David Frum

03.30.13

Boris Berezovsky and the Russian Money Problem

ANDREW COWIE/AFP/GettyImages ()

From my National Post column: why Russia's neighbors should be increasingly concerned.

Boris Berezovsky, once one of the richest men in Russia, was found dead last Saturday at his house in Ascot, a wealthy little English town near Windsor Castle.

Everything about the death suggests suicide. Berezovsky’s body was found inside a locked bathroom. An inquest has found no signs of violence on his body. The ligature around his neck corresponded to a fragment of ligature still attached to the shower curtain.

The 67-year-old Berezovsky had suffered financially from his prolonged conflict with Vladimir Putin’s Kremlin. In the past three years, he appears to have lost the remainder of his fortune. In 2011, a British court had ordered him to pay a huge settlement — rumored at 100-million pounds — to one of his ex-wives. Only last year he had been ordered to pay costs of 35-million pounds after losing a lawsuit against another Russian tycoon. He was reported to have sold artworks and houses to raise cash. Friends described him as “depressed.”

On the other hand … sudden death seems to have become contagious among Putin’s critics. Berezovsky had been friends with Alexander Litvinenko, the ex-spy who died of radiation poisoning in the United Kingdom in 2006 after somehow ingesting a dose of deadly polonium. In 2008, Berezovsky’s 52-year-old former business partner, Badri Patarkatsishvili, dropped dead at his home in Surrey, apparently of cardiac arrest. Well, he was a smoker.

The deaths of these ex-oligarchs will loose few tears. The friends and family of the American journalist Paul Klebnikov — murdered in Moscow in 2004 — suspect Berezovsky of ordering the hit. Berezovsky and Patarkatsishvili gained their fortunes by seizing assets of the former Soviet state in the disorder after the collapse of communism in the early 1990s.

But the second wave of oligarchs brought to wealth and power by their alliance with Vladimir Putin hardly constitute a moral improvement over the first. They are plundering the Russian state, too, this time in alliance with the former KGB — the spy agency Putin headed and whose leading members have become billionaires alongside him.

The second wave of Russian oligarchy is different from the first in another way, too. Thanks to the rise in oil prices since 2005, they together are much richer — and thus much more of a problem for the rest of the world.

It’s Russian money — both that of the ultra-rich and that of the next level down — that flooded into Cyprus in recent years. It’s generally estimated that 40% of the bank deposits in Cyprus belong to Russians, who domicile their accounts in Cyprus to avoid tax at home. These arrangements have created the appearance that an island with an economy the size of Vermont’s has become the single largest foreign investor in Russia.

Read the rest at the National Post.