Michael Cherney: The "sky" from which the assets fell to Oleg Deripaska

Classified Polnews

By David Waldman 31 july, 2007 Russian business analysts continue to mock Oleg Deripaska's recent FT interview, in which the RusAl's owner rewrites history and claims that his fortune "fell from the sky".

Russian Aluminium

Oleg Deripaska's willingness to ignore the interests of his Western partners is not the only thing that has amazed experts who have read Deripaska's sensational interview in which he voiced his readiness to hand RusAl over to the Kremlin; it is the oligarch's willingness to play fast and loose with facts as well.

According to Deripaska, in 1994 he wished to become the director of Sayansk smelter, one of the largest aluminum manufacturers in the world, and he "managed" to do so. However, it is common knowledge that no one in Russia would have appointed a young unknown manager to such a position unless he had associated himself with a powerful benefactor. In this case Deripaska was appointed director by his mentor and older partner Michael Cherney (Mikhail Chernoy), who, along with TWG, owned a lion's share of Russian metals industry - the same Cherney who is now in London suing Deripaska for 20% of RusAl's stock. Observers note that RusAl's current CEO, Alexander Bulygin, was also hand-picked by Cherney in the mid-1990s to serve in various managerial positions, and was entrusted by Cherney to sign financial documents of SibAl and later RusAl.

Furthermore, Deripaska's interviewer states that "in a period when the industry was wracked by conflict, Mr Deripaska stayed on the sidelines" Again, it is common knowledge that the core of this "conflict" was the Sayansk smelter. It was over the control of Sayansk that the so-called "aluminum wars" was waged, and Deripaska was the general of these wars. It was he, not the shareholders residing abroad like Cherney or the Reuben brothers, who was in the thick of it. Deripaska acknowledges as much by saying that"in the one big assault on the Sayansk facility, when my commercial director was seriously wounded, I hit back both by 'destroying' the group behind the attack and by strengthening ties with local law enforcement." Indeed, Russian media has reported the results of this "hitting back" - 2 murders which were committed in Sayansk at that time. Previously Deripaska denied his involvement in these murders… and he now in fact confesses to them and endorses the opinion of analysts that the murders related to Russian metals industry were carried out by law enforcement agents!

Moreover, Deripaska claims in the interview that he parted ways with the partners residing in England and Israel - meaning the Reubens and the Cherneys - because they "sucked all the resources out of the country."

However, it is known that it was Michael Cherney who made the largest investments in the Russia's metals industry in the 1990s and backed Mr Deripaska in the split from Transworld. According to Mr. Cherney, it was he who drafted the plan of RusAL's expansion and forming - jointly with Deripaska - the BasEl holding by investing in the automobile, aviation, and machine-construction industries.

Deripaska, of course, neglects to mention that he had become the sole owner of RusAl by buying out the 50% of the stock from Abramovich with the help of Cherney's financial backing. Anyone with knowledge of Russian business is aware that Deripaska had no money of his own at that time.

Experts in this matter wonder why Deripaska is not in a rush to settle with Cherney and instead prefers to risk his reputation and his company's IPO in the London stock exchange. As the suit between ex-partners drags on, it is becoming more likely that Deripaska's numerous competitors could dig into the files of numerous accountants and lawyers who worked with Cherney in other countries and turn up other papers that would severely compromise Deripaska's standing.