Oligarch Smackdown: Live!


Who said the filthy rich are good for nothing? Their antics are very entertaining! The Nouveau Riche have always been notorious headline-stealers, but the newest crop of Russian oligarchs make the robber barons of previous generations look timid and colorless. As money ages, it becomes anaemic; divided and subdivided by careful lawyers into a maze of corporate entities. New money is still good fun; oligarchs are like prizefighters ablaze with sudden victory. They pull their stunts right in public, and they don’t pull their punches. These hometown heroes fill the vacuum left by the maharajas and sheiks in a way that our drab bureaucrats never could; they parade their Humvee Jeeps through the Moscow crouds, as sure and proud as the Indian kings who once rode their battle elephants in the jungle.

They are more powerful and less restrained in their choice of action than ever were Scorsese’s Mafia dons. Brutal, unscrupulous, overriding, often overreaching, these are characters made for a Shakespearean drama. They are lawless; they freely trample upon other people until somebody finally tramples upon them. They are full-bloodied villains or generous benefactors, or both. Their habit of using London as their litigation headquarters has given their other habits an international audience.

Recently two mighty tycoons, Berezovsky and Abramovich, jousted in a London court for the prize of billions — and incidentally disclosed how they stripped the Russian public of its most valuable assets during Yeltsin’s privatization regime. These courtroom warriors do not flinch at revealing the basest of crimes to achieve victory; in this case another Neoliberal myth has been destroyed, and another dark chapter in Russian history has been illuminated.

The looting of a country is heavy fare; the public hungered for some light farce. The Polonsky vs. Lebedev case came to the rescue — again publicized internationally via the London court system. This is the hilarious story of a media mogul and a real estate baron who go full smackdown on live TV. Only the mighty pen of Nikolai Gogol, the mid-19th century Russian author of The Squabble  (You can read the plot here) could have done it justice; he might have called it Why Alexander Lebedevich Punched Sergei Polonovich, but you’ll have to bear with my humble efforts.

BelleNews gives us a blow by blow description of the live smackdown action:

  1. In front of an astonished studio audience, Alexander Lebedev (the Russian mogul) rains a series of blows onto the head of Sergei Polonsky (the real-estate baron), knocking him off his chair. This is during a TV debate on the global economic crisis.
  2. Images of the dramatic scene, which have been posted on YouTube, show Lebedev losing control and standing over Polonsky in a threatening manner.
  3. Polonsky appears to attempt to calm him down and Lebedev takes his seat once more.
  4. After few seconds, without warning, as Polonsky gently pats him on the arm, Lebedev again decides it’s time to let his fists do the talking.
  5. Lebedev suddenly hits Polonsky several times on the side of the head, sending him sprawling to the floor.
  6. Polonsky stands back up, seemingly unharmed, and the two men stare hard at each other as studio flunkies defuse the situation. 

Note: Alexander Lebedev is one of the richest men in the world, with a fortune that’s estimated to be in the region of $3.1 billion.

In fact, Polonsky and Lebedev are two mid-sized Russian tycoons; neither of them could buy Minnesota cash on the nail. They could have become great pals, toasting each other’s successes in turn; for both are given to real estate development, both love swimming, both wear casual more often than formal, both are rather vain, and both are facing a sharp decline in their fortunes. But instead they have come to blows, for they are doomed to be opposing characters. Which is the protagonist and which the antagonist? None.

Sergei Polonsky is forty, a young man as tycoons go, the first post-Soviet generation of Russian businessmen. He is still big and broad like the Blue Beret commando he once was, but years of soft living have robbed him of his waist; now he looks more like a jolly, well-fed dolphin. His lady friend is a prominent businesswoman by her own right, and a swimming champion.

Alexander Lebedev is 12 years older; his was the generation that privatised the USSR. He is a shape-shifter; he has modernized his appearance over the years from a hard-muscled, disciplined, business-suit-wearing ex-KGB-man into a metrosexual guitar player with an alluring haircut, light shirts and blue jeans. He traded in his old Soviet-era wife for a newer, more camera-friendly model.

Lebedev lives in downtown Moscow, in a former Scout Youth Club built in glorious Stalinesque imperial style with columns and portico, and transformed – after its privatisation – into a minor manor, with an Olympic-size swimming pool where he spends much of his time. He escapes the Moscow autumnal gloom at his Cote d’Azure villa and in his London mansion.

Polonsky lives in a futuristic penthouse, perched like a ship’s bridge atop a skyscraper with a 360° view, high above Moscow. He designed and built the skyscraper and his own apartment himself, being an architect by education and profession. He spends his weekends floating in a converted barge, moored just beyond the city limits, in the company of a tame racoon, doing chi kung – Chinese meditation practice – and voraciously reading arbitrarily-chosen books. In winter he drives a slim, high-tech sled pulled by snow-white blue-eyed huskies; in summer he glides through the deeps on a sea-bob, or hang-glides over blissful hills.

Lebedev built a resort in Crimea; he lavished his generosity on the city, restoring the historic Chekhov theatre, but he prefers to spend his time in London, hobnobbing with Harry Potter’s creator, Ms Rowling, Sir Elton John and other worthies. He plays guitar, and supports DDT, a Russian rock group. He also owns a quality British newspaper, The Independent, as well as a tabloid, the Evening Standard, and the Russian Novaya Gazeta.

Polonsky, in contrast, has built himself a fortress of solitude, a stone and glass castle rising from the waves of a lonely island off the shores of Sihanoukville, not far from Alain Delon’s home in remote Cambodia. He meets with Sufi teachers, receives instructions from Zen monks and chi gung adepts. He is into esoteric knowledge and mystic experiences.

The two men are from very different cities and backgrounds. Lebedev grew up a child of privilege; his father was a professor of the prestigious Foreign Service School. As a young man he joined the KGB and the Communist Party. He graduated from his father’s school, proceeded into the KGB college, and then entered the diplomatic service. He was stationed at the Soviet Embassy in Kensington, London; his assignment: stop the money fleeing Russia.  In eight years he learned the ropes, and with the fall of the USSR the gamekeeper turned poacher.

Lt.-Col. (KGB) Lebedev left the service in 1992 and used his professional insider knowledge of Soviet debts to make a fortune and direct fleeing money to safe havens.  Not many Russians knew the banking system like he did. There was a lot of money that could be made by a person with the right connections: he bought cut-rate loans cheap and cashed them in at full value with a friendly Treasury official. He made a deal with Gazprom that made the Russian state two hundred millions poorer and himself and his collaborators that much richer. He befriended Victor Chernomyrdin, then Prime Minister, and Chernomyrdin channelled state funds into Lebedev’s recently-opened bank. Lebedev used his connections to capture positions in state-sponsored companies like Ilyushin and Aeroflot: the profits went to Lebedev, while the expenses went to the state.

Polonsky hailed from St Petersburg, of humble origin. He grew up as the USSR collapsed around him; he studied architecture, went into construction and building, hired Ukrainian builders while they were still inexpensive, and built himself into a real estate developer. He is proud of being a self-made man; he obtained nothing from the state, and never sought anything, he says. He did not privatise government factories, but instead established good connections with City Hall and catered to newly-prosperous Muscovites. He looks honest enough to buy a used car from, though such trustworthy guys do not become billionaires. People in the know say that he had to cut backroom deals with Mme Baturina, wife of the Moscow Mayor and one of the richest women in the world: no building was erected in Moscow without a nod from her.

Polonsky has tried to avoid politics; he professes a lack of knowledge and interest in things political. He is a builder, he says, no more. He puts his soul into huge projects spreading from Moscow to Switzerland and from London to Croatia. He is democratic in the Russian style: he mixes easily with all kinds of ordinary folks, but they’d better follow his orders or else. He is a petty tyrant, his (dismissed) employees say: he forbids texting during board meetings! Violators have their precious iPhones smashed against the wall (a feat I myself have only dreamed of). His ambitions lie in the spiritual sphere, and business often takes a back seat to his search for God.

Lebedev has a penchant for politics. He has tried on for size several political factions, varying from the ultra-nationalist Rodina (“Motherland”) to the socialist SR and to the ruling ER, being torn between political ambitions and the desire to make a fast buck. Sometimes the two go together.

In 1996, in the run-up to the fateful elections, Lebedev supported Boris Yeltsin, the then-president of Russia, a dissipated alcoholic who embezzled Russian national wealth and enriched the oligarchs. Lebedev’s bank was used by Yeltsin’s Treasury in order to channel state funds into piles of greenbacks all wrapped up for bribes. It was some of Lebedev’s cash that was seized by security in the infamous Case of the Xerox Paper Box, when an activist tried to carry out millions of dollars for Yeltsin’s bribe fund in a cardboard box. Lebedev did not shy away from this deed; he was rather proud of it, and even paid the dirt-digging magazine Kompromat (“Compromising Matters”) to produce a special issue containing a sanitised version of this, and other exploits.

Lebedev’s daring misdeeds inevitably attracted the attention of law enforcement, and a case against him was eventually drawn up by the State Attorney General. Lebedev, by his own boast, set the Attorney General up with two easy-going girls in a sauna, and filmed the frolics. The film has been broadcasted on a fellow oligarch’s private NTV channel and the Attorney General abruptly resigned.

Some people say that Lebedev was not responsible for the setup. If true, this speaks volumes. Might Mr. Lebedev think that bad publicity is much better than no publicity at all? The facts support the theory. Lebedev produced a book ominously entitled 666 or The Beast Is Born, full of prosaic smackdowns targeting nearly every public personality in Russia. He humbly refers to himself as the “ideal capitalist” and claims credit for these and other dashing criminal exploits.

Lebedev is always quick with an explanation as to why each crime was a good deed: it was either to save Russia from the clutches of the commies (he conveniently misplaces his own Party credentials), or to save the world from the KGB (again he is silent about his own history in the very same service). He openly despises Putin’s working class roots and rise to power. It galls him that they once had the same rank in the KGB. But the real reason behind Lebedev’s opposition is that Putin fearlessly prosecutes the oligarchs. Or is it “persecutes”?

Oligarchs have a persecution complex: any and all interference is unjust. They think of themselves as omnipotent, though they are only powerful, and they bristle against even the most minor efforts to curtail their power. Their money buys them power over life and death, but this power saps their mental health. They start to believe the hype offered by sycophants. They begin to reject trusted advisors. They end up alone and unhinged, pursued by the law. Too much power corrupts, and the Russian oligarchs have more power than any of Stalin’s satraps ever had.

Mr Putin does not approve of oligarchs meddling in politics. He does not punish them arbitrarily, nor does he rewrite the laws to target them. Putin’s Russia allows these tycoons to get away with many things, but it does draw the line at crime – sometimes. This is Putin’s great sacrilege; he holds the oligarchs accountable to the letter of the law. This level of independence comes as a great shock to them. They are getting whiplash trying to readjust after the total freedom of lapdog Yeltsin’s day. The oligarchs wistfully recall the days when they employed their powers over life and death with impunity, like viceroys of India in Clive’s time.

Alas, Mr Lebedev’s political ambitions have remained unfulfilled. He reduced his lofty goals to something more achievable, and decided to become the Mayor of Moscow. He failed. Worried now, he set his sights upon becoming the Mayor of Sochi (the Miami of Russia). Again, he failed. The sharks, sensing blood, began to circle. His dashing exploits belatedly began to attract the attention of the law, especially his alleged appropriation of $300 million in state bailout funds meant to shore up his bank. He accepted the money, but it soon became apparent that his bank’s coffers were empty, or rather stuffed with fictitious promissory notes. His dealings in the aircraft industry also have come under scrutiny and it appears that the state, the main shareholder, might have been swindled in a major way.

In response, the canny Mr Lebedev activated his long term insurance policy. If he were a Russian Jew, he would have claimed he was being attacked by authoritarian Russian anti-Semites; but Mr Lebedev is not a Russian Jew. Instead, Mr Lebedev claims he is being attacked by authoritarian KGB thugs like Mr Putin. This insurance was effective but expensive: for many years he had been forced to heavily subsidise the anti-Putin newspaper Novaya Gazeta, widely read in the central borough of Moscow and unheard of elsewhere. To influence the international set, he purchased two British newspapers and strenuously promoted his new image as a sort of Khodorkovsky: just another wealthy man victimized by Putin’s KGB thugs. He claimed that he was poisoned like Litvinenko, but he miraculously survived. The British were only too happy to cooperate with Lebedev’s propaganda campaigns; the establishment was (and is) willing to support any and all anti-Putin elements, including the Chechen separatists.

It was during his campaign for Moscow Mayor, that Mr Lebedev became aware of Mr Polonsky, who happened to be on good terms with the incumbent Mayor. At that time, Polonsky was busy erecting the tallest twin skyscrapers in Europe, the Federation Towers – the gem of Moscow City. Polonsky immediately became the next target for Lebedev’s hate: another low-caste self-made man, definitely not a pukka sahib. It was also an opportune moment for a quick and easy kill, because Polonsky’s star was falling fast.

Polonsky had gotten himself into trouble, as do all the oligarchs at one point or another. He was not thorough and he was not prudent. He rejected his trusted advisors and surrounded himself with yes-men. He believed his hunch instead of counting odds. He jumped into multimillion deals with a bow and a handshake, and his partners walked away with chunks of his empire. His dreams of samurai honour were shattered by modern Russian business pragmatism.

He relied upon his assistants, and they robbed him blind. The more he empowered them, the faster they would vamoose with his money. His vast capital (assessed at over three billion dollars at the peak) began to shrink precipitously; cash flow became a problem for him, he was over-extended and had difficulty completing his most ambitious projects. Ordinary people who invested in his projects had become justifiably angry.

It was at this moment that the cunning Lebedev unveiled his ingenuous device to break Polonsky. The media mogul spread a malicious (and apparently false) rumour that the foundations of Federation Towers had cracked. Polonsky was already on the defensive, now his back was against the wall. He invited Moscow journalists to come and look for themselves: they were allowed to roam freely some forty yards below the surface, trying to locate the crack, refusing to admit its absence. He offered a million roubles to anyone who could find it. Nobody found anything, but the rumour persisted, supported by Mr Lebedev and his newspapers.

Alone and unhinged, Polonsky began to claim that he himself invented the crack story in order to promote public awareness of the project. There were no buyers for this weird story. His projects continued to suffer setbacks, raiders continued to seize his developments, his companions continued to rob him blind. The crack story cracked his empire.

This is the backstory to the Oligarch Smackdown on live TV. It was ostensibly going to be about global economics. They had exchanged only a few words when Mr Polonsky brought up the painful subject of the crack. The whole world awaited Lebedev’s reply. He looked into the eyes of his victim. What did Mr Lebedev feel at that moment? Pride? Hatred? In any case, alone and unhinged, he rose and landed a few well-aimed jabs upon Polonsky’s jaw. The sitting ex-commando was knocked down, decisively proving the superiority of KGB training over that of Airborne Troopers. The programme was a global success; after delighting the viewers, who had been prepared for a dry recitation of global doom, it went on to become an all-time favourite on YouTube.

But the story did not end there. In face of millions who had watched the assault live, Lebedev denied he hit Polonsky. Standing just outside of the studio, Lebedev insisted stubbornly to the journalists: “I did not touch him; Polonsky assaulted me, because I am in opposition to Putin.” Yes, Lebedev is amazing: he is one man who is prepared to deny anything. Years ago, he had fought to ban gambling in St Petersburg, an ostensibly noble purpose. When it came out that his bank had heavily invested in the lotteries (the main competitor to gaming machines), Lebedev denied all motives of self-interest. Even after his own bank manager proved beyond the shadow of a doubt that the strategy was Lebedev’s own idea, he continued to deny all knowledge with a straight face. I wonder if even James Bond could equal this feat.

During the race for the Moscow City Hall, Lebedev bought a newspaper (the Moscow Correspondent) and turned it into a fighting machine. They soon printed a scurrilous rumour that Mr Putin was involved in an extra-marital affair. Lebedev could not imagine that Putin would react as he did. Usually quite complacent to rumours, accusations and attacks, the President became furious. Fearing Putin’s fury, Lebedev immediately shut down the newspaper, fired the editor and said on air that the baseless article was created by the current Mayor of Moscow and inserted by the editor in return for a bribe. This brazen lie cost the editor his career; Lebedev never recanted.

Since his televised assault, Lebedev has been asked many times why he did it. Some of his explanations are so off the wall that one has difficulty believing he actually offered them as true statements. The palm probably should go to “I thought that I would become a popular hero because I struck out against that hateful oligarch”. This is rich coming from him. Polonsky seems genuinely at a loss to explain Lebedev’s behaviour. Not only has Lebedev refused to apologise, he is continuing to deny he even did it. Is he claiming the insanity defence? More likely he is claiming his rights of oligarchic power: the impunity defence.

Polonsky has not benefited from his public humiliation; in fact, the story only further injured his already suffering business reputation, and a project he had planned to do in London collapsed soon afterwards. It was for this reason that he brought civil charges against Lebedev in a London court, and retired to his Cambodian island, posting his daily catch of barracudas on the Facebook.

Almost a year had passed before the exceedingly slow-grinding mills of Russian criminal justice charged Mr Lebedev, but eventually the media baron was charged with “hooliganism” and “assault”. His lawyers claim that Lebedev had felt threatened and was forced to defend himself; Lebedev (with a straight face) claims that he is being persecuted by the bloody Putin regime for his “love of freedom”.  A bald-faced liar is always more entertaining than a talented ingénue, so we will not be too surprised if Mr Lebedev walks away with a slap on the wrist. Anyway, the bloody Putin regime is soft on the oligarchs. However, this Oligarch Smackdown is far from over. We await Mr Lebedev’s elevation to the voice of Russia’s conscience by his own British hacks!

Israel Shamir reports from Moscow, and can be reached at adam@israelshamir.net

Israel Shamir can be reached on adam@israelshamir