Profile: Alisher Usmanov

Updated December 2, 2017 by Ilya Zaslavskiy

Alisher Usmanov

Estimated worth

$15.5bn as of November 2017, from U.S. Forbes list

Reported links with Communist party, KGB or organized crime

- Was member of Komsomol, CPSU

- Worked as Director of the Foreign Economic Association of the Soviet Peace Committee, which is believed to have been a front for the KGB. He himself denies serving in KGB but confirms contacts with KGB officers

- Was convicted in Soviet Uzbekistan, denies that he was guilty. Continues to have close and beneficial business and political relations with kleptocratic regimes in Uzbekistan and Russia

For details see below

Undermining effect on democracy

- Immense because he is reportedly involved in high level money laundering schemes around the world and helping Kremlin to invest into strategic Silicon Valley assets like Facebook

- Has top class assets in other strategic industries around the globe

- Reportedly mentioned in bribe schemes involving Prime Minister Medvedev (presented a palace) and Deputy Prime Minister (“Shuvalov Affair”), this was refuted by Russian courts

- Reportedly moved to UK and Switzerland for tax purposes while underpaying his employees in the mining business

Key bio and links with kleptocracies

Alisher Usmanov is an Uzbek-born oligarch who built his fortune in iron ore, steel, mobile phones and media. He was ranked as Russia’s richest man but in 2015 lost 25% of his fortune due to the conflict in Ukraine and the resulting Western sanctions. However, he bounced back and his current net worth is estimated at $15.5bn, according to US Forbes, and he was ranked as Russia’s third-wealthiest person in 2016, according to Russia’s Forbes.

The son of a state prosecutor, Usmanov attended the Moscow State Institute of International Relations and graduated in 1976 with a degree in international law. At the Institute, he formed a close friendship with his professor, Yevgeny Primakov, who later headed the Russian Foreign Intelligence Service and served as Yeltsin's prime minister. He also developed a close friendship with Sergei Yastrzhembsky, who became Boris Yelstin's press secretary and a deputy prime minister and policy chief for President Putin.

After graduation, Usmanov returned to Tashkent as Director of the Foreign Economic Association of the Soviet Peace Committee, which is believed to have been a front for the KGB. In 1980, he was convicted on unspecified fraud and extortion charges and sentenced to eight years in a Tashkent prison.

In 1986, he was conditionally released for good behavior and for expressing remorse. He nonetheless has maintained his innocence and in 2000, all charges were expunged by the Supreme Court of Uzbekistan which ruled that “the original conviction was unjust, no crime was ever committed, and the evidence was fabricated." There has never been a clear explanation of this highly unusual reversal, global media outlets speculated it was the result of Usmanov’s connections to organized crime and high-level Uzbek politicians (see more below on this).

During 1990’s Usmanov’s rise to power in the steel or “ferrous metals” industry has been credited to his close relationship with former Gazprom CEO Rem Vyakirev, highly controversial figure in Russian energy sector during that period. Under Vyakirev, Gazprom took control of Oskil, Russia’s most modern steel mini-mill, and the Lebedinsky iron ore mining and processing plant, both managed by Interfin. In 1998, Usmanov was invited by Vyakhirev to head Gazprom Investholding, the Gazprom subsidiary owning all steel assets. In 2000, Usmanov became an official adviser to Vyakhirev. When Vyakhirev stepped down in 2001, Usmanov remained to assist the new Gazprom management led by Alexey Miller, Putin’s confidant and aide in many controversial business deals from their days in St. Petersburg in 1990’s. Among Gazprom’s new priorities was to divest of non-core assets and it was during this time that the steel companies Oskol and Lebedinsky were sold to Usmanov’s Interfin-Gazmetall group.

Usmanov has helped the Kremlin to streamline Kommersant (including through registered incidents of censorship) and other media and IT/communications companies within Russia, including the takeover of social media Vkontakte. The founder of Vkontakte, Pavel Durov, was ousted from Russia, and rules of access to private information and censorship are now executed according to the wishes of the Federal Security Service (FSB) of the Russian Federation.

After Russia invaded Ukraine, Usmanov remained loyal to Kremlin’s policy and criticized the West for its sanctions. In mid-2016, Usmanov met with Putin in the Kremlin, a visit that was reported on prime television channels. Usmanov’s key message was that of support for government policy. He said that sanctions were negatively impacting the Russian economy but that his company was faring well due to the steps it had taken to improve efficiency and boost workers’ morale.

Undermining activity in the West

As a result of his early years in prison, Usmanov’s career has been dogged by allegations that he has connections to the Russian and Uzbek crime syndicates. He has been repeatedly linked to Gafur Rakhimov, an alleged Uzbek mafia boss. These allegations were made public in the West in 2007 when Usmanov and his business partner Farhad Moshiri bought a 14.58% stake in the British Arsenal Football Club.

In 2007 in exchange with the Guardian he denied that there was a charge for rape. This followed a dispute between former UK diplomat and Usmanov’s lawyers hired in London. According to RFE/RL, on his Internet blog, Craig Murray, a former British ambassador to Uzbekistan, made a series of allegations about Usmanov's business affairs and his alleged financial ties to Gulnara Karimova, President Islam Karimov’s eldest daughter. Murray called Usmanov a convicted criminal in reference to his 1980 imprisonment for fraud, extortion, and rape. Usmanov, who says he was framed, calls himself a "political prisoner" who was later pardoned by Soviet leader Mikhail Gorbachev.

Murray’s blog sparked a legal storm in Britain, and showed how a powerful underminer like Usmanov can use UK’s libel laws to his advantage. Usmanov's lawyers succeeded in having Murray's post taken down, citing libelous charges. Then, according to RFE/RL Usmanov launched a charm counterattack, flying several British reporters on his private jet for interviews at his retreat outside Moscow. The result was a series of profiles in the British press that portrayed Usmanov as an enlightened tycoon unfairly portrayed by both the Western media and the Soviet system.

The leak of millions of documents from the Panamanian law firm Mossack Fonseca in spring 2016, known as “Panama Papers,” revealed that Usmanov has at least six offshore companies registered in the Isle of Man, though there is no indication this is illegal.

However, there is much more incriminating evidence in the Igor Shuvalov dossier that was revealed by western media and think tanks in 2011-12. Thus, the report, titled “The Shuvalov Affair,” written by Henry Jackson Society summarizes all available evidence and describes two major 2004 investments by Deputy Prime Minister Shuvalov that yielded very high returns. One was a $49.5mn loan made to Alisher Usmanov to help buy a stake in Anglo-Dutch steel company Corus, the other a $17.7mn bet on Gazprom stock via Suleiman Kerimov’s Nafta Moskva.

Shuvalov has repeatedly denied that there was anything improper or illegal about his business activities and his relationships with billionaires like Kerimov and Usmanov. However, the report states that there is insufficient evidence to back up Shuvalov’s claim that the $49.5mn loaned to Usmanov was financed by a 0.5% stock option in Sibneft — then one of the country’s biggest oil companies and owned by Abramovich — in payment for Shuvalov’s legal advice. Alexey Navalny’s anti-corruption team argued in this video that in return for these lucrative schemes in offshores, “Shuvalov lobbied Usmanov’s interests in the Russian government”.

In October 2016 Navalny accused Usmanov of unethical move as a tax resident away from Russia to Switzerland and UK, which robbed Russian budget millions of dollars. Navalny also accused Usmanov of unfair treatment and inadequate pay to his workers in the mining sector. Since then Usmanov became 9th wealthiest person in Switzerland.

In 2017 investigation by Navalny’s team stated that Usmanov bribed prime minister Medvedev with a palace: “After closely studying the real estate documents, the Anti-Corruption Foundation learned that the charitable foundation received this very expensive estate as a gift from one of Russia’s richest businessmen, Alisher Usmanov. And such present from the oligarch to the government official can only be called a bribe.”

Usmanov took Navalny to court and in May 2017, Moscow judge issued a verdict in Usmanov’s favor that demanded that Navalny’s Anti-Corruption Foundation (FBK) publish a retraction. FBK did so, while Navalny refused and FBK plans to fight this case further in Russian courts.

In October 2017, media reported that new president of Uzbekistan Shavkat Mirziyoyev hired a Usmanov’s airplane while Moscow’s Carnegie suggested that the pair has very close business and political relations since the time when late nephew of Usmanov Babur (died in a car accident in 2013) was married to Mirziyoyev’s niece. The article suggested that Usmanov is playing Kremlin’s hand in Uzbek politics to balance power against national security services and to bring other oligarchs with secure investements.

In November, documents revealed under Paradise Papers showed that Usmanov helped Kremlin to invest hundreds of millions of dollars into Facebook via Gazprom Investholding into Yuri Milner’s companies that co-invested in Silicon Valley assets. The documents also threw into doubt whether Usmanov circumvented Premier League rules in the UK and ended up having stakes in two football clubs Arsenal and Everton (which is not allowed) with the help of an Iranian businessman Farkad Moshiri by hiding his money through a fake “gift” through offshore accounts. Usmanov denied that he used state-controlled money for the transaction with Facebook or did anything illegal with sport investments.

Key financial and luxury assets

In 2012, Usmanov created USM Holdings which, according to its website, was intended “to streamline and consolidate Alisher Usmanov’s various projects, which are the result of over 20 years of illustrious entrepreneurial and business development activities.” Usmanov owns 48% in USM Holdings while his partners Vladimir Scotch and Farkad Moshiri own 31% and 11%.

USM combined all key assets of Usmanov and his partners: it owns major mining company Metalloinvest, Baikal mining company. Usmanov is the second largest shareholder, after Dr Mohammed Al Bawani (MB Holding), in Toronto-listed Nautilus Minerals, which is planning to extract undersea gold and copper deposits off Papua New Guinea in 2019.

Outside of steel and mining, Usmanov’s interests include telecom and technology interests and the media. In 2015 USM invested “several dozen million dollars” in Uber. In the same year, USM invested over $100 million into Virtus Pro, an eSports organisation based in Russia with competing teams in Counter-Strike games: Global Offensive, Dota 2, World of Tanks, Starcraft II, Hearthstone, Paladins, Quake Champions and Heroes Of The Storm.

Usmanov also owns the Kommersant Publishing Houses, which publish the newspaper, Kommersant, and is in control of 56.32% of Russia's second-largest mobile telephone operator, MegaFon. Usmanov also controls the Mail.ru group, the largest Internet company in the Russian-speaking world. Mail.ru owns stakes in popular Russian web portals including Odnoklassniki and Vkontakte. Usmanov controlled entities have made significant investments in globally known internet companies Facebook, Twitter, Groupon, Zynga, AirBnB, ZocDoc, Alibaba, JD.com, Xiaomi although subsequently it sold the first four concentrating on investments in Chinese assets.

Usmanov is currently a co-owner of the media holding company UTH, which holds 51% share of Disney Russia and 100% of the Muz TV and U television channels.

Usmanov is now the second-largest shareholder of the Arsenal club, with a 30.4% stake. In January 2017 USM Holdings signed a 5-year contract with FC Everton which will give it a major media outreach, while USM Holdings will sponsor training center of Everton renamed as USM Finch Farm. Usmanov is the co-founder of the Arts and Sports Charity Foundation, one of the key backers of the successful 2018 Russian football World Cup bid.

Select key stakes:

· Controlled (50% +): Metalloinvest, Kommersant Publishing Houses, MegaFon, Mail.ru group

· Minority stakes (49% -): Arsenal Club (30%), Uber, AirBnB, Alibaba, JD.com, Xiaomi, Nautilus Minerals Inc

· Luxury:

A. Yacht “Dilmar” cost $600mn

B. “Sutton Place” in Surrey, UK bought for £10 mn in 2004

C. House in Yurmala, Latvia bought be Usmanov’s relatives for $3.9mn in 2014;

D. “Beechwood House” purchased for a reported £50 mn in 2008.

E. Usmanov owns villas in Moscow region and Sardinia.

Photos of luxury property:

https://www.euromag.ru/catalogs/realty/39383.html

http://www.standard.co.uk/news/arsenal-billionaire-buys-48m-london-estate-6673430.html