By John Helmer, Moscow
Roman Abramovich has bought two houses, and is negotiating for at least one more, on East 75th Street in New York for about $70 million. The New York papers are reporting that Abramovich is planning to live there with his family because his wife prefers it for her work. Abramovich’s spokesman insisted yesterday that Abramovich’s “main residence is Moscow”.
So why is the well-known crony of President Vladimir Putin buying American assets which may be sequestered, the transactions reversed, his funds frozen or lost, by US Treasury sanctions and by the US Government’s campaign to oust Putin from office? Has Abramovich been offered a guarantee of asset protection from the Obama Administration if he is buying for the one individual the US Government wants to put in exile there – Putin himself?
Fanciful? Oleg Deripaska long ago agreed in secret with the British Government that before ex-President Boris Yeltsin’s death in 2007, his daughter Tatiana Dyachenko, her husband, and other family members could live undisturbed by warrants and litigation at Deripaska’s English country house, then their own, and then the property they hold in common, fronting for each other in a ring, much as they do in Moscow and in Jersey.
Across the Atlantic safe-haven homes – in fact multiples or compounds of them — have been acquired by Mikhail Lesin, the Russian press and propaganda supremo, in California so that he is safe from political misfortune and prosecution, and so that his daughter may broadcast from the Los Angeles studio of Russia Today Television (RT). Lesin’s assets were purchased in 2011 and 2012.
Abramovich began acquiring assets in the US in 2006. Through shareholding control of Evraz, he owns several steelmills, one of which, in Oregon, makes special steel for the armour plate that is fitted to tanks and armoured vehicles of the American and NATO armies. These are currently deployed in Germany, Latvia, and Poland – within surge range of the Ukrainian and Russian borders. In 2008 Abramovich bought a ranch at Wildcat Ridge in Colorado (below, left), as well as a ski lodge at Snowmass Village (right).
According to an email last month from John Mann, Abramovich’s spokesman, “for future reference, Mr Abramovich’s main residence is in Moscow.” A few weeks earlier, Abramovich had been trying to separate himself from the North American assets of Evraz by floating them off as a separate, US-listed shareholding company. But there weren’t enough takers, and the initial public offering was pulled.
As the US sanctions campaign intensified against individuals with residential and other personal links to Putin, Abramovich may have appeared to be withdrawing his asset exposure in the US. In fact, as the New York Post reported on Saturday, Abramovich started buying houses in New York in October. The first, Number 11 East 75th Street, came from a developer, and cost $29.7 million. It is just 6.4 metres wide, and contains 882 square metres of space. In December, Abramovich bought No. 15, two doors away, for $18.3 million. It is 5.2 metres wide, and contains 677 square metres. In between, No. 13, is being sold by the current owners to a “Russian mystery buyer”.
The sellers, Mark and Lori Fife (right), a fund operator and a bankruptcy lawyer, may have been the leakers of the Abramovich purchases, because their deal isn’t done. They bought for about $7 million in 2000; they are reported to be asking more than $20 million now.
Abramovich has engaged a New York real estate specialist from the Skadden Arps law firm called Evan Levy. He won’t say he is representing Abramovich, and Abramovich won’t say he has engaged him.
Abramovich has had several legal brushes with the US Government in the past, all harmless. The US Treasury and the Committee on Foreign Investment in the US (CFIUS) investigated him when Evraz was taking over Oregon Steel Mills in December 2006. More recently, according to Reuters and Russian media, he was interviewed by the Federal Bureau of Investigation (FBI) in New York in March 2013. He wasn’t “arrested or detained”, his spokesman said at the time. Several theories were aired in the press in explanation, one connected to the death of Boris Berezovsky; another to football, and the award to Russia of the 2018 World Cup.
How much of a Putin crony Abramovich has been, or still is, depends on what the US Office of Foreign Asset Control (OFAC) thinks of the widely reported allegations that Abramovich paid for, and presented to Putin, this motor yacht, the Olympia (below). Novaya Gazeta reported the alleged favour in 2012. So did the Voice of America. A Russian newspaper report in 2003, supported by a London yacht broker and the state shipping company Sovcomflot, say that Olympia was ordered by Abramovich in Amsterdam. When it was completed, the handover ceremony included representatives of Putin; Edmiston the London yacht broker; the vessel master; and Eugene Tenenbaum, Toronto accountant and long-serving financial advisor to Abramovich.
Maybe the Olympia is a crony boat; maybe it isn’t. In its Russian sanctions campaign, OFAC has targeted more than one Russian business crony of Putin’s for much less.
Abramovich isn’t denying he’s bought houses on East 75th Street. Yesterday Abramovich’s spokesman was asked how he views the New York real estate in relation to Putin’s policy of deoffshorization. He was also asked: “what undertakings, guarantees or protections has Mr Abramovich sought and obtained from the US authorities that as an associate of President Putin he and these assets will not be designated for sanctions by the US Government in relation to the war in Ukraine and the US campaign to replace Mr Putin?” The spokesman replied: “we don’t comment on his personal property.”
Through Evraz Abramovich has a billion-dollar stake in an iron-ore mine, steelmill, and coke batteries in the Dniepropetrovsk region of eastern Ukraine. They were first acquired in 2007 from Igor Kolomoisky. Abramovich has been complaining that he was chiselled in the deal ever since. Read the story then. Last March Putin publicly defended Abramovich, charging Kolomoisky with “scamm[ing]” him. “They signed some deal, Abramovich transferred several billion dollars, while this guy never delivered and pocketed the money.”
Last week Evraz reported its Sukha Balka iron-ore production was up 4% between the third and fourth quarters of 2014, down 3% compared to 2013. Crude steel production at the DZMP mill had dropped 20% in the last quarter of 2014. The report also intimated that the war has been good for Evraz’s business because costs have been falling, and export sales picking up. “Production of finished products [in Ukraine] decreased by 11% year-on-year as a result of lower demand for finished products, in particular sections, both in the Ukrainian market (the largest end-user is located in the Donetsk region) and in Russia and in the Middle East. Consequently, production of semi-finished products grew by 11% vs. 2013, also supported by the weakening Ukrainian hryvnia and by strong demand for export billets as a result of lower supply by Ukrainian steel producers.”
Yesterday Abramovich was asked: “In the present war does Mr Abramovich indicate which side he prefers his assets to be on?”
His spokesman replied: “Last I checked, Russia was not at war!”