Kremlin Extends Lifeline to Mikhail Fridman

fridman061108.jpgThe Wall Street Journal is reporting that the Kremlin’s oligarch rescue plan is being fully deployed with the first major bailout of an individual, as $2 billion was tossed to Mikhail Fridman to pay back a loan from Deutsche Bank AG, allowing him to retain his 44% stake in Vimpelcom (VIP), one of the country’s largest and most successful mobile phone operators. On Monday, a Russian court froze Fridman’s stake in VIP, which actually protected the Alfa Bank founder from having the collateral seized by his creditors. The Journal reports that for the $50 billion rescue package, they have already received more than $100 billion in requests, and that Fridman appears to be the first official beneficiary: The selection criteria for the bailout loans are supposed to be objective, but VEB’s board is dominated by government officials and headed by Mr. Putin. But we doubt that Fridman is very happy about all this…

Apparently the government put a lot of pressure on Fridman and Alfa Bank to come to terms with VEB, which is a positive sign that they would like to avoid the reputational tarnish of the past, when Russian companies would hide assets from their creditors with the help of the courts. There might be a lot of Cold War bluster and confrontational posturing from Russia’s leadership these days, but today it looks like they are planning to continue playing ball with the current international financial system.Fridman also probably owes the government a favor or two ever since they stepped in to help push around BP via the regulatory authorities and police during the TNK-BP fiasco (remember all those office raids and arrests?). One thing’s for certain: Fridman’s leash to operate independently of the Russian government just got a lot shorter.