By David R. Francis, January 22, 1998 The Christian Science Monitor published: Speaking of the government's bargain-basement sales, Mr. Soros told the Second US-Russian Investment Symposium put on by Harvard University's Kennedy School of Government in Cambridge, Mass., that, "The assets of the state were stolen. It was quite repulsive. I didn't want to have anything to do with it."
“Mikhail Khodorovsky, a young Russian tycoon, sounded either naive, hugely cocky, or extremely frank. It was hard to tell which.
Billionaire financier George Soros had just been talking critically at lunch about Russia's "robber baron capitalism." And Mr. Khodorovsky, a few minutes later in an interview, admitted to having been a robber baron from 1994 to 1996.
During the first round of privatization of state companies in Russia, private entrepreneurs supporting President Yeltsin had taken them over in "insider auctions" at bargain prices.
That's when Khodorovsky bought his state-owned Yukos oil company. It's also when another Russian tycoon, Boris Berezovsky, purchased Sibneft, another major oil company, from the government. The two magnates merged these companies Monday, with Khodorovsky becoming the majority owner and chief executive.
Speaking of the government's bargain-basement sales, Mr. Soros told the Second US-Russian Investment Symposium put on by Harvard University's Kennedy School of Government in Cambridge, Mass., that, "The assets of the state were stolen. It was quite repulsive. I didn't want to have anything to do with it."
The conference Jan. 9-11 attracted more than 500 Russian and American business people, with 300 turned away, indicating a vibrant interest in dealmaking.
Khodorovsky was asked about Soros's comments.
"When I hear that from George Soros, I want to give him a mirror," he replied with a smile, perhaps joking, perhaps not. His American facilitators cringed. Khodorovsky was scheduled to meet with Soros later. For one thing, Khodorovsky is seeking a Western partner to join Yukos in bidding for Rosneft, another state-owned oil company that may be sold as soon as March.
A "modest" price would be $2 billion, Khodorovsky indicated.
With the Yukos-Sibneft merger into the renamed Yuksi, Khodorovsky becomes head of Russia's No. 1 oil company, and the 11th largest in the world. The acquisition of Rosneft would make it the largest private oil company in the world, beating out Netherlands-based Royal Dutch/Shell.
Mr. Berezovsky, also attending the conference, popped briefly into the room during the interview. Perhaps some details of the merger were worked out by the two tycoons in Cambridge.
Through a translator, Khodorovsky was asked, did he contribute to Mr. Yeltsin's presidential campaign?
"I very much wanted Mr. Yeltsin to win, period," he replied, again smiling.
Soros held that Russia was "slowly converting" from robber capitalism to legitimate capitalism. As a result, he had felt free last year to ally with Vladimir Potanin, head of a major Russian bank, Oneximbank, to buy a chunk of Svyazinvest, a state-owned telephone company, in what was considered a genuine auction.
Soros has been a philanthropist in Russia since 1987, spending through a foundation more than $100 million to help scientists and soldiers, among others, adjust to the huge changes in that nation.
Like Soros, Khodorovsky sees the Russian laws and economy improving in a way favorable for foreign investors. The oilman holds that the economy is now growing again. World Bank economist Marcelo Selowsky said Russian output grew 0.5 percent in 1997.
Timothy Post, a recent graduate of Babson College in Wellesley, Mass., who heard Soros at lunch, told of working for four young Russian entrepreneurs in the grocery distribution business in Krasnodar. He sees life "getting better" in that city 1,000 miles south of Moscow.
Private cafes have sprung up. So have retail shops attached to gasoline stations. High-end retailers are offering Western goods - Levis jeans, Adidas shoes, and German-made Bosch electronics. And some Russian manufacturers are starting to produce goods that substitute for imports.
Soros added that he was impressed Russia had passed the test imposed by the east Asian financial crisis with success.
"The economy and the companies are beginning to pull themselves together," he said”. – notes The Christian Science Monitor in the article “Confessions of a Russian 'Robber Baron”