The Man Behind The Man Behind The Man

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Ignore the puffery in the lede on the Telegraph's story on Alexey Mordashov, the boss of the Russian company Severstal, which Arcelor has agreed to buy in an effort to block Mittal Steel's hostile bid to take it over. The rest of the story has some useful information, although you have to translate it to understand exactly what it really means.

A boyish 40-year-old, Mr Mordashov emerged from Russia's era of primitive capital accumulation with a vast fortune and has gone on to build vital establishment credentials during the rule of President Vladimir Putin.

Translation: Mordashov is not an oligarch or a gangster because in Russia today those words mean someone who isn't a friend of Putin. Mordashov is a friend of Putin.

He has lobbied for Russia's bid to join the World Trade Organisation. His purchase of a stake in commercial channel REN TV last year amounted to a demonstration of loyalty towards a Kremlin which tightly controls the broadcast media.

Translation: Mordashov is Putin's boy.

Analysts said Mordashov would never have been able to pull off the Arcelor deal without first getting the nod from President Putin.
"It's about who you are and it's about what you've done," said Rob Edwards, metals analyst at Renaissance Capital. "He's always been politically well placed."

Translation: Mordashov is the guy behind Severstal. Putin is the guy behind Mordashov.


A look further back raises questions about how Mr Mordashov got his start, a story documented by the late US investigative journalist Paul Klebnikov.

Mr Klebnikov, writing in the first Russian-language edition of Forbes magazine in 2004, gave a detailed account of how Mr Mordashov took advantage of Russia's "voucher" privatisation scheme to claim personal ownership of Severstal.
Mordashov won the backing of Severstal's longtime head Yuri Lipukhin to create a firm called Severstal-Invest, which earned easy money by buying the plant's steel cheaply and selling it at a market price - a practice known as "transfer pricing".
He then used the cash to buy up shares issued to Severstal's workforce, and later squeezed out Mr Lipukhin to take control of the operating business.
Mr Mordashov did not challenge that version of events, but denied using illegal methods to obtain control of Severstal.
"We never seized anything, we never twisted anyone's arm, we never used state organs or corruption," Mr Mordashov said in the Forbes article. "We paid for everything we acquired."

Translation: "We paid pennies on the dollar for what we acquired. This is how the super rich got that way in Russia. That, and I'd like to introduce you to my friend Putin.

Who is Arcelor's white knight?
[Telegraph]

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