‘It’s like the Wild West out there [in Russia]. A few businessmen own everything. It’s amazing’
- STEPHEN CURTIS
CLOCHER DE LA GAROUPE is a spectacular, rambling villa in Cap d’Antibes in the heart of the Côte d’Azur. Set in 50 manicured acres of fragrant gardens, olive trees, and terraces that run down to the Mediterranean, the magnificent Italianate property is protected by a well-guarded gate tower and is a full mile from its ornate entrance. There are three sizeable villas - two for guests and one for its owner, commanding an impressive view of coastline and sea - along with a gymnasium, tennis court, and large swimming pool. The surrounding gardens are styled in the grand formal English manner with sweeping lawns and hedges.
The American composer Cole Porter rented the property in 1922. Along with fellow American, the artist Gerald Murphy, Porter famously raked the beach clean of seaweed that year, and wrote many of his most famous songs in the villa, notably his hit musical Hitchy-Koo.
Boris Berezovsky bought the place for $13.4 million in September 1997, a typically conspicuous statement of his personal wealth and extravagant tastes. It was soon put to good use and not just as a summer retreat. The chateau, just down the coast from Cannes, was the scene of many of Berezovsky’s most important business deals and much of his political scheming. It was here in 1998, during Russia’s deepening financial crisis, that he conspired with other oligarchs on who to back as Yeltsin’s successor when the President started to rapidly lose his faculties. The following year Vladimir Putin and his family were among those who were invited as guests.
In the autumn of 2000, when Berezovsky was facing up to the full implications of his spectacular rift with Putin and the Russian prosecutors were closing in, the chateau provided the perfect retreat. On 30 October 2000 the state seized his high-security nineteenth-century dacha in Alexandrovka, which he leased from the Kremlin. On 1 November 2000 the Russian Deputy Prosecutor, Vasily Kolmogorov, announced that he was launching criminal proceedings and summoned Berezovsky to appear in Moscow for questioning over the hundreds of millions alleged to be missing from Aeroflot’s Swiss-based accounts. The prosecutor said that if he failed to attend, an international arrest warrant would be issued. Knowing he would not emerge from the process unscathed, the next day he took a momentous decision: to remain in the South of France and become a fugitive. Berezovsky has repeatedly denied the accusations, claiming that they were politically motivated.
As he reflected on his predicament in his Cap d’Antibes retreat, the oligarch decided to remain defiant. Publicly, Berezovsky said that he still planned to return to Russia, but privately the decision had already been made. Two weeks later, on 14 November, he declared that he would not return to Moscow. ‘I have been compelled to choose between becoming a political prisoner or a political emigrant,’ he said.1
For the next month Berezovsky stayed in France. With his future now in the balance, his options were bleak: return to Moscow and face trial or lead a life of exile. The threatened international arrest warrant was then issued by the Russian Prosecutor-General. Although Interpol issued a ‘red notice’ that alerted other countries to this warrant, it did not oblige or mandate police to arrest him. But with the threat intensifying and his options rapidly narrowing, Berezovsky took a life-changing decision - London would be a safer refuge. He already had links to the UK - his daughters had gone to Cambridge and he owned a luxury apartment at Palace Gate in Kensington Palace Gardens - and so in early 2001 he travelled to London, a move he hoped would be temporary.
Berezovsky’s immediate concern as he quit Russia was how to protect his personal fortune. He still owned - or believed he still owned - large stakes in LogoVaz, Aeroflot, Sibneft, Rusal, and ORT - all jointly with Patarkatsishvili. He also had interests in the television channel TV6 and several newspapers. One of his greatest fears was that Putin would simply seize these assets. Then, several weeks after he fled Russia, he received a telephone call from his old friend Roman Abramovich.
Berezovsky’s former protégé, also a shareholder in Sibneft and Rusal, explained that he wanted to meet on ‘urgent business’. It was mid-December 2000 and Berezovsky was somewhat bemused by the call. The next day Abramovich drove the ten minutes from his own magnificent villa at Château de la Croix to Berezovsky’s Château de la Garoupe, where they were joined by Badri Patarkatsishvili. The meeting was not the usual informal, backslapping event the three men were used to. Instead, the atmosphere was uncharacteristically tense. There was now much at stake between the three men and Berezovsky had every reason to be wary of his old friend. While Berezovsky had turned himself into an enemy of Putin, he suspected that Abramovich had become the President’s consigliere.
Top of the agenda was the media company ORT. Putin was still fuming about Channel One’s critical coverage of the sinking of the Kursk and he was still demanding that the two tycoons sell their 49 per cent holding back to the state.
It was a measure of the tension and importance of this meeting that conflicting versions of what was said later emerged and have since become the subject of a hard-fought lawsuit being contested between the two oligarchs in London. According to Berezovsky, Abramovich was sent on the specific orders of Putin to exert intense pressure on them to sell up. He claims that Abramovich, in the role of the President’s willing messenger, warned him that unless he sold his ORT shares, Putin would simply seize the television station without compensation. Berezovsky later maintained that this was a trick to force him and Patarkatsishvili to sell their ORT stake at a knockdown rate, thereby cheating them out of millions.
According to Berezovsky, central to the negotiations was the fate of Nikolai Glushkov, who had been arrested on 7 December 2000 on charges relating to his management of Aeroflot. He was being held at Lefortovo jail in Moscow, notorious as the place where the KGB tortured political prisoners in the Soviet era. Berezovsky believed the arrest was part of the wider campaign by the Kremlin to curb his power. He claimed that Glushkov was essentially being used by the Putin administration as a hostage to prompt him and Patarkatsishvili into relinquishing their assets. According to Berezovsky, Abramovich told the partners that, if they sold their shares in ORT, Putin would release Glushkov from prison. Frustrated and cornered, Berezovsky had no leverage and reluctantly accepted the terms. He needed substantial funds to finance his London lifestyle and knew there was a risk that his stake might otherwise be seized without compensation.
Abramovich’s account of events is entirely at odds with Berezovsky’s. While he accepts that he was at such a meeting, he maintains that he was present in a quite different capacity - in order to assist Berezovsky, at his request, to sell Berezovsky’s ORT shares. Abramovich has denied making any threats or acting as an agent of Putin or the Russian state, claiming that Berezovsky was anxious to sell his ORT shares and actually asked for his help. Far from making threats, the future Chelsea FC owner claims that he, in fact helped Berezovsky and made money for him - by buying his stake in ORT at a price higher than he would otherwise have got.
On any view of the matter, the deal was not going to be straightforward. Neither Abramovich nor Putin would want to be seen publicly doing business with a man being investigated by the Russian state for fraud and for whom there was an international arrest warrant. All sides knew that, in order for the transaction to work, it would need to be entirely clandestine. But how could such a deal be constructed?
The solution was provided by the lawyer Stephen Curtis. He had already been working for Khodorkovsky, knew Abramovich, and advised Berezovsky. He relished the challenge of constructing a convoluted scheme by which to sell the ORT shares.
The fast-talking Curtis found working for the Russians exciting and challenging. He loved the complex and often unorthodox structure of their business and finances, but his colleagues had been less than happy when he first started to work for them. Late one evening in 1998, sitting in the back of his Mercedes, he told a confidant, ‘I need to tell you something. We’ve got some major new Russian clients.’ The friend was dismayed. ‘That’s crazy,’ he replied. ‘Why are you getting into bed with the Russians? It will be a disaster. They play by different rules. If you fall out with them, they will come after you. You are dealing with the Devil.’ Curtis laughed and brushed aside the comments, ‘Well, I will jump on their backs and ride all the way down to hell.’ He was mesmerized by the high rollers and high stakes. This was his chance for the big time. After one particular trip to Moscow, he told his staff breathlessly, ‘It’s like the Wild West out there. A few businessmen own everything. It’s amazing.’
Blessed with remarkable intellect and a prodigious memory, Stephen Langford Curtis was born in Sunderland on 7 August 1958. His father was an accountant. With a law degree from Aberystwyth University, Curtis’s career took off in the early 1980s when he was a tax solicitor at the City law firm Fox and Gibbons. Most of their clients were from the Middle East and the astute, softly spoken Curtis developed an affinity with the Arabs, especially those from the Gulf States. In 1990 he set up his own law firm, Curtis & Co., specializing in commercial and property transactions.
It was in 1997 that Curtis first recruited Russian clients when he started working for Khodorkovsky’s Bank Menatep. Some months later, in 1998, he advised the American defence and communications contractor Lockheed Martin when they were looking for a local (Russian-based) partner to help establish a satellite company for direct broadcasting in Russia. Menatep recommended Berezovsky and that is how the two men first met. Meetings took place in London between Lockheed directors and Berezovsky executives but the deal never materialized.
Curtis was a gifted lawyer and a generous man, but he was also chaotic, disorganized, and extravagant. Despite having wealthy clients such as Mahdi Al-Tajir, the billionaire businessman and former customs official in Dubai, he was always overdrawn and beset by cash-flow problems. Even before the appearance of the Russians, he would buy Ferraris or Bentleys for rich new clients with his own money, something he could ill afford to do. He sometimes had to borrow cash from his own employees and once a client even had to help bail him out. He liked to take expensive holidays and was a regular gambler at London casinos. And he loved to buy jewellery, most especially from W. Roberts at Hatton Garden for his wife and girlfriends. He was also a frequent visitor to Chanel on New Bond Street, where one of his girlfriends worked.
For a Mayfair law firm, the offices of Curtis & Co. were remarkably informal and the senior partner was gregarious and inclusive. Late on a Friday afternoon he would dispense champagne, his arm around the shoulders of members of his staff. People liked Curtis. He was amusing, endearing, and engendered trust. ‘He was one of those people who could remember everyone’s name and make them think that he was their closest and devoted friend,’ said a former colleague. ‘He was phenomenally charming and made you think that you were the most important person in the room.’ The Russians - by nature often sceptical, fearful, and paranoid - trusted him with hundreds of millions of their money. To the astonishment of his colleagues, he was able to buy properties, art, and jewellery on their behalf with few questions asked.
On one occasion Curtis was given a Russian doll with a diamond necklace inside the ornament. His young daughter nonchalantly played with the doll and then threw it into her toy box. Curtis did not realize its value until he saw the same doll in a store in Red Square, Moscow. He was stunned at the price of the bejewelled doll and immediately retrieved it from his daughter’s playroom on his return.
However, Curtis was too shrewd to be completely mesmerized by the mysterious new Russians. He knew there were risks and so applied the old adage of ‘know your client’ even more stringently. In 2000, shortly after starting to work for Berezovsky, he bought a private security firm, ISC Global Ltd, which he then used to investigate his intriguing new clients and their associates.
By late 2000, Curtis was a close confidant of Berezovsky and it was to him that the oligarch turned with the problem of how to sell his ORT shares discreetly. Curtis’s solution required the use of a middleman, ostensibly in order to keep the parties at arm’s length from one another. With his network of high-worth clients spread around the world, many with their own financial networks through which money could be funnelled, Curtis was perfectly positioned to put the pieces in place.
Soon Curtis was coordinating the deal. He set up accounts at Clydesdale Bank in London for Berezovsky and Patarkatsishvili and the ORT shares were transferred, via an intermediary, to an Abramovich-owned company, which then sold them on to the state-owned savings bank Sberbank for the same price - $160 million. Abramovich himself made no money from the clandestine deal, which was concluded by July 2002.
After fees had been paid to the lawyers and other parties who had provided services, Berezovsky and Patarkatsishvili each received around $70 million. Curtis even suggested that Patarkatsishvili - by then based in Georgia - take residence in the United Arab Emirates to avoid paying any tax on his receipts. True to form, details of the commissions received by all the parties were never put in writing.
Although Berezovsky received $70 million for his shares, he has long protested that they were worth more, and had indeed been offered more before he fled Russia. Yet some have claimed that he was fortunate to receive even this much for his 49 per cent stake in ORT, as Putin could easily have seized ORT and nationalized it, leaving Berezovsky with nothing.
Even more infuriating for Berezovsky, Vladimir Glushkov was not released from prison. The Kremlin failed, he claimed, to keep its part of the agreement and Glushkov continued to languish in Lefortovo jail. For Putin, however, mission had been accomplished: the state had regained control of the popular television channel and Berezovsky could no longer use it as a propaganda weapon. Meanwhile, Abramovich was soon to capture another prize - the highly profitable Sibneft oil company.
It was the division of this giant conglomerate that was to become the source of the next dispute between the two oligarchs. According to Abramovich he was the 100 per cent owner of Sibneft, although he was prepared to acknowledge that Berezovsky and Patarkatsishvili had played a crucial role in providing political protection when they had initially acquired the lucrative oil company together. For their part, Berezovsky and his business partner were adamant that they owned a substantial holding in Sibneft that was ‘held on trust’ on their behalf by Abramovich - as part of an option arrangement - even though there was no written agreement to that effect.
It was agreed that in May 2001 Abramovich met Patarkatsishvili at Munich Airport to discuss Sibneft, but Abramovich and Berezovsky are completely at cross-purposes as to what the precise purpose of this meeting was and what went on at it. According to Berezovsky, Abramovich offered another stark warning to his former business associates: as long as they retained a stake in Sibneft, there was a risk of confiscation by the Kremlin. Boxed in again, Patarkatsishvili raised the subject of the imprisonment of Glushkov. Abramovich assured Patarkatsishvili, according to Berezovsky, that if they sold their holding in Sibneft, this time Glushkov would definitely be released. Berezovsky alleges that, once again, on this occasion, Abramovich was acting with Putin’s knowledge and approval.
Abramovich denies this. His position, by contrast, is that he did not purchase or offer to purchase Berezovsky’s and Badri’s stake at all, as, on his account, they had no stake to sell. Rather, according to Abramovich, by the time of the Munich Airport meeting, at an earlier meeting with Patarksishvili, he had agreed to pay Berezovsky $1.3 billion ‘in recognition of the political assistance and protection Berezovksy had provided in respect of the creation of Sibneft’.
According to Berezovsky, it was after the meeting in Munich that the haggling started. Patarkatsishvili, Berezovsky says, telephoned him in private to let him know what had happened. Again, on Berezovsky’s account, they reluctantly agreed to accept Abramovich’s offer, and again, a discreet way of conducting the deal needed to be found. On this occasion, Berezovsky claims, a middleman was again required.
Berezovsky alleges that at this point Sheikh Sultan bin Khalifa bin Zayed Al-Nahyan, brother of the ruler of Abu Dhabi, agreed to take this role. Although the precise nature of the underlying deal between Berezovsky and Abramovich is vigorously disputed and shrouded in mystery, what is not in doubt is that there was some such deal, that the Sheikh became involved in it and that the person who introduced the Sheikh to the deal was Stephen Curtis.
Curtis had come to know Sheikh Sultan through one his clients, a flamboyant Jordanian banker called Eyhab Jumean. Born on 6 August 1964, and educated at Harrow, Jumean was a talented gymnast from a powerful military family. He took great pride in his physical appearance, but loved money even more. In 2001 he bought a 33 per cent stake in Chinawhite, the celebrity nightclub off London’s Piccadilly, for a mere £33,333 in cash. It proved a lucrative investment.
Jumean was briefly married to the South African supermodel Gina Athan. With a flat in Paris and a yacht and speedboat moored on the French Riviera, when in London he hosted regular parties at Chinawhite. Jumean’s gadget-filled £12 million London home on Brick Street, around the corner from both Berezovsky’s and Curtis’s offices in Mayfair, housed no fewer than six sports cars and a Harley-Davidson. Jumean is a car fanatic: in 2001 he bought a Porsche 911 for £97,000 and a Ferrari 360 Spider F1 for £133,000. One friend recalls seeing Jumean press a button in his house, at which the entire outer courtyard suddenly descended like a lift. He was then led down into an underground car park that was dominated by a Ferrari, a Lotus, and four Lamborghinis. ‘It was incredible, like a scene out of Thunderbirds,’ said the friend.
Jumean funded his extravagant lifestyle by managing the private finances and investments of Sheikh Sultan. From 1998, he managed the Sheikh’s private wealth - based on the Gulf States’ oil reserves - and invested his millions in the US and UK. During his visits to Abu Dhabi, Jumean would dress in Arab garb. Adjusting well to life in the Sheikh’s court, he was hand-somely rewarded.
Curtis’s work for Jumean had led him to Sheikh Sultan. After advising the Sheikh on some property acquisitions in the UK and a hotel investment in Dubai, Curtis established a rapport with him. When contemplating how to structure the Sibneft deal, it dawned on Curtis that Sheikh Sultan would be the perfect intermediary. As the Sheikh had official diplomatic status and was personally beyond reproach, the banking authorities would be more likely to accept him as a source of funds. He was also low key and low profile.
For his part, the Sheikh was intrigued by the oligarchs. An amiable soul, he too loved gadgets and was fascinated that Berezovsky had his own private telephone network. While in London, Sheikh Sultan stayed at the Carlton Park Tower Hotel in Knightsbridge, owned by Sheik Mohammed, ruler of Dubai, and enjoyed discreet dinner parties at the private dining club of celebrated Swiss chef and restaurateur Anton Mosimann to discuss the investment of his oil millions.
The transaction in which the Sheikh became involved was deliberately complex, using third parties and offshore companies and trusts. Secrecy was again vital. As with the ORT deal, there was the risk of seizure by the state. ‘The concern was that if Berezovsky and Abramovich dealt directly within Russia, then the proceeds would be retained in Russia,’ said Curtis.
Berezovsky alleges that under the terms of the plan, agreed in the summer of 2001, Sheikh Sultan would buy the Sibneft stake from Berezovsky and Patarkatsishvili and then sell it onto Abramovich.
Abramovich, by contrast, denies that there was any deal to purchase shares in Sibneft from Berezovsky and Patarkatsishvili, whether involving the Sheikh or not. The only money he agreed to pay to Berezovsky in connection with Sibneft was the $1.3 billion in return for ‘political assistance and protection’.
The verbal dealings between the oligarchs made Curtis nervous. Concerned with the solicitors’ regulations relating to potential money-laundering implications, he was rigorous in disclosing the transaction to the compliance office of Clydesdale Bank (into whose accounts the proceeds of any deal that ensued between Berezovsky and Abramovich were to be deposited). The bank’s executives were equally anxious to comply with the letter of the law. During one meeting attended by Curtis, Berezovsky, Abramovich and their lawyers, the bank’s compliance officer told Sheikh Sultan: ‘We need your passport and one of your utility bills as proof of identity.’ His aide was bemused and stunned. ‘But he is the son of the Crown Prince of Abu Dhabi,’ he said. ‘He does not carry around copies of his electricity bills.’
An amused Sheikh responded by taking out his wallet and handing over a wodge of dirhams. The bank’s chairman was shocked. ‘Why are you offering me cash?’ he asked.
‘Well, you asked me for proof of identity,’ he replied. ‘My face is on these bills.’
The meeting dissolved into laughter.
To receive and protect the proceeds from both the ORT and the ‘Sibneft’ deal, offshore trusts were set up in Gibraltar - the Itchen Trust for Berezovsky and the Test Trust for Patarkatsishvili. Each trust then opened bank accounts with Clydesdale at their Fleet Street branch in London to receive the funds. For Patarkatsishvili, a key adviser was Josef Kay who was not only a trustee but also a protector of the Test Fund. This gave Kay significant influence: a protector can remove and appoint trustees, hire auditors, and oversee its management. In terms of protecting Patarkatsishvili’s assets, maintaining privacy, and avoiding unwanted attention, Kay played a key role. Patarkatsishvili was, of course, the beneficiary of the trust.
As protector, Kay was an important custodian of Patarkatsishvili’s assets. Born in Georgia in 1958 as Iosif Kakiashvili, he is a half-cousin of Patarkatsishvili, whom he describes as ‘like a brother’. In the 1970s he emigrated to the United States through Israel, gained citizenship, and lived in Dix Hills, New York, where his parents still reside. His route to wealth started in the 1990s when he worked for Patarkatsishvili as Commercial Director of ORT-Videos, which distributed down-market, low-quality videos - a lucrative market in Russia at the time.
A small but robust man with a muscular physique, Kay speaks with a pronounced Brooklyn accent. In May 2000 he married Sophia Boubnova, a 26-year-old impoverished Russian from Irkutsk in Siberia, and moved to London. He bought a flat on Park Street, Mayfair, and rented a third-floor office at Stanhope Gate, just off Park Lane and around the corner from the Hilton Hotel. The following month Kay’s relationship with Patarkatsishvili was cemented when he set up Bili SA, a Luxembourg-registered company that managed some of the billionaire’s assets, notably his private jet. Kay’s newly glamorous wife Sophia loved London and frequented the nearby Harry’s Bar restaurant on South Audley Street. The couple were desperate to become players in the Londongrad community, and their dream came true on 27 December 2001 when Kay was granted an investor’s visa, requiring him to deposit at least £1 million in the UK, three-quarters of it in government securities. He is just one of a number of rich Russian émigrés to have taken advantage of the scheme that provides unique residential rights.
By August 2001, approximately £250 million had been paid by Sheikh Sultan to Berezovsky and Patarkatsishvili (divided equally between their respective offshore trusts). Then came a bombshell. Clydesdale Bank suddenly announced that they would accept no further deposits. Clydesdale said they had received a directive from their new parent company, the National Australia Group, which had switched their policy away from accepting large deposits from super-rich clients.
Eventually, a solution was found. In March 2003, part of the remaining balance of the Sibneft proceeds was deposited in an offshore account in the Netherlands Antilles, and the remainder in a wealth and asset management company based in Mayfair. This money was then reinvested. Eventually Sheikh Sultan paid out a total of £650 million.
In a complex commercial transaction, all of those involved in the Sibneft deal received substantial fees, including Sheikh Sultan. Curtis personally received £9 million.
While Berezovsky was now some £300 million richer, he was furious with Abramovich: he believed he had been shortchanged on the Sibneft deal and manipulated by his former protégé. And, even worse, his friend Glushkov had still not been released from jail, adding to the growing animosity between the two men. It was even claimed that in April 2001 there had been an attempt, orchestrated by Berezovsky, to spring Glushkov from jail. The operation was allegedly led by Andrei Lugovoi, Berezovsky’s security chief at ORT and later the chief suspect in the murder of the former FSB officer Alexander Litvinenko in London in 2006.
Mindful that the Russian prosecutors were investigating his close business relationship with Berezovsky, Patarkatsishvili fled Russia in early 2000 to his Georgian homeland. In June 2001 the Russian prosecutor issued an international arrest warrant against him through Interpol, on charges of complicity in the attempted jailbreak of Glushkov. It was not until 2004 that Glushkov was eventually acquitted of charges of fraud and money laundering relating to Aeroflot. He denied that he had attempted to escape, claiming it was stage-managed by the FSB.2
Forced into exile in Georgia (which refused to extradite him to Russia), Patarkatsishvili sold his shares in his major Russian businesses, but the spectre of investigation and sequestration of assets continued to dog him. In August 2002, in order to stall such a threat, Patarkatsishvili created a new family trust to protect his assets. Two months later the Prosecutor-General duly charged him with embezzlement of funds from AvtoVaz and LogoVaz, the Russian car manufacturers.
Despite their windfall, fear of appropriation of their assets and extradition haunted both Berezovsky and Patarkatsishvili throughout 2002. Their futures were far from secure. While Berezovsky had applied to the Home Office for political asylum in October 2001, there was no guarantee of success. Then, in March 2002, an extradition warrant was issued by the Russian authorities. The warrant accused Berezovsky of defrauding the region of Samara by stealing and illegally selling cars while head of LogoVaz. The extradition case would be heard before a British judge, and if extradited Berezovsky faced the grim prospect of being sent back to Russia to face a trial and possibly a long jail sentence. Berezovsky maintains the charges were unfounded and politically motivated.
It was partly to protect his vast wealth from Russian prosecutors that every time Berezovsky bought a house or shares, quite legitimately, he used a different company known as a Special Purpose Vehicle (SPV). If all his assets were lodged under the name of one company, he could lose everything, but if one SPV was being sued or prosecuted, he could fall back on another. It was all part of an elaborate barrier to ensure that assets were kept separate from each other, and the SPVs were created to avoid businesses being linked. Berezovsky rarely did anything under his own name. He never kept money in one place, always dispersing funds into multiple accounts in different locations and entities.
One of Berezovsky’s most important SPVs was the Itchen Trust (into which the proceeds from the Sibneft deal had been placed), registered in Gibraltar and used to buy and protect his primary assets, notably his properties. This helped hide the identity of his assets and, importantly, ensure that if he died, was jailed, or went bankrupt, the funds would be distributed to his family and closest friends.
Berezovsky entrusted his eldest and favourite daughter Ekaterina, known as Katya, to be the protector of the Itchen Trust, to translate his wishes to the trustees and ensure his interests were secure. Katya is very much like her father: tough, intelligent, impatient, charming, and cunning. Closely involved in his business affairs, she married Yegor Shuppe, owner of the company Cityline. The couple lived in Berlin before settling in Surrey.
The initial primary trustee of Itchen was Ruslan Fomichev, a Russian banker and Berezovsky’s principal financial aide. When Fomichev first moved to London in 2001, he rented a penthouse flat on Eaton Square for £5,000 a week, and then a ground floor flat at nearby Eaton Place. Although he aspired to be part of London society, when he first arrived from Moscow he hardly looked the part, dressing only in jeans and looking generally dishevelled. ‘He looked like a Polish construction worker,’ recalled a former colleague, ‘and so Stephen [Curtis] decided to smarten him up.’ The Mayfair lawyer sent Fomichev across the West End to his Savile Row tailor. The next day he walked into 94 Park Lane in hunting and shooting gear so illfitting that the office fell about laughing. But it did not take long for Fomichev to integrate (he even went shooting with celebrity chef Marco Pierre White) and by 2007, he was adorning the society pages of Tatler alongside his beautiful, talented, and highly intelligent wife Katya, a PhD from Moscow University. In 2008 they were listed as the thirteenth ‘most invited couple in London’.
Fomichev became one of Berezovsky’s sharpest financial operators and had soon amassed a pot of gold for himself. He bought a £3 million apartment suite in Belgrave Square, an old embassy building, and hired the upmarket interior designer Nicholas Haslam to renovate the property. He spent £1.5 on refurbishing the interior, including a glass floor in the drawing room and lime-green chairs to complement the huge Julian Schnabel painting on the wall. The library resembled a hunting lodge from the pages of Anna Karenina. Above the desk hung a Francesco Clemente canvas, with a bald head and staring face bearing a striking resemblance to Vladimir Putin. The apartment spread through different buildings and there was a vast underground swimming pool.
The opinionated Fomichev loved to live life on the edge: he drove a Porsche around London and in his spare time was addicted to adrenalin sports - heli-skiing in Greenland, shooting, and yacht- and cresta-racing. The family skied in St Moritz, where they also have a house.
Many feared the secretive Fomichev, and Curtis was keen to impress him. He found a private school for Fomichev’s children and on one occasion telephoned a fellow solicitor every ten minutes and launched into a tirade of abuse - just to impress his Russian client who sat nearby laughing uproariously.
Remarkably, in the autumn of 2002 Berezovsky removed his daughter Katya as a beneficiary of the Itchen Trust and replaced her with Damian Kudriavev, a close confidant and political adviser, as well as the International Red Cross. At a time when he was under investigation by the Swiss and Russian prosecutors, the oligarch also removed his name from the list of beneficiaries.
This meant that between December 2002 and February 2003 Kudriavev, a 27-year-old former computer programmer, and the International Red Cross were the sole beneficiaries of around $250 million of Berezovsky’s assets. But the oligarch completely trusted Kudriavev, his young protégé, media adviser, IT consultant, and virtually the only person that he could talk to in any confidence. Berezovsky seems to think more quickly than he speaks and he often talks so fast that few people, including his own Russian staff, can understand him. A gifted chess player, Kudriavev seemed to be the only person able to follow his boss’s chaotic train of thought.
Probably because of the impending extradition proceedings, in March 2003 Katya was reinstated as the protector and beneficiary of the Itchen Trust. Berezovsky knew that the prosecutors would seize his assets if he were extradited to Russia. Katya, on the other hand, was protected from action against her father.
Although Kudriavev was employed to manage Berezovsky’s IT systems and mobile phones, his close affinity with his boss brought him a much broader influence. An air of mystery surrounds Kudriavev. In an elaborate tale he claimed that he fled Russia and moved to Israel because he was pursued by the FSB, which had killed his dog and burnt his dacha. But he never explained why he was placed under surveillance in the first place. Moreover, colleagues could never understand how such a close associate of Berezovsky was able to travel so freely to and from Moscow while his boss was the subject of an international arrest warrant. Kudriavev claimed this was because his name was spelt incorrectly in his passport. The easy-going, laid-back Kudriavev was well looked after: he bought a luxury flat in Holland Park, west London, drove around in sports cars, and travelled the world, notably to India - all at Berezovsky’s expense.
For a man who has admitted that he is not an astute judge of people, Berezovsky has taken remarkable risks with the stewardship of his multi-million-pound fortune. He even lent his trustees millions of dollars on an unsecured basis with no due diligence. Stephen Curtis thought this was reckless and advised against it but Berezovsky ignored his counsel. Appointing known associates and family members as trustees was also a gamble. If the trust could be linked to its beneficiary, then the cloak of secrecy would be removed. For this reason, trusts are often administered by anonymous lawyers and nondescript company formation agents. But Berezovsky took the risk of deploying his associates as individual trustees out of fear that professional, corporate trustees would steal his money.
As Russia’s Most Wanted, Berezovsky became much more vigilant about security. When he first arrived in London he moved into an apartment in Kensington Palace Gardens, which he had bought in 1995. At first he seemed surprisingly unprepared for his new life. He did not even possess any credit cards. A prestigious location was important and so he rented an office at Melrose House in Savile Row, refurbished by the young property dealers Candy and Candy. But his communications system was primitive. For example, he was using an unsecured Virgin e-mail account that could easily have been infiltrated by the FSB.
It was not until 2002, when he moved into new offices at Down Street, near Hyde Park Corner, that a brand-new, ultra-secure computer system was installed. Security became an obsession. Berezovsky even created his own e-mail and telephone network outside conventional norms. His mobile phone bills had been astronomical - thousands of pounds a month. Now, with an early version of Skype, they were substantially reduced. He used Siemens’ ‘Top-Sec’ S35 mobile phones because their scramble signals made them almost impossible to bug. For this reason, they were often used by MI5 officers and the British Army. But they were expensive, at £2,000 apiece, and not easy to find, so they were purchased cheaper in Russia and then brought into the UK.
Berezovsky’s operational base has been functional as well as security-driven. To get into his private office, you are required to be fingerprinted. Dominated by photographs of Berezovsky with VIPs and celebrities, his inner sanctum cost an estimated £1 million. The most expensive and elaborate carpet, wood panels, and security gadgets were installed. In the hallway leading to the office boardroom the wall is lined with black-and-white photographs of Russian leaders, from Tsar Nicholas onwards, among them his arch enemy Vladimir Putin. In the back of his office is a private room and bedroom where very few people have ventured. The private room has been a constant source of speculation by members of his staff. ‘We all thought that that was where he kept his most secret documents or held his most important meetings,’ said one former aide.
Such is the importance of security that Berezovsky insists on hiring a female or elderly security guard to operate reception downstairs so as to disguise the identity and nature of the occupants within. There are no buttons for punching in codes for entry to rooms; all are accessed by a biometric fingerprint security system. Nor did Berezovsky trust British security operatives, preferring former members of the French Foreign Legion. One review of his security by an experienced Israeli operative found that his close-protection team was loyal, tough but unsophisticated, and unlikely to offer him much protection in a fire-fight. His main bodyguard had been a former member of the French Special Forces and was recruited from Israel.
Surrounded by bodyguards, Berezovsky soon became obsessed with intelligence and espionage. He believed that MI5, the CIA, and the FSB had all been investigating him and kept him under surveillance, including hacking into his computers. He regularly reviewed his network, which used Linux rather than Microsoft software. He even thought there was a spy inside the church directly across from his second-floor office. He also took seriously the suggestion that Scotland Yard has planted an undercover officer inside his headquarters. ‘I have information that there is a police informant inside your office, but I do not know his name,’ his security consultant Keith Hunter told him. Berezovsky’s friends argue that he was entitled to be vigilant, given that in 1994 a bomb blew up his Mercedes and killed his chauffeur.
Every time this wiry, intense man, always dressed in either a dark pinstripe suit or black leather jacket, left his office, an elaborate security operation swung into action. A bodyguard would check that the foyer and street were clear. Berezovsky would always travel in convoy - often altering his route and drivers - with two armoured Mercedes Maybach limousines, one bodyguard in the front seat and one in the back, a black backup Jeep, and motorcycle outriders.
On one occasion Berezovsky hired six identical limousines, travelling in pairs and heading off in different directions to throw off potential tails. At a function in April 2007 at the Royal United Services Institute, a short distance from Downing Street, his cavalcade, complete with motorcycle outriders, was almost presidential.
After the murder of Alexander Litvinenko, Berezovsky suspected that a ‘traitor’ had leaked sensitive information from his office. Internal security was reviewed and a new company was hired - Risc Management headed by Keith Hunter, who advised the oligarch since 2000. One director of Risc was Tim Collins, the former British Army officer who became famous during the second Iraq War, in March 2003, for his eloquent eve-of-battle speech to his troops.
For Berezovsky it was perfectly normal to spend freely in Mayfair’s restaurants, clubs and bars. Alloro, on Dover Street, Sumosan, a Japanese restaurant in Albemarle Street, Harry’s Bar and Annabel’s were particular favourites. Something of a hypochondriac, and constantly checking his heart rate, at home he employed an Italian chef for his special diet.
Berezovsky also enjoyed the company of young women, often ending up at the Library Bar of the Lanesborough Hotel on Hyde Park Corner in the company of a statuesque Russian blonde - as well as the obligatory pair of bodyguards. Late one afternoon a hotel guest was amazed to see a nervous Russian approach Berezovsky and kneel before him. He then took the tycoon’s hand and kissed his ring, shaking. ‘It’s O.K., it’s O.K.,’ whispered Berezovsky and the suppliant retreated looking relieved. ‘It was astonishing,’ said the eyewitness. ‘It was like a scene out of The Godfather with Marlon Brando taking pity on a guy who owed him money.’
Since his arrival in England, Berezovsky has invested close to £50 million in country houses, including £3 million for Heath Lodge in Iver, Buckinghamshire, for his influential investment adviser Natalia Nosova; Pentlands in St George’s Hill, Surrey, for £4.5 million; and Warren Mere House in Thursley, near Guildford, Surrey, bought for £4.5 million for one of his daughters and her family.
In August 2001 Berezovsky purchased Bakeham House at Wentworth Park, an estate near Virginia Water in Surrey, for £20.5 million from Scott Young, a wealthy Scottish property developer. He bought it after flying over the premises in a helicopter with Stephen Curtis and an estate agent. Typically, Berezovsky, supported by Curtis, would insist on completing such deals at speed and worry about any problems later. Contracts for Bakeham House were exchanged the next morning and the deal was completed by the following Monday. Berezovsky did not even look inside the property.
Bakeham House has became Berezovsky’s main residence. He has lived there with Yelena Gorbunova and two of his children since 2002. Indeed, the stunning Yelena owns the grand house and oversees a staff of some twenty servants and gardeners. They have never married since Berezovsky has not divorced his second wife, Galina. For over a decade Galina never sought financial settlement but lived the high life in an £8 million apartment in west London. It was not until 2008 that she requested a divorce. ‘His relationship with Galina is perfectly amicable,’ said Lord Bell, the spokesperson for Berezovsky. ‘There are no issues between them that I am aware of. They are negotiating a divorce settlement.’3
Berezovsky commutes to his Mayfair office but rarely stays in London overnight. He prefers his country estate, which abuts thirty acres of well-manicured lawns and four golf courses that make up the prestigious Wentworth Golf Club. The mansion is impenetrable, with imposing steel gates, and is monitored twenty-four hours a day by Berezovsky’s security staff. This is where most of his meetings are held.
Once word got out that Berezovsky was prepared to splash out on expensive country houses, he was soon besieged by estate agents. ‘They are like flies on shit,’ he snapped to an aid. Security was paramount. During one helicopter tour of a £28 million Elizabethan mansion in Surrey, he noticed that the main gate stood virtually on the A3 and that there was a deer fence around and public footpaths through the estate. He even asked the shocked estate agent if the footpaths and chapel could be closed. But he was intrigued and uncharacteristically looked around the estate with Yelena. All in black, Berezovsky resembled Ian Fleming’s Dr No as he stepped out of his cream-and-grey Agusta helicopter after it landed on the immaculately kept lawn.
Berezovsky did not buy that particular property because of security concerns, but he did buy another Surrey mansion, Hascombe Court, near Godalming, for £9 million. It had been owned by the former Radio One DJ and television presenter Chris Evans. Designed in 1908 by a pupil of Edwin Lutyens, with formal gardens laid out by Gertrude Jekyll, the eight-bedroom house set in 10 acres of parkland was bought unseen for another of his daughters.
The deal was conducted in strict secrecy and Chris Evans repeatedly asked the identity of the purchaser, but Berezovsky refused to allow his estate agent to disclose his name. Even his daughter and her husband did not see the property until after the oligarch had bought it for them as a wedding present.
In London, however, Berezovsky had more problems finding the right house for himself. He considered Toprak Mansions on The Bishops Avenue, then marketed for £50 million, making it one of the most expensive houses in the UK, but he found the atmosphere ‘sterile’. In 2004 he made an offer of £37.1 million for 15 Kensington Palace Gardens, but he was outbid by fellow Russian oligarch Leonid Blavatnik, who paid £5 million more.
To facilitate his search for London properties - for himself and his family - he turned to the interior designers Candy and Candy. The brothers have become the most trumpeted, well-known, and powerful interior designers and property developers in London. At turbo-charged speed they have propelled themselves onto a multi-billion-pound property empire. In the early post-millennium years the brothers fast developed a sense of the insatiable appetites of the new Russian billionaires.
When, in April 2001, they showed Berezovsky the glossy brochure for a deluxe, glistening, hi-tech Buckingham Suite apartment in Belgrave Square, he was impressed and purchased it for his daughter Katya. The property - selling for £4.15 million - promised all the characteristics that appealed to acquisitive Russian oligarchs: bullet-proof CCTV cameras, a fingerprint entry system that can remember 100 fingerprints, remote-controlled cinema and television screens in the bathroom walls, laser-beam alarms, and smoke bombs. An electronic system recognized the resident’s favourite music and TV programmes and followed him or her from one room to another.
The indulgent suite designed to suit the tastes of the new twenty-first-century super-rich was dominated by oak, black walnut, and polished granite surfaces. The furniture was bespoke and everywhere was the best marble and leather. Outside there was a Japanese garden with a fountain shooting water into a pool, which was then pumped into a moat around the edges of the garden.
By 2002, there was an aura about the brothers, and wealthy Russians wanted to buy a ‘Candy and Candy’ flat. In June 2002 Andrei Melnichenko, a young Russian banker, paid £2.95 million for a three-bedroom penthouse apartment in Berkeley Square, previously lived in by Christian Candy himself. Dominated by extravagant marble surfaces, the oligarch installed his young Russian girlfriend into the property.
The brothers even started to emulate the lifestyles of their Londongrad clients, buying their own £10 million second-hand yacht, Candyscape, joining the private jet set, and moving to Monte Carlo. Like many of their clients, the brothers’ business is based in a complex offshore structure.
Gradually, Berezovsky integrated himself into the British way of life. He bought property in the right areas, hired some of the most powerful law firms in the country, and even, in December 2003, spoke at that most respected of London institutions, the Reform Club. While his initial arrival was barely noticed, his wealth - he was prepared to spend £1 million a month on his private jet and £40,000 for a QC’s opinion on a property dispute - and dynamic political apparatus soon began to open doors.
Despite the questionable provenance of his wealth and his controversial role in Russia in the 1990s, there was no shortage of influential members of the British establishment prepared to be courted. Berezovsky and Yelena would often be seen with Lady Carla Powell, the socialite wife of Lord Powell, the former private secretary and adviser on foreign affairs to Margaret Thatcher. Lady Carla hosted the most influential political salon in London at her Bayswater home, where fellow guests included Peter Mandelson and Lord Bell, and Berezovsky and Yelena regularly attended Goodwood and Ascot, the latter on occasion as guests of the Duke of Devonshire.
Berezovsky’s search for social acceptance extended to rubbing shoulders with members of the aristocracy and minor royalty. The Marquis of Reading (whose great-grandfather, the first Marquis, was Lord Chief Justice, Ambassador to the United States, and Viceroy of India) was educated at Eton and served in the 1st Queen’s Dragoons. Describing himself as a ‘Sino-British consultant’, he first met Berezovsky in Moscow in the early 1990s when he was exploring business opportunities.
Simon Reading would often drop by at Berezovsky’s office without making an appointment as a ‘courtesy call’. On one occasion Reading happened to mention a charity dinner in passing and Berezovsky handed over a cheque for £25,000. Berezovsky pays for dinners and for his part, Reading invites him to VIP receptions and dinner parties. Fixated by moving with the powerful, Berezovsky would become obsessive about who attends these events, demanding to know who else was coming, who he would be sitting next to, and for his staff to confirm that certain people would attend.
The Marquis gave Berezovsky an entrée into the City and also introduced him to Prince Michael of Kent. Useful yet again for widening Berezovsky’s upmarket social circle, Prince Michael offered impressive, and useful, credentials. He entered Sandhurst in 1961 and served in Germany, Hong Kong, and Cyprus before subsequently joining the Defence Intelligence Staff, retiring from the army with the rank of major in 1981. With a full beard and moustache, it is said that Prince Michael bears a striking resemblance to the murdered Tsar Nicholas II (his English grandfather, George V, was Nicholas’s first cousin), so much so that when he visits parts of rural Russia on one of his trips to the country, startled locals have been known to drop to their knees in amazement, as if the Tsar had been brought back to life.
By late 2002, Berezovsky needed all the powerful friends that he could get. Earlier that year the Russian Prosecutor-General launched a new criminal investigation, alleging that Berezovsky had helped to create and finance Chechen rebel groups. ‘This applies primarily to the funding of unlawful armed formations and their leaders,’ said Nikolai Patrushev, then head of the FSB, adding that his agency planned to document the charges and relay the information ‘to our partners abroad, and wait for a proper reaction from them’.4
Berezovsky admitted to the New York Times that he had had extensive contacts with Chechen separatist leaders, especially from 1997 to 1999, when he was a deputy national security adviser to President Yeltsin, but strenuously denied funding terrorism. He admitted giving $2 million of his own money in 1997 to a Chechen field commander, Shamil Basayev, who was also Chechnya’s Prime Minister. The money was intended for the restoration of a cement factory, he said, but he admitted that it might have been used for other purposes. ‘It was not my function to control how he spent the money,’ Berezovsky said, adding that Russian security officials were aware of the gift at the time, though they were not happy about it.5
Then, in the late spring of 2003, as Berezovsky nervously awaited the outcome of his political asylum request and for the extradition case hearings to begin, there was more uncomfortable news: his former protégé Roman Abramovich was spending more time and money in London. Flush with the flow of dividends from Sibneft - now almost wholly owned by him - Abramovich had been seen attending football matches in west London, buying more expensive property - not far from Berezovsky’s Down Street office - and was planning to buy a major British asset. While the future of Berezovsky continued to look precarious, there was a new oligarch in town, one unburdened by such concerns.