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Russia: High-Ranking Boris Berezovsky Sacked

Moscow, 6 November 1997 (RFE/RL) -- Boris Berezovsky, Russia's most notorious business tycoon who was sacked from his post on the Kremlin Security Council, said yesterday he has no plans to return to the world of business. But that, like his murky financial holdings, is open to speculation.

In an interview on Ekho Moskvy radio, Berezovsky said: "I don't want to go back into business." He denied accusations that he had mixed politics and business during his year-long tenure as deputy Security Council chief, repeating statements that he had relinquished control over his business interests while serving in government.

"From the moment that I began to work in the Security Council not a single fact was presented confirming that I combined this with business," he said.

Facts, however, are always hard to find when it comes to Berezovsky. His business empire is perhaps one of the most renowned of all Russia's major financial groups, but it is also the most mysterious.

What is known is that he built his holdings by striking a deal with the management of Russia's largest automaker, AvtoVAZ, to take over its distribution network. In 1989, he founded LogoVAZ, which quickly blossomed into the nation's most extensive car dealership with annual revenues estimated at up to $500 million.

From there, the murk begins. For Berezovsky, winning over the management of companies has been the key to expanding his empire, where contacts count more than the size of share holdings.

Berezovsky has allegedly captured sizable stakes in oil company Sibneft, national airline Aeroflot and Russia's television channel ORT. The corporate magnate also was rumored to be behind the losing bid for telecoms holding company Svyazinvest in July, while Russian press reports have speculated he was looking to get a hold on gas giant Gazprom.

Berezovsky reportedly secured control of oil mini-major Sibneft in an auction in May that was widely-considered to be rigged. An unknown company called Finansovaya Neftyanaya Korporatsiya (FNK) won the 51 percent stake paying a $110 million, widely considered to be well below its true value.

That stake had previously been held in trust by SBS-Agro and Neftyanaya Finansovaya Kompaniya (NFK), which is linked to Berezovsky, under the government's loans for shares program. Berezovsky has denied links with FNK, while SBS-Agro has said it had owned FNK at one point. The chairman of SBS-Agro, Alexander Smolensky, sits on Sibneft's board.

Speculation has been rife that Berezovsky is planning to bid for upcoming auctions of several prized oil companies slated for this year and early next, including state-owned oil major Rosneft.

Berezovsky denied Wednesday he was planning to bid for Rosneft, but he craftily left the door open.

"I did not discuss this issue with the companies of which I was a co-founder." But, he said: "Of course, I will have more time to devote to this and if you are still interested in my opinion I will be able to answer you after a while."

Despite denying plans to bid for Rosneft, Berezovsky accused First Deputy Prime Minster Anatoly Chubais of pretending to support open fair privatization while in reality setting up insider deals.

He accused Chubais of favoring of Uneximbank in the sale of Rosneft, alluding to his recent trip to London where he met with representatives of British Petroleum. BP is considering linking up with Uneximbank's oil holding company Sidanko, which is planning to bid for Rosneft. Berezovsky put it: "Chubais' words are at odds with his actions."

One analyst who asked not to be named said Berezovsky's departure from government could make it easier for him to openly court foreign sources of finance for his Rosneft bid.

Others said Berezovsky's sacking could help clean up the government's controversial privatization process. Stephen O'Sullivan, an energy analyst with MC Securities in London, said: "Russia is making a transition from a state where all that mattered was who knew who...There is a recognition that will have to change."