Alisher Usmanov, Russia’s richest person, moved control of most of his $20 billion fortune last year to a holding company based in the British Virgin Islands, a collection of more than 60 isles 5,600 miles away from Moscow.
The company, USM Holdings, controls the billionaire’s most valuable asset, Metalloinvest Holding Co., Russia’s largest iron ore producer, through two Cyprus-based subsidiaries, USM Steel & Mining Group Ltd. and USM Investments Ltd., according to Metalloinvest’s annual report.
“Offshores are the main tool for Russian businessmen to protect their assets from state authorities, rivals and all kinds of raiders,” Valery Tutykhin, an attorney with John Tiner & Partners, a Geneva-based law firm that specializes in wealth management, said in a phone interview.
All of Russia’s 20 richest people -- who have a combined net worth of more than $227 billion, according to the Bloomberg Billionaires Index -- control a portion of their fortune through holding companies registered outside of their home country.
The billionaires, most of whom built their fortunes during the violent and unpredictable post-communist economic environment, use the entities to manage, preserve and conceal their wealth -- a tactic that has drawn the ire of Russian President Vladimir Putin.
Vekselberg, Deripaska
Viktor Vekselberg, 56, holds the majority of his $14.8 billion fortune through Bahamas-based Renova Holdings. Among the company’s assets is a 7 percent stake in United Co. Rusal, the world’s largest aluminum producer.
Vladimir Lisin, 56, controls his 85 percent stake in publicly traded OAO Novolipetsk Steel, Russia’s most valuable steelmaker, through a Cyprus-based holding company, Fletcher Group Holdings Ltd. Mikhail Fridman, 49, controls his banking, retail and telecommunications assets through Moscow-based Alfa Group, which is owned by Gibraltar-based CTF Holdings.
Putin has vowed to bring some of the money home. Last year, he took control of the Federal Financial Monitoring Service, an executive body aimed at combating money laundering. The State Duma, Russia’s lower house of parliament, introduced a series of amendments to existing laws, tightening control over companies’ financial transactions.
During his campaign for a third term last year, Putin, 60, said that he was considering a one-time tax on entrepreneurs who acquired state assets at “unfair” prices in the 1990s.