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MOSCOW – Roald Dahl, the English humorist, once wrote a tale about a man who had acquired the secret of seeing through cards. Naturally, he had to conceal it, if he was to make a killing at casinos. As professional gamblers all know, casino managements are constantly on the lookout for players with systems that can beat the odds of losing. It’s also entirely legal for them to build systems for insuring their clients lose; and to ban those clients smart enough to overcome them.

Alisher Usmanov is a Russian businessman who thinks like a casino. He enjoys the reputation for big-stakes gambling, because that attracts other people’s money. But he doesn’t like the risk of losing his own. Last month, Usmanov suffered the biggest loss ever, despite what many judged to have been a cleverly managed entry into the casino that is the City of London financial market. But had Usmanov studied more closely, he would have known not to gamble, unless you have bought the casino first.

Usmanov’s loss came after a year of steadily buying up shares in the ailing steelmaker, Corus, an Anglo-Dutch company. As Usmanov bought, he also tipped off the UK press to his ambitions for Corus — a bigger shareholding he intended to accumulate, he said, in order to take a seat on the Corus board of directors, and to build a link between Corus and the steel plant and iron-ore mine, which he controls in Russia. The more he publicized himself, and the more shares he bought, the higher the share price went. Over a year, Usmanov’s offshore holding called Gallagher accumulated almost 14 percent of Corus to become the second largest shareholder in the steelmaker. The share price rose in that interval from a low of 4 pounds on March 13, 2003, to a high of 45 pounds on March 9, 2004. Usmanov could count tenfold profits, at least, on his early stake purchases, if not on the later ones. He refuses to provide details, but it is possible to estimate that he has outlaid on his gamble not less than $200 million.

The Corus management repeatedly replied to Usmanov’s press statements by denying him their endorsement for a seat on the board of directors. But apart from vague generalities, they never explained why. They also rejected Usmanov’s attempts to link the two steel making groups. Gallagher’s share buying was good for Corus; Usmanov, the company decided, was not.

After booking his initial gains, it is unclear what Usmanov had to gain financially by continuing to spend more money to chase shrinking gains in a rising market. His iron-ore mine, Lebedinsky -the largest in Russia – is already producing at close to maximum capacity, and exporting almost a third of its production outside n Russia. It is virtually impossible for Usmanov to offer more iron-ore to Corus. As for Usmanov’s steel plant, Oskol Electro-Metallurgical Combine, its range of products doesn’t suit Corus’s range of needs.

Usmanov himself, and his spokesmen, have been fast on the press release making claims they then refuse to clarify. Accordingly, there are three theories of what Usmanov really wanted from Corus. The first is that he viewed the Corus board as his route to a seat in the Anglo financial establishment. Usmanov needed the ticket to respectability, so the theory goes, because his reputation in Moscow has been that of a corporate brawler, who muscled into assets on behalf of his sponsors in the Gazprom management, or in alliance with LUKoil CEO Vagit Alekperov. The biggest dent in Usmanov’s reputation came from his raid on a diamond-mine discovered in the Arkhangelsk region in 1996 by Archangel Diamond Corporation (ADC), a small Canadian company that now belongs to De Beers. In court papers filed in the United States, Usmanov (and Alekperov) has been accused of massive fraud. Initial rulings have rejected US jurisdiction, and are on appeal. The charges against Usmanov remain untried, not only in the United States, but also in an arbitration proceeding in Sweden.

The second theory of Usmanov’s campaign against Corus is connected to the first. He is greenmailing Corus — that is, he is positioning his newly acquired shareholding, or his Russian steelmaking interests, or both, for sale back to Corus, and not for buying into Corus. The Moscow opinion of Usmanov is that he is a financial investor, not a steelmaker. His objective, according to this interpretation, is to oblige Corns into relieving itself of the pain of his attacks by making him an offer to exit. This could take several forms, including a joint venture between the Russian smelter, the mine, and Corus; or it could be a simple cash transaction. Usmanov’s raid on the ADC is viewed in similar light by De Beers; Usmanov has hinted that for the right price, he might let go. Like Corus, De Beers has chosen to fight, not pay.

The third theory of Usmanov’s intentions go back to problems Usmanov admitted he was having at Gazprom, when the Putin administration began its reorganization of the company almost three years ago. It was then that several of Usmanov’s friends at Gazprom followed the sacked CEO, Rem Vyakhirev, out the door. Usmanov conceded at the time that he was feeling potential pressure on his assets from the new Gazprom management, led by Alexei Miller, which had started an investigation of what Vyakhirev had done with Gazprom’s assets and asset disposals. Through Gazprominvestholding, which Usmanov directed on Vyakhirev’s behalf, Usmanov had taken control of the steel plant and the mine. If Miller had wanted, he could have retrieved the assets from Usmanov. But that that was then. The situation at Gazprom has now changed, and Usmanov believes he is no longer under threat. In the interval, it stands to reason that if his control of Osko! and Lebedinsky was at risk, Usmanov should try to cash out into offshore assets. Corus, so this theory goes, was Usmanov’s cash-out vehicle — and an easy, lucrative one at that.

On March 16, Usmanov thought he would rap hard on the casino door, and threaten to blow it down if he wasn’t admitted on his terms. The threat to take “strategic and tactical steps” against Corus was issued in the March 16 issue of the Financial Times. Usmanov thought that Corus would be as intimidated by the newspaper as he is impressed by it. Employing also as his corporate chairman the former Liberal Party leader and ex-Foreign Minister, Lord David Owen, Usmanov might have calculated that he had both pen and sword on his side.

He was able to recruit a handful of sound-bytes in the media, but he failed to make a dint in Corus’s resistance, or in the opposition of other shareholders. They refused to accept the nomination of Usmanov to the board at the annual shareholders’ meeting, scheduled for April 22. Usmanov then proposed a palliative. If you won’t take me, he announced, I offer my nomination of a man you once trusted to run Corus, retired executive Adrianus van der Velden. A Dutchman for a Russian purpose was the proposal. But on the eve of the vote, Usmanov learned that neither the Financial Times, nor Owen, had swung a significant number of votes. Indeed, so small was his apparent gain over the 13.39 percent he already controlled, Usmanov decided it was better to retreat than to allow the magnitude of his defeat to be recorded. Van der Velden’s nomination was withdrawn before the shareholders’ meeting could vote it down. All four of the other nominees to board seats received more than 98 percent of votes in favor.

“We are not going to go away” was the riposte Usmanov’s spokesman made, as he retreated. Corns fired back, intimating that Usmanov had been unable to overcome his Russian dossier, “Gallagher’s challenge to UK corporate governance principles,” aCorus statement said, “has proved a distraction to the management of the company.”

Muffled though Usmanov’s defeat was, it was the first counter-attack on a major Russian businessman to succeed in the London market. From Usmanov’s point of view, the defeat needs to be camouflaged if he is to make good on either the ticket to respectability or the greenmail objectives. He has already made a success of the cash-out ploy, and will probably not waste any more money adding Corus shares to his holding.

But there is a lesson too, for the other major Russian businessman, who is presently keeping the London market in thrall – Roman Abramovich, owner of Russian oil and metal assets, the Chelsea Football Club, and England’s richest man. For him, as for Usmanov, there may come a time when the Russian dossier will catch up with him, no matter how many peers and other establishment assets he has bought. For there is one other lesson that Russian gamblers have yet to learn about the City of London — you can rent, but you can’t buy the casino.

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