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BBC PROFILE OF ALISHER USMANOV – LORD MYNERS LETS THE BANK OUT OF THE BAG

By John Helmer, Moscow

Alisher Usmanov’s fortune began with a business of making plastic bags when they were in short supply in Moscow in the last days of the USSR. At least, that’s the asset in the self-start, self-made fortune story which reporters for global rich lists have been persuaded to believe about Usmanov. How much capital he accumulated in plastic bags and how this recommended him as a debt collector for Rem Vyakhirev and others in the early Gazprom leadership – Usmanov’s next step up the fortune ladder — have yet to be clarified.

Last autumn there was also much the UK Financial Services Authority (now renamed Financial Conduct Authority) and the UK Listing Authority wanted to be clarified, because the UK regulators refused to allow Usmanov’s telecommunications company Megafon to make its initial public offering (IPO) on the London Stock Exchange. Earlier UK refusals to allow Usmanov to sell shares in his iron-ore mines and steelmills through the Metalloinvest holding weighed on that judgement. The story of how the “clarifications” were added to the prospectus, and the Megafon share sale allowed, has been told here [1] and here [2].

In that process, Usmanov hired an ex-British financier, turned bank sector minister in the last Labour Party government of Gordon Brown. That hire was Paul Myners, who was awarded a peerage by Brown in October 2008 so that he could serve as the Financial Services Secretary to the Treasury (aka City Minister); that’s a parliamentary appointment in the British system, who must hold a seat in the elected or the appointed chamber. Myners sat in his Treasury seat until Brown lost the election of May 2010; he continues in the House of Lords.

Myners’s appointment by Usmanov followed what he has subsequently described as a due-diligence interview Myners conducted with Usmanov as they walked around a German lake.

Myners signed on as an independent director, and his role as lobbyist for the Megafon share sale was reported [3] in the London financial press on November 19. Still, his name wasn’t included in the IPO prospectus, and Megafon’s 7-man board [4] listing still doesn’t mention him.

The company announced on March 5 that a special shareholder meeting had been called the day before, the purpose of which appeared to be to put Myners in the board seat which had been announced [5] in London almost five months earlier. Myners replaced Tero Kivisaari, who was representing TeliaSonera’s shareholding in Megafon. Kivisaari has been publicly named as a target of investigation by Swedish prosecutors looking into alleged corruption by the Swedes TeliaSonera in Uzbekistan’s telecommunications sector. That story, and Usmanov’s place in it, has been told here [6].

Myners omits the Usmanov appointment in his own Wikipedia biography [7]. Last night he led the cheer squad for Usmanov in a profile broadcast [8] by BBC Radio 4:

On the radio Myners described Usmanov’s business practice as that of “an opportunist, a man who has a flair for spotting an opportunity.” Myners then let something out of Usmanov’s bag which has not been revealed before: he reported that Usmanov may be contemplating the takeover of a UK bank. This may happen, said Myners, “if he saw an opportunity in, for instance, banking.”

UK regulators make it repeatedly, if privately plain that they have not allowed, and will not allow, a Russian-owned or controlled bank to operate in London with full UK registration. So for Usmanov to buy control of an already registered and listed UK bank would be a major regulatory hurdle for the British government. Beating the bar, Myners intimated last night on the BBC, is an opportunity he’s in a position to lobby on Usmanov’s behalf, although perhaps it was unwise of him to drop the hint so publicly, so soon. All Usmanov is broadcast on the BBC as saying is: “We will see and we will wait.”