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. Last Updated: 07/27/2016

Berezovsky Reveals the Sale Price of His Holdings

APBoris Berezovsky
LONDON -- Boris Berezovsky has for the first time disclosed how much he earned from selling his vast Russian holdings, as the self-exiled oligarch prepares a lawsuit against his former protege, Roman Abramovich.

Berezovsky said that he and his partner Badri Patarkatsishvili each made nearly $1 billion from the sale of their jointly held stakes in the Sibneft oil major, Russian Aluminum and national television channel ORT.

That was significantly less than the stakes' real worth, Berezovsky said, and he intends to file suit later this year against Abramovich, whom he accused of doing the Kremlin's bidding to strip him of his assets at knock-down prices.

"This was not a sale but racketeering conducted by [President Vladimir] Putin, Abramovich and [former presidential chief of staff Alexander] Voloshin," Berezovsky said in an interview in the elegant boardroom of his Mayfair office last week. "This is a crime, and I intend to start an official investigation into all three transactions in the West."

Berezovsky said he was crafting a case under English law against Abramovich, who has gained fame in Britain as the deep-pocketed owner of Chelsea Football Club.

"Abramovich said that if we didn't sell, they would take it off us anyway," Berezovsky said, referring to what he claimed was the forced sale of the 50 percent stake in Sibneft he owned jointly with Patarkatsishvili.

Berezovsky said Abramovich had told them he was speaking in Putin's name and offered them little choice but to accept the sale price of $1.3 billion for the stake -- a sum that Berezovsky said was paid out to them in several tranches between 2000 and 2003.

"This is less than the dividends we should have received over the same period," he said.

Berezovsky said his case against Abramovich was "almost ready" to be filed in a London court.

A spokesman for Sibneft said Abramovich would contest any court case filed by Berezovsky.

"I can't comment on Mr. Berezovsky's specific allegations, but any lawsuit will be vigorously contested," said John Mann, a Sibneft spokesman.

Abramovich is also under fire from British-based Sibir Energy, which last week said it was planning legal action against Sibneft for pushing it out of a joint venture in Siberia. Sibneft denies any wrongdoing.

Berezovsky has often claimed that Abramovich, a former partner, joined forces with the Kremlin to push him out his holdings in Russia after he openly clashed with Putin in 2000.

Berezovsky, the one-time Kremlin kingmaker, fled Russia in November 2000 after prosecutors launched a mounting probe into his affairs. They arrested the deputy director of his Aeroflot airline, Nikolai Glushkov, on charges he had embezzled funds and charged Berezovsky with fraud in a separate case linked to his business with carmaker AvtoVAZ.

By the time he left the country, Berezovsky had already started selling his stake in Sibneft and had sold his holdings in ORT, which had come under fire after airing critical coverage of Putin's handling of the August 2000 Kursk submarine disaster.

In 1995, Berezovsky and Abramovich won Sibneft for a little more than $100 million in the controversial loans-for-shares auctions, which were widely seen as rigged.

Now Sibneft is worth $15.6 billion, and 57.5 percent of the oil firm is owned via Abramovich's London-based investment vehicle Millhouse Capital.

Berezovsky said Abramovich used the same tactics he had used with the Sibneft sale to force him into selling his stakes in ORT and Russian Aluminum.

"In the case of ORT, he said that if we did not sell Glushkov would sit in prison for the rest of his life," he said. "It was the same with RusAl. ... Abramovich said that if we didn't sell our shares then we would get nothing at all."

In 2003, Abramovich sold his 25 percent stake in RusAl for an estimated $1.8 billion to Basic Element owner Oleg Deripaska, who already owned 50 percent.

"In breach of all our agreements, [Abramovich] sold his stake for a sum close to $2 billion. And we were told to sell ours for a significantly smaller sum of $500 million, maybe for even less, ... $400 million -- a price four or five times less than what Abramovich got. This is called racketeering," Berezovsky said.

Berezovsky said he and Patarkatsishvili sold their 49 percent stake in ORT for approximately $140 million in 2000, while the 25 percent stake they held in RusAl was sold between 2003 and 2004.

Berezovsky declined to give specific details of these transactions, saying Patarkatsishvili had been in charge of them.

Berezovsky said he and Patarkatsishvili held the stakes in a 50-50 ownership structure. He said Patarkatsishvili, who now lives in exile in his native Georgia, was unlikely to join him in his lawsuit.

"My position is different from Badri's. He still has relations with Abramovich."

Patarkatsishvili could not be reached for comment.

It is unclear what consequences legal action taken by Berezovsky might have.

Legal experts said the case would be difficult to evaluate until Berezovsky actually filed suit. There is no legal provision for racketeering under English law, unlike the extensive RICO provisions in the United States. But English law does hold some provision for contesting transactions made "under duress," which could give Berezovsky room to maneuver, legal experts said.

"There have been cases in the last few years where people have succeeded in cases of duress, but Berezovsky would need to have a lot of evidence and a long paper trail proving these transactions were made under duress," said one British lawyer speaking on condition of anonymity. "I can imagine there will be arguments about jurisdiction too."

Under English law, such transactions can be disputed only in the six years after they were conducted, he said.