The term oligarch derives from the Greek and translates approximately as “rule by the few.” It is an apt term for the Russian business elite who have emerged from the privatization of that East European economy to join the ranks of the wealthiest men on the planet. Many are close associates of Vladimir Putin, and control great swathes of Russian industry and business interests. When the dissolution of the Soviet Union occurred in the early 1990s, the void left by the state had to be filled. The oligarchs are the businessmen (rarely, if ever, women) who accumulated the massive fortunes on offer.

Who hasn’t heard of Roman Abramovich, the owner of the English Premier League’s Chelsea F.C? Once Britain’s wealthiest man, he is now the richest citizen of Israel after being denied a renewal of his British visa. Or exiled Mikhail Khodorkovsky, once the richest man of Russia (17th on the Forbes ranking) who spent almost 10 years behind bars for openly challenging Vladimir Putin, the President of Russia. He proved that, while being part of Putin’s close circle is advantageous when it comes to achieving oligarch status, it is not a prerequisite.

The stories of former KGB politburo bosses, links to the Russian Mafia, and beautiful women who have legs longer than the eye can see—it all just brings out those fuzzy feelings that could stem right out of a James Bond spy movie. One (un-named) oligarch, who sends his children to an exclusive British school arrived, for security reasons, in a fleet of black Range Rovers, most of them decoys against security threats. Security agents wait on the school grounds in case of trouble, and accompany school trips, merging into the background of whatever treat the children are enjoying.

The oligarchs live in a very strange, cloistered world. Mostly.

But it’s not all private jets and expensive cars, some mundane business dealings and political chess games that require foresight and fortitude can make up daily life. Besides, not all oligarchs are created equal, and are sometimes dependent on the whims of fate that are out of their control. Let’s dive into the fascinating world of money, power and vodka as we look at the lives of two Russian oligarchs, their businesses and their investment affairs.

Mikhail Prokhorov—The Sly Fox

“The government in Russia does not tell me what to do with my assets.”—Mikhail Prokhorov

Mikhail Prokhorov
Mikhail Prokhorov, Banker and Basketball player

You might know Mikhail Prokhorov as the owner of the Brooklyn Nets or as a Russian politician. This is a man with a billionaire lifestyle, jets and yachts and several giant mansions dotted around the globe. Today, he is estimated to be worth over $11 billion according to Bloomberg.[i] What you may not know is his comet-like rise from simple Soviet banker to a career of savvy business management. Or how a sudden stroke of seemingly bad luck appeared to drive him into obscurity, before he shot back to fame as a rich Russian oligarch and a celebrity in the West. In his case, a scandal involving a private jet, some Russian models and a corporate power struggle ended up earning him the single biggest payday of his life—a payday in the order of billions of dollars—in cash.

Upbringing and Career

Prokhorov was born into a middle-class Russian family; his maternal grandmother was a prominent Jewish microbiologist who had remained in Moscow during World War II to make vaccines, while his paternal grandparents were relatively wealthy peasant farmers (known as kulaks) who had suffered terrible persecution under the Soviets.

Mikhail’s father, Dmitri Prokhorov, one of eight children, grew up poor in Siberia, but managed to train as a lawyer. He worked up the ranks within the Soviet Committee of Physical Culture and Sport, dealing with international relations. Unusual for a Soviet citizen, Dmitri Prokhorov had the opportunity to travel abroad and see the Western world—its riches and madness—with his own eyes. His father’s tales of Western capitalism and decadence deeply impressed young Prokhorov, who began buying cheap jeans for $3 and selling them at $12 apiece when he was a teenager. He decided to study economics and finance, graduating in 1989 from the Moscow Finance Institute.

After graduation, he started a career in banking; by 1992, at the tender age of 29, he was President of the United Export-Import Bank (also known as Onetime Bank). More remarkably, he achieved all this without being a beneficiary of the Soviet Union’s notoriously corrupt patronage network. He represented a new wave of educated, sophisticated businessmen, similar to the business elite in the West.

It was at Onexim Bank that he met Vladimir Potanin. Potanin, himself only 33, quickly recognized the raw talent and business acumen in Mikhail. Potanin had spent the previous 10 years working in the Soviet Union’s Ministry of Foreign Trade, where he cultivated many valuable contacts within the body politic. Together with Potanin’s government connections and Prokhorov’s business acuity, they set out to transform the face of Russian business. As the Soviet Union collapsed and anarchy grew, they seized opportunities as they appeared, and had soon amassed significant fortunes.


During the largely unregulated privatization of former state-controlled industries after the collapse of the Soviet Union in 1991, the new Russian government was desperately strapped for cash. In an attempt to raise funds, it sold majority stakes in some of its biggest nationalized companies. In these highly dubious auctions, state assets were acquired at extremely low prices by a small number of Russian bank consortia made up of renegades, former spies and the remaining Soviet elite. It was the dawn of a new financial hierarchy in Moscow—led by the Russian oligarchs.

This was the new reality Mikhail and Potanin had been waiting for. They studied the early process of the first auctions carefully, seeing the new Russian market’s economy in action. Thanks to Potanin’s Kremlin contacts, they were able to identify the most valuable assets the new government intended to sell—many of these lay in the field of precious metal mining companies.

In 1995, their moment arrived. The Russian government announced that it was auctioning off its most valuable state-owned asset: a mining conglomerate called Norilsk Nickel. Despite producing a quarter of the world’s nickel and having a turnover of over $400 million annually, Norilsk Nickel was losing cash at an alarming rate. This deterred most potential bidders. What Prokhorov and Potanin noticed, though, was that there was no reason for this, and with fresh capital and reforms, Norilsk Nickel could be made profitable—especially considering the company’s vast untapped mining rights. So they devised an elaborate plan to tweak the odds to assure them success in this high-stakes poker game.

First, they made sure that Prokhorov’s Onexim Bank was chosen to administer the auction, with Prokhorov himself in charge to collect bids for the government to evaluate. Potanin’s newly-founded holdings company, Interros, soon established itself as a leader in the bid for ownership of Norilsk Nickel.

In fact, it was not only the leader in the bidding war, but one that was virtually unopposed. To everybody’s surprise, there was only one other bid—but at $355 million, it was $184.9 million more than Interros’. As we might guess, neither of the future oligarchs would let something as minor as a higher offer get in the way of their dreams. Prokhorov simply canceled Rossiiski Kredit’s bid, on the grounds that it would violate official credit limits (even though Interros’ bid would violate these same limits). In the end, Prokhorov and Potanin’s group won at a price that was just $100,000 higher than the reserve price of $170 million. In short, the entire auction process was a pure farce, and everyone involved knew it.[ii]

Norilsk Nickel, even at a bargain basement price, was still a calculated risk for investors. It came at a substantial risk for any buyer. In 1995, the company was deeply indebted, bleeding cash at a rate of about $2 million a day due to falling nickel prices and outmoded organizational structures. Corruption and poor practice ran through the company, which leaked cash through the rusty holes in its framework.

Prokhorov rose to the challenge. In short order, he demonstrated why Potanin had chosen him as a business partner. Under his direction, the company sold off all non-core assets and regained the trust of the mining workforce by modernized equipment and improving safety.


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[i] “Mikhail Prokhorov,” Bloomberg Billionaires Index, accessed September, 2018,

[ii] “Rusal Agrees to Acquire 25% Stake in Norilsk,” The Wall Street Journal, accessed September, 2018,

[iii] “Profit of Norilsk Nickel,” Statista, accessed September, 2018,

[iv] “Norilsk Nickel,” Financial Times, accessed September, 2018,

[v] Financial Times

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