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Oleg Deripaska in strong defence of his role in the Siberian Aluminium wars

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22 April 2012


Businessman has spoken candidly over the controversial events of the 1990s, admitting he paid protection money to criminal gangs. 

It was better to 'stay alive' and fight back by cleaning up the metals industry, he insisted. 

His revelations come ahead of a London court case this summer when the battle for control of Siberian assets will take centre stage in a £1.6 billion legal tussle between Deripaska and Uzbek born billionaire Mikhail Cherney, now exiled in Israel.

'The first time I was directly threatened … two weeks later my commercial director was shot two times in the head. This was how, finally, I decided it was better to pay for the moment to stay alive and for my people to stay alive,' Deripaska said in an interview with Britain's Sunday Telegraph newspaper.

'I hated having to pay but there was no other safe choice, for me or my staff.'

Mr Deripaska insisted he was seeking to clean up the industry and at one point had to pay the police — impoverished following the Soviet collapse — to protect him and his business.

'I saw it as a temporary, unpleasant necessity while I did everything I could to clean up the industry and put in place security that was needed to make my businesses and my staff safe,' he said.

In the case, Cherney will claim he was a partner the Deripaska's Rusal company, but was not paid his stake.

Cherney's legal team, in turn, strongly deny that he was leader of a crime gang extorting money from Deripaska. 

Cherney will not appear in person in London due to an international arrest warrant, reported the Sunday Telegraph which said the case was being heard in the UK because of Cherney's fears that he faced assassination in Russia.

Verdict is still awaited on another high profile but unrelated London case featuring tycoons Roman Abramovich and Boris Berezovsky.

The British newspaper informed its readers: 'The Deripaska-Cherney case will once again throw a light on one of murkiest chapters of Russia's history when organised crime and business came together in a toxic mix. It is estimated that up to 100 people were killed and there were countless more kidnappings, beatings and general terrorism.'

In retrospect, Deripaska suggests the Chinese route to the market 'looks more attractive' than Russia's experience in the 1990s.

'They are slowly getting the economic benefits and slowly releasing the society into private property opportunities and increasing the level of living standards ~ slowly releasing political freedom. But in Russia police did not function, institutions did not function.'

Recalling his early days in Siberia, Deripaska said: «One of my employees was kidnapped in 1992. We were not buying luxury cars, we weren't buying apartments, we tried to stay under the radar as much as possible.

'Of course, I was a trained soldier for military purposes, and you can use this experience in civil life. I had a lot of friends in low levels in law enforcement. 

'They were all sending me and my people signals that the system was so destroyed it was better to avoid any conflict. Moscow was called the Wild, Wild West because of the violence on the street. We used ex-law enforcement officers and they went and they made a bargain. Then I started to assemble my first security team.'

He recruited former Soviet Army and KGB personnel, he said. 

'As soon as we started buying shares from employees, we immediately started receiving pressure from the local crime group.

'To counterbalance it I went to the local law enforcement, which were out of money, and I said if you help me protect my people I will help you, I will make sure you get proper money.

'They were honest people, they were very brave helping us to buy shares by protecting my people.

'Then in 1993 there was an 'accident' in Krasnoyarsk. There was a very important director, a very prominent figure was beaten in front of his house.'

Deripaska told the Sunday Telegraph: 'This was the start of the aluminium wars — this was the start of the battle.

'We supported this guy. As a punishment — much later — his son who worked for me was killed in a strange accident. He was shot dead.

'In 1993 and 1994 more than 34 people in Krasnoyarsk were shot dead because of this struggle for control.'

In a frank and chilling account, he said: 'The first time that I was directly threatened, there was a local guy, well known, his nickname was 'Chinese', who called. I was surprised when I picked up the phone — it was the first threat I received.

'Two weeks later my commercial director was shot two times in the head. He survived.

'This was how finally I decided it was better to pay [gangs] for the moment to stay alive and for my people to stay alive. And then later making sure we can improve security.'

Deripaska said he then adopted the policy 'that I will pay now and I will deal with it later'.

He claimed the arrival of Vladimir Putin as president in 2000, re-establishing the state, was a key factor in severing ties with organised crime. But he insisted the gangs had never controlled his business.

'I tried to stay just paying money but of course you can't avoid infiltration,' he said.

'But we wanted to prevent them having control in the business. That is why we have been able to cut the ties.'

He reasoned the power of the mafia 'could not go on forever'.

'It was a lawless time with all the institution of the state — the police, the courts, the government falling apart. It was not the same situation as now at all.

'Far from being ashamed of my actions during that time, I am extremely proud of the role I played in ensuring the safety of my staff, clearing out the criminal gangs from the industry and building up a great company from scratch in the most difficult of circumstances.

'Finally I decided it was better to pay for the moment to stay alive.'

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