Billionaires Featured on Richest Russian

The Story of the Russian Billionaire

After the fall of the Soviet Union in 1991 many previously state-owned companies were privatized. The aim was to move towards capitalism and to bring order to the economy which was in a state of complete disarray. President Boris Yeltsin was in power and his administration needed a way to raise capital while redistributing the poorly managed state-owned companies to private concerns.

In 1994, Oneksim Bank devised a plan that involved banks lending the government money, using shares in the companies as collateral. The plan was called ‘loans for shares’. When the government defaulted on payments, the shares used as security became the property of the banks and the balance was auctioned. Foreign bidders were excluded in the sales and the shares were often sold at a fraction of the price to the very banks that were in charge of the auctions, and already held shares. The proprietors’ net worth increased overnight, making them extremely wealthy and powerful very quickly.