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Biography of Mikhail Khodorkovsky

Biography of Mikhail Khodorkovsky

It is difficult to imagine the soft-spoken and painfully shy Mikhail Khodorkovsky, as a ruthless businessman. He was Russia's richest man for a long time, before he was recently overtaken. He has pulled off some of the most astounding corporate deals of our times, using methods whose legitimacy is still under question. Keep reading the following OpinionFront write up to know more...
OpinionFront Staff
The arrest of Mikhail Khodorkovsky, ensured the completion of a karmic circle. The underdog turned hero turned villain and could now turn martyr. Mikhail Khodorkovsky was born in 1963 in Moscow. His parents lived in a communal apartment, and were both factory workers.
He joined the Mendeleeva Chemical Technical Institute, where he studied Economics. He was also an active participant in the Kommosol. There was something in young Mikhail that wanted to be different from the rest, he refused to get typecast as another working Russian youth by communism.
In 1987, he opened a cooperative that designed software, and sold computer hardware. Within a years time, the cooperative had a turnover of more than U.S. $10 million. His next step was to buy a banking license to create Bank Menatep in 1989. This was one of the first private banks in Russia. Deposits made to the bank, were used to expand the export business of the cooperative.
One of his greatest assets was his ability to build relationships. He utilized these skills to the hilt, and won a lot of business from the Government of the erstwhile U.S.S.R. However, two years into the banking business, and there were rumors that Bank Menatep was nothing but a sham act, created to stage manage the country's Treasury Bills.
Bank Menatep's next move was its most decisive one. It bid for the acquisition of Yukos, which was one of Russia's biggest oil companies. He ensured that all other bids were ruled out on some technicality or the other. Menatep paid U.S. $350 million for a 78% stake in the company, which inferred a value of U.S. $450 million. To the amazement of the most hard-nosed corporates in the world, the company was listed two years later, at a value of U.S. $9 billion.
Khodorkovsky's ruthlessness was on display, when he closed a deal with Amoco over the development of the Priobskoye field in western Siberia. It was estimated that more than 3.5 billion barrels of oil was lying under this area. Once the Priobskoye field was completely developed, Amoco suddenly found itself forced out of the equation. The $300 million that it had spent developing the area was lost forever.
He turned his attention solely to the running of Yukos. He changed the way it functioned. For the first time in the history of the company, did it release ownership details. GAAP accounts were published for the first time, taxes were paid, and most astonishingly a dividend was declared.
Prior to Yukos, oil companies were powerful enough not to pay any taxes. Mikhail Khodorkovsky had realized the importance of funds from foreign institutional investors, while he was studying economics. In order to ensure that this happened, he poached a number of senior employees from western multinational oil corporations.
In April 2003, Yukos told the world of its plans to merge with Sibneft. The merger would create an oil monster, that would own the second-largest oil and gas reserves in the world, after ExxonMobil. It will be capable of pumping 2.3 million barrels (370,000 m³) of oil a day.
He was Russia's richest man for an extended period of time, relinquishing the position to fellow oil baron, Roman Abramovich. He has interacted with some of the most rich and powerful people in the world on several occasions.
Mikhail Khodorkovsky lived in an environment, where his life was under constant threat. Prior to his incarceration, he and senior executives of Yukos, built a compound of luxury houses among the pine trees. The compound resembles a fortress. High walls, powerful lights and machine gun totting guards surround it.
Apart from Bank Menatep and Yukos, Khodorkovsky had interests in Trust Investment Bank, the Blackstone Group, the Carlyle Group and AIG Capital Partners, Sibintek, MKS, Macomnet, Metrocom, Rascom and Magistral Telecom, and Open Russia Foundation.
On October 25, 2003, Khodorkovsky was arrested at gunpoint on a Siberian airport runway, by the Russian prosecutor general's office, on charges of tax evasion. Khodorkovsky was in his private plane with all his bodyguards surrounding him. The Russian Government then froze the shares of the company. Many international observers believe that the actions of the Russian government have been motivated by Khodorkovsky's support for the opposition.
His personal life has been unblemished. He has four children. His efforts at philanthropy materialized in the form of an Internet training center for teachers, archaeological digs, student exchange programs and summer camps for children.