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He loves it, he loves it not. The Moscow-London story of Mikhail Fridman

In 2019, Mikhail Fridman was named the richest Londoner by the Forbes. He is a UK tax resident, and the 10th richest person in the country according to the Times. Yet he is a Russian tycoon with close ties to the Kremlin… or is he?

It has been widely discussed that Fridman has been trying to distance himself from Russia in general and Russian political powers in particular for several year now. In 2013 he sold his largest  Russian asset (TNK-BP oil producer), set up a Luxemburg based investment company LetterOne, and moved to London. For the past couple of years, he has also become very vocal about leaving Russia behind and doing business predominantly in the West. Most of these statements appeared right about the time he got into the US ‘short-list’ of Kremlin-associated Russian nationals that sanctions may be imposed upon, but that may be a coincidence.

Fridman and his affiliated structures definitely feel the pressure to cut ties with the homeland: in April 2019, U.S. national security officials told Pamplona Capital Management, LetterOne’s investment manager, to sell its stake in Cofense Inc., a US cybersecurity firm used by major corporations, to prevent “active foreign involvement”; his Alfa-Group’s offer to buy an oil shelf deposit in Texas was declined a year before that.

It caused no surprise when last year, the Financial Times reported that Fridman had made another step away from Russia by attempting to sell Alfa-Bank, the largest privately owned commercial bank in the country and the absolute crown jewel of his business empire, to VTB and UniCredit. The attempt failed, and the businessman strongly denied it had ever been made.

He does business in the West all right. LetterOne’s oil and gas, technology and retail divisions have economic interests in several European countries – there is Dea in Germany, ZED and Dia in Spain (not all going well here, he is currently being accused of fraudulent insolvency and business corruption by Spanish prosecutors), Veon in the Netherlands, Turkcell in Turkey, Qvantel in Finland. There is also a telecom start-up FreedomPop in the US.

Yet, there is plenty of old and new business back in Russia. Interestingly, there is one that may be considered a Russian lookalike of the American Cofense Inc. Korund-M, a R&D and production enterprise develops secure computers for Russian state-owned structures (including those responsible for aviation and space programmes), and holds a license for developing weaponry.

Fridman’s A1 investment company bought 50% of Korund-M’s shares earlier this year via an affiliated company and is now being accused of attempted illegal takeover by its founder and director of 35 years Russian Academic Betelin.

Ironically, back at home Fridman is once again faulted for “active foreign involvement” in a strategic national defense enterprise because A1 is registered in Luxemburg. Sources in Russia say that since the ‘Kremlin dossier’ was published, Fridman’s local structures have been avoiding any contact with the national military forces not to anger the US, whether or not Fridman’s involvement in a Russian national defense enterprise will affect the way he is profiled in the US sanctions lists remains to be seen.