile: Oleg Deripaska
21 Oct 08 |  Europe

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