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| Tycoon on the Run Hopes Russia’s Reach Stops at the French Riviera’s Edge | Tycoon on the Run Hopes Russia’s Reach Stops at the French Riviera’s Edge |
| (about 13 hours later) | |
| NICE, France | |
| When his bodyguards found a small brown package with protruding wires taped to the undercarriage of his Rolls-Royce in London, Sergei Pugachev decided it was time to take cover. Already on the run from Russia, he fled Britain last year for what he now hopes will be a less stressful refuge on the French Riviera. | |
| “London is a dangerous place,” said the 53-year-old Russian tycoon and bitterly estranged former friend of the Russian president, Vladimir V. Putin, noting that at least three Russian exiles at odds with the Kremlin had died under mysterious circumstances in or near the British capital over the last decade. | “London is a dangerous place,” said the 53-year-old Russian tycoon and bitterly estranged former friend of the Russian president, Vladimir V. Putin, noting that at least three Russian exiles at odds with the Kremlin had died under mysterious circumstances in or near the British capital over the last decade. |
| “I felt the noose tightening,” Mr. Pugachev added. “Here I can live in peace, and the weather is better, too,” he said, standing on a tiger-skin rug in the study of his Nice villa overlooking the Mediterranean. | “I felt the noose tightening,” Mr. Pugachev added. “Here I can live in peace, and the weather is better, too,” he said, standing on a tiger-skin rug in the study of his Nice villa overlooking the Mediterranean. |
| His departure, however, did not go down well with the High Court in London, which, at the behest of an arm of Russia’s Central Bank, had earlier ordered that the magnate — a French citizen since 2009 — surrender his passports, disclose all his assets and stay put in Britain pending the outcome of a lengthy legal wrangle over money that Russia says he stole. | His departure, however, did not go down well with the High Court in London, which, at the behest of an arm of Russia’s Central Bank, had earlier ordered that the magnate — a French citizen since 2009 — surrender his passports, disclose all his assets and stay put in Britain pending the outcome of a lengthy legal wrangle over money that Russia says he stole. |
| Unmoved by Mr. Pugachev’s claims that his life could be in danger, a High Court judge, Vivien Rose, in February sentenced him in absentia to two years in prison for contempt of court and ordered him to pay 375,000 pounds, or about $548,000, in costs. | Unmoved by Mr. Pugachev’s claims that his life could be in danger, a High Court judge, Vivien Rose, in February sentenced him in absentia to two years in prison for contempt of court and ordered him to pay 375,000 pounds, or about $548,000, in costs. |
| As it turns out, the device hidden under his Rolls-Royce and similarly mysterious objects found under three other family cars contained no explosives or poison but were only tracking devices put there by a private British security company acting for the Russians. | As it turns out, the device hidden under his Rolls-Royce and similarly mysterious objects found under three other family cars contained no explosives or poison but were only tracking devices put there by a private British security company acting for the Russians. |
| THE contempt of court verdict was the latest in a long series of setbacks for a man who just a few years ago ranked as one of Russia’s richest, best connected and most secretive tycoons: a friend of Mr. Putin; a patron of the Russian Orthodox Church; and the head of a business empire that included a bank, two shipyards making vessels for the Russian Navy, a huge coal deposit in Siberia and a prestige real estate project right on Red Square. | |
| Unlike Boris A. Berezovsky, a self-exiled Russian tycoon who was found dead at his home west of London in 2013; Alexander V. Litvinenko, a former K.G.B. officer who died in London in 2006 after being poisoned by a rare radioactive isotope; and Mikhail B. Khodorkovsky, a former oil magnate who spent a decade in a Russian jail before fleeing to Switzerland and then London, Mr. Pugachev has not used his time abroad to dabble in Russian politics or sought to rally opposition to Mr. Putin. | Unlike Boris A. Berezovsky, a self-exiled Russian tycoon who was found dead at his home west of London in 2013; Alexander V. Litvinenko, a former K.G.B. officer who died in London in 2006 after being poisoned by a rare radioactive isotope; and Mikhail B. Khodorkovsky, a former oil magnate who spent a decade in a Russian jail before fleeing to Switzerland and then London, Mr. Pugachev has not used his time abroad to dabble in Russian politics or sought to rally opposition to Mr. Putin. |
| Nor has he joined forces with Kremlin foes, as did Alexander Perepilichnyy, an émigré Russian banker, who, after providing information about Russian corruption to the London-based financier Bill Browder, unexpectedly dropped dead while jogging near his English mansion in 2012. Traces of a rare poison were later found in his stomach. | Nor has he joined forces with Kremlin foes, as did Alexander Perepilichnyy, an émigré Russian banker, who, after providing information about Russian corruption to the London-based financier Bill Browder, unexpectedly dropped dead while jogging near his English mansion in 2012. Traces of a rare poison were later found in his stomach. |
| All the same, Mr. Pugachev has found it difficult to extricate himself from his Russian past and what he described as mafialike codes of conduct that are expected to bind current and former members of the Kremlin inner circle. His many critics in Russia view him as a crook who simply tried to grab too much money for himself, but Mr. Pugachev insists he fell prey to a system that rewards absolute loyalty and punishes those who break ranks by asserting their own business interests against the demands of the state. | All the same, Mr. Pugachev has found it difficult to extricate himself from his Russian past and what he described as mafialike codes of conduct that are expected to bind current and former members of the Kremlin inner circle. His many critics in Russia view him as a crook who simply tried to grab too much money for himself, but Mr. Pugachev insists he fell prey to a system that rewards absolute loyalty and punishes those who break ranks by asserting their own business interests against the demands of the state. |
| At one point, he was as deep into that inner circle as anyone. His family photograph albums contain pictures of his two sons, now adults, playing as teenagers with Mr. Putin’s daughters in the Kremlin and at Mr. Pugachev’s country house outside Moscow. Other photographs record long-ago dinner parties attended by powerful Kremlin insiders like Igor Sechin, a former K.G.B. officer whose portfolio now includes the United Shipbuilding Corporation, a state-owned ship maker that now controls Mr. Pugachev’s ship yards. | At one point, he was as deep into that inner circle as anyone. His family photograph albums contain pictures of his two sons, now adults, playing as teenagers with Mr. Putin’s daughters in the Kremlin and at Mr. Pugachev’s country house outside Moscow. Other photographs record long-ago dinner parties attended by powerful Kremlin insiders like Igor Sechin, a former K.G.B. officer whose portfolio now includes the United Shipbuilding Corporation, a state-owned ship maker that now controls Mr. Pugachev’s ship yards. |
| The famous photographs of a shirtless Mr. Putin fishing, hunting and riding horses were taken at Mr. Pugachev’s estate in the Siberian region of Tuva, which the businessman represented from 2001 to 2011 as an elected senator in the upper house of Parliament. | The famous photographs of a shirtless Mr. Putin fishing, hunting and riding horses were taken at Mr. Pugachev’s estate in the Siberian region of Tuva, which the businessman represented from 2001 to 2011 as an elected senator in the upper house of Parliament. |
| LIKE many of Russia’s wealthy elite, Mr. Pugachev got his start amid the chaos of the 1990s, when he set up a bank, Mezhprombank, and used it to finance other business ventures and cement relations with state and church hierarchies. The son of a Soviet military officer, he now has five children, two sons by a Russian wife, from whom he is now divorced, and three more children with Alexandra Tolstoy, an English equestrian, socialite and distant relative of the Russian novelist Leo Tolstoy. She now lives mostly in London, where their three young children attend a French school. | |
| The couple used to appear regularly in British and Russian gossip columns, particularly when both were still married to other people. The British news media named him “the Kremlin’s banker,” a role he denies having played. Though he says he is no longer a billionaire and deeply out of favor in Moscow, Mr. Pugachev is far from down-and-out in Nice, where he keeps a full-time staff of cooks, servants and bodyguards. | The couple used to appear regularly in British and Russian gossip columns, particularly when both were still married to other people. The British news media named him “the Kremlin’s banker,” a role he denies having played. Though he says he is no longer a billionaire and deeply out of favor in Moscow, Mr. Pugachev is far from down-and-out in Nice, where he keeps a full-time staff of cooks, servants and bodyguards. |
| A 2014 court order issued in London at Russia’s request froze his assets worldwide but still granted him weekly living expenses of £50,000 and left him with a string of properties, including homes in Chelsea, one of London’s most expensive areas, and Nice, as well as a yacht with an onboard swimming pool moored in nearby Monaco. | A 2014 court order issued in London at Russia’s request froze his assets worldwide but still granted him weekly living expenses of £50,000 and left him with a string of properties, including homes in Chelsea, one of London’s most expensive areas, and Nice, as well as a yacht with an onboard swimming pool moored in nearby Monaco. |
| But perhaps his most valuable remaining asset is a cache of documents and other evidence assembled in preparation for a showdown with Russia in an arbitration process in The Hague. There, he hopes to demonstrate that Russia violated an investment treaty with France by expropriating properties he owned worth at least $12 billion, and to win compensation for his alleged losses. | But perhaps his most valuable remaining asset is a cache of documents and other evidence assembled in preparation for a showdown with Russia in an arbitration process in The Hague. There, he hopes to demonstrate that Russia violated an investment treaty with France by expropriating properties he owned worth at least $12 billion, and to win compensation for his alleged losses. |
| Among his documents are the minutes of a 2011 inter-ministerial meeting in Moscow that laid out a plan to force Mr. Pugachev to hand over control of his St. Petersburg shipyards to Mr. Sechin’s state-owned United Shipbuilding Corporation. The meeting recommended, among other steps, that the Federal Security Service, the post-Soviet version of the K.G.B. known as the F.S.B., “initiate checks” and find “signs of crimes” so as to force a transfer of ownership. | |
| The entry of the F.S.B. into what had previously been normal business negotiations, Mr. Pugachev said, showed that “discussions moved very quickly onto a noncommercial track.” He said he was always ready to give up the shipyards, but only if the state paid a proper market price. It paid nothing in the end, seizing the property after declaring his bank, which had pledged the shipyards as collateral for loans, bankrupt. | The entry of the F.S.B. into what had previously been normal business negotiations, Mr. Pugachev said, showed that “discussions moved very quickly onto a noncommercial track.” He said he was always ready to give up the shipyards, but only if the state paid a proper market price. It paid nothing in the end, seizing the property after declaring his bank, which had pledged the shipyards as collateral for loans, bankrupt. |
| Like most of the Russian feuds over money that have ended up in British and other European courts over the years, Mr. Pugachev’s struggle has so far yielded millions of dollars in income for lawyers but little clarity. Bewildered judges have been left struggling to reconcile flamboyantly contradictory accounts of the truth. | Like most of the Russian feuds over money that have ended up in British and other European courts over the years, Mr. Pugachev’s struggle has so far yielded millions of dollars in income for lawyers but little clarity. Bewildered judges have been left struggling to reconcile flamboyantly contradictory accounts of the truth. |
| THE British judge who sentenced Mr. Pugachev to jail over his flight to France, Ms. Rose, questioned the businessman’s trustworthiness but also acknowledged that he had “faced very considerable pressure.” Referring to “the realities of political power in the Russian Federation,” she noted that Mr. Pugachev’s evasiveness was in part understandable. | |
| “I hope this will be over by end of the year. I am confident of a positive outcome,” said Mr. Pugachev of the arbitration process in The Hague. He added that he does not “really need” the billions of dollars he is seeking in compensation but does want vindication against a Russian system that he helped put in place by promoting Mr. Putin as a successor to President Boris N. Yeltsin. | “I hope this will be over by end of the year. I am confident of a positive outcome,” said Mr. Pugachev of the arbitration process in The Hague. He added that he does not “really need” the billions of dollars he is seeking in compensation but does want vindication against a Russian system that he helped put in place by promoting Mr. Putin as a successor to President Boris N. Yeltsin. |
| “I took part in bringing him to power,” he said, recalling how at the end of Mr. Yeltsin’s tenure in 1999 he had sung Mr. Putin’s praises to Mr. Yeltsin’s daughter, Tatyana Dyachenko, and her partner Valentin Yumashev, an influential Kremlin insider. | |
| “I now see this was a mistake,” he added. |