Mikhail Dmitrievitch Prokhorov (Russian: Михаил Дмитриевич Прóхоров; born 3 May 1965) is a Russian billionaire and owner of the American basketball team, the Brooklyn Nets. After graduating from the Moscow Finance Institute he made his name in the financial sector and went on to become one of Russia's leading industrialists in the precious metals sector. While he was running Norilsk Nickel, the company became the world's largest producer of nickel and palladium. He is the former chairman of Polyus Gold, Russia's largest gold producer, and former President of ONEXIM Group. He resigned both positions when he entered politics in June 2011.
In December 2011, Prokhorov capped a year of higher-profile political activity in Russia with the December declaration that he would run as an independent in the 2012 presidential elections. Russian prime minister and former president Vladimir Putin was the favorite in the race at the time of Prokhorov's announcement.
He is the seventh richest man from Russia and the 57th richest man in the world according to the 2012 Forbes listing with a fortune estimated at US$13.2 billion.[1]
Prokhorov was born in Moscow, the son of Tamara and Dmitri Prokhorov. He has one sibling, an elder sister, Irina. His maternal grandmother, Anna Belkina, was a prominent microbiologist who during the war stayed in Moscow to make vaccines while Tamara was moved east to safety. Prokhorov's father's parents were relatively wealthy kulaks but "his father lost everything and was forced to flee from one part of Siberia and restart life in another".[3] Dmitry was trained as a lawyer and handled international relations for the Soviet Committee of Physical Culture and Sport. Tamara was a materials engineer at the Institute for Chemical Machine-Building.[4] In his job, Dmitri had the rare privilege of traveling abroad. Tamara worked as an engineer for a research group at the institute specializing in plastics. They died within a year of each other from heart disease when they were in their late 50s and Prokhorov was in his early 20s.[3] Prokhorov remained in their flat, which he shared with his divorced sister and her daughter. He became the breadwinner of the family, has never married and his sister, who "runs his philanthropic organizations, an erudite literary magazine, and a publishing house, ... lives in a wing of his mansion west of Moscow".[4]
In 1989, he graduated with honors from the Finance University under the Government of the Russian Federation, known at the time as the Moscow Finance Institute. From 1989 to 1992, Prokhorov worked in a management position at the International Bank for Economic Cooperation. Thereafter he shortly served as head of Management Board of the MFK bank (International Finance Company[citation needed]) and then the United Export-Import Bank, or Uneximbank (or Onexim Bank or Oneksimbank), with Alexander Khloponin, his best friend in college, and Vladimir Potanin, to whom he was introduced by Khloponin and who became his business partner.[4]
In 1993, aged 28, Prokhorov became wealthy, aided by warm ties with the government of President Boris N. Yeltsin. During the largely un-regulated privatization of former state-controlled industries after the collapse of the USSR, Prokhorov and Potanin, the latter by then a deputy prime minister who oversaw privatization, engineered the acquisition of Norilsk Nickel by Uneximbank in 1995. Prokhorov became chairman of the board.[5]
Prokhorov first major financial success came at MFK, which became a depository institution for the government. The bank acquired Soviet assets in the amount of US$300 to 400 million. Prokhorov held a post of the chairman of the board from 1992 until 1993. In 1993 Prokhorov became the chairman of board of Potanin’s Onexim Bank.
In 1993, Onexim Bank became the paying agent for Finance Ministry bonds and a servicing bank for the City of Moscow’s external economic activities. In 1994 it became the depository and paying agent for treasury obligations and in 1995 the authorized bank for the federal agency dealing with bankrupt enterprises.[6][7]
Banks holding government funds earned handsome fees and paid minimal interest at a time when inflation was in the triple digits.[8]
In the 1990s, the Russian government needed loans to operate. Prokhorov partnered with Potanin. Their Oneximbank ran auctions for the government. In these auctions, bidders won the right to loan the Russian government money. Oneximbank and its affiliates were the winning bidders at the Norlisk Nickel and other auctions they conducted. The Russian government secured the loans with blocks of shares of newly-privatized state enterprises. The government never repaid the loans, and Oneximbank received the shares in the privatized enterprises.[8]
When cash privatization eventually replaced the failing voucher privatization phase, the government came up with a scheme to leverage the privatization process and quickly raise money for its cash-strapped operations. Under the "loans for shares" program, the administration sold off majority stakes in some of its prized companies in the energy, telecommunications, and metallurgical sectors in exchange for loans taken from the new private sector banks owned by rich businessmen. According to the terms of the loan, the lender could stake equity ownership in the company if the government failed to repay the loans by September 1996. Auctions conducted under the "loans for shares" program were executed in such a way that only the few businessmen who owned these banks were allowed to partake in auctions. Following these bogus auctions, the majority stakes in some of the biggest Russian companies were acquired by a small number of major banks at abysmally low prices. These businessmen also bankrolled Yeltsin's 1996 presidential election victory, exerting their influence over the then president.[9]
Oneksim-bank purchased petroleum company SIDANKO, a part of Novolipetsk metallurgical industrial complex, Novorossisk marine shipping company and the big share of Northwest marine shipping company. In April, 1996 Prokhorov was included into board of directors of «Norilsk nickel» (then still belonging to the state). All these enterprises were purchased by Prokhorov and Potanin approximately for third of real value. The businessmen became the richest people in Russia.
Onexim bank bought Norilisk Nickel at auction for much less than the actual value of the company. In November 1995, Onexim Bank won 38 percent of Norilsk Nickel in a loans-for-shares auction for US$170.1 million, just US$100,000 higher than the bid starting price. At the time, Norilsk produced 25 percent of world nickel output.[10]
Oneksimbank managed the Norilsk Nickel auction, with a reservation price of US$170 million. It arranged three bids from affiliates, all at US$170 or US$170.1 million. Rossiiski Kredit Bank offered US$355 million, over twice as much. Oneksimbank disqualified Rossiiski Kredit’s bid on the grounds that the bid amount exceeded Rossiiski Kredit’s charter capital (the nominal value of its outstanding shares); Oneksimbank’s affiliate won the bidding at US$170.1 million. Oneksimbank’s bid also exceeded its charter capital. The auction rules required Oneksimbank to provide any objections in advance of the auction, to give bidders time to cure them. No bid reflected the value of Norilsk Nickel, which had annual profits of around US$400 million.[11]
The US news program 60 Minutes interviewed Prokhorov. The news program stated
Kremlin leaders gave him what amounts to an insiders opportunity to buy one of the state's most valuable assets. It was acquired from the Kremlin in a so-called auction for the measly sum of a few hundred million dollars in a process that even Prokhorov's business partner admits wasn't perfect, and probably not even legal under Western standards. But it was legal in Russia".
During the interview, Russian business correspondent Julia Latnina stated about the auction of Norlisk Nickel, "Yes, it was rigged. But, it can not be explained in normal economic to an outsider, especially an American. You had robber barons, we have oligarchs."[12]
After selling off most of Norilsk's non-mining assets, Prokhorov moved to modernize a complicated, expensive business venture which required icebreakers to transport metal over the frozen Arctic region. Prokhorov invested in an innovative Finnish freighter that did not require icebreakers. Norilsk Nickel is headquartered in Moscow. Environmental and labor conditions are harsh, and pollution remains a problem; Prokhorov has invested heavily in pollution control. However, the region continues to suffer from incredible pollution.[13] He converted Norilsk Nickel's gold-mining interests into the US$8.5 billion corporation Polyus Gold, Russia's largest gold producer. In 2003, Prokhorov oversaw the acquisition of Stillwater Mining, his first international venture.[citation needed]
Prokhorov resigned as Norilsk CEO in February 2007 and declared his intention to separate his assets from those of long-time partner Vladimir Potanin. The two engaged in protracted negotiations to separate the conglomerate Interros, co-owned by the two, into separate holdings.[14]
In May 2007, following the decision to exit Interros, Prokhorov launched the private investment fund ONEXIM Group, with assets valued at US$17 billion at the time. As the de-merger from Interros proceeded, and as other industries caught Prokhorov's attention, the group rapidly changed its investment profile. In April 2008, Prokhorov sold his most valuable asset - a 25% plus two shares stake in Norilsk Nickel - to United Company RUSAL, another mining conglomerate controlled by fellow billionaire Oleg Deripaska, in exchange for some 14% of Rusal stock, about US$5 billion in cash and an obligation to pay over US$2 billion more. The deal has been singled out as a major success for Prokhorov as only three months later, following a dip in oil prices, a disastrous stock market crash halved the value of most Russian companies, including Norilsk. He emerged as one of the very few businessmen to have cashed out in time. However, his wealth has also been affected, as the value of his remaining interests in various companies (including Rusal and Open Investments) declined sharply, and as the remaining payment from Rusal had to be postponed. It has since been fully paid.[citation needed]
In September 2008, ONEXIM Group acquired 50% of Renaissance Capital,[15] a major Russian investment bank which has reportedly encountered liquidity problems. ONEXIM also purchased a small bank, renaming it IFC (for the bank which Prokhorov had run in the early 1990s).
One of ONEXIM Group's divisions focuses on the development of nanotechnology investing in high-technology projects such as white LEDs. One of the key areas of development is the production of materials with ultra–tiny structures used in energy generation and medicine. In that purpose in 2008 ONEXIM purchased Optogan.[citation needed]
In June 2007, then-Prime Minister Mikhail Fradkov announced the formation of the Government Council for Nanotechnology, to oversee the development of nanotechnology in the country. Prokhorov was one of 15 individuals appointed to the council, which was to be chaired by then-First Deputy Prime Minister Sergei Ivanov.
A high-profile media venture is JV!, a media group led by the publisher of Kommersant, Vladimir Yakovlev; the group publishes, among other things, such magazines targeted at the wealthy as Snob and Russian Pioneer.[citation needed]
In July 2009, the shareholders of RBC Information Systems agreed with ONEXIM Group of Mikhail Prokhorov to sell the latest issue of the additional 51% stake for US$80 million, half of which went to pay off debts. The deal was closed in 2010. Prokhorov has business interests in mining and metallurgy (Polyus Gold, Intergeo, stake in Rusal), financial services (IFC-Bank, Soglassye insurance company, half of Renaissance Capital), utilities (stake in Quadra), nanotech, media (JV!) and real estate development (Open Investments).[citation needed]
In March 2004, he founded the Cultural Initiatives Foundation (as part of the Mikhail Prokhorov Foundation). It is headed by Prokhorov's elder sister, Irina, a prominent Russian publisher. At one time, he financially supported CSKA Moscow's basketball, hockey and football clubs, and is a member of the Supreme Council of the Sport Russia organization.[citation needed] Prokhorov currently serves as president of the Russian Biathlon Union. He is also an avid freeride/freestyle jet skier. He performs tricks on a stand up jet ski. In the 60 Minutes interview he stated that a backflip is his hardest trick.[12]
In September 2009, he made an offer to buy a controlling interest in the New Jersey Nets of the National Basketball Association and half of a project to build a new arena in Brooklyn.[16] On 11 May 2010, the NBA approved the sale of the Nets to Prokhorov, making him majority owner of the team with an 80% stake, as well as a 45% interest in their new Barclays Center.[17][18] He thus became the first non-North American and tallest (he stands 6'8") NBA owner. In December, 2011, after announcing his run for the Russian presidency, the NBA confirmed that Prokhorov's ownership interest would not need to be altered in the event of his election. (Sitting U.S. Senator Herb Kohl owns the Milwaukee Bucks.)[19]
On April 30, 2012, the Nets officially made the move to Brooklyn, rebranding themselves as the Brooklyn Nets.
At a Christmas party for the Russian rich at the French Alpine resort of Courchevel in January 2007, he was arrested on suspicion of arranging prostitutes for his guests.[20] After three days he was released without charge.[21] In September 2009, Prokhorov was officially cleared from this charge and the judicial case was dismissed.[22] According to the French prosecutor, he had paid all expenses for the single women to travel to France, but they were neither professional prostitutes, nor working for a prostitution agency.[23] According to his blog, he made an apology for his actions during a visit to France in 2009.[24]
In parallel, resolved another important question for me. I have apologized for the well-known event in January 2007. So in this case is over.
Prokhorov made headlines in early March 2010 when he was forced to forfeit a £36 million deposit he placed on the £360 million Villa Leopolda in the French Riviera in 2008. Under French property law, once an initial sale contract has been signed, a deposit can only be refunded during a seven day cooling-off period. On 2 March 2010, a court in Nice, France ruled that the villa's owner, 71-year-old Lily Safra, widow of deceased billionaire banker Edmond Safra, could keep the £36 million deposit, plus £1 million in interest.[25]
Regarding Prokhorov's political efforts and the Right Cause party, critical commentators claim that the entire endeavor is just a project of the Kremlin closely curated by Vladislav Surkov and that Prokorov was effectively appointed a party leader.[26][27] According to them, the "puppet party" was designed to divert opposition voters by using liberal rhetoric.
In August 2006, he was awarded the Order of Friendship for his significant contribution to the growth of Russia's economic potential, when the President of the Russian Federation, Vladimir Putin, signed an order for the granting of state honors on 18 August 2006. In March 2011, he was bestowed with the French Legion of Honour. France's ambassador to Moscow, Jean de Gliniastrance, presented it at the French embassy in Moscow.[citation needed]
In May 2011, Prokhorov announced a plan to join the leadership of the Russian pro-business political party Right Cause. While not antagonistic to the Kremlin, the party was seen as likely to support President Dmitry Medvedev rather than Prime Minister Vladimir Putin if the latter entered the 2012 presidential race. In June, Prokhorov was elected to the leadership of the party at the Right Cause Party Congress of 2011. At the acceptance ceremony, Prokhorov officially criticized the present ruling tandem of Medvedev-Putin, the structure of Russia, and vowed to bring Russia back to a stable development course.[28] However, in September, Prokhorov reversed course and resigned from Right Cause, "condemning it as a 'puppet Kremlin party' micromanaged by a 'puppet master' in the president's office ..., Vladislav Y. Surkov".[5]
In December 2011, after the legislative elections, Prokhorov announced that he would contest the 2012 presidential election against Vladimir Putin as an independent.[29] Prokhorov called it at the time "probably[30] the most important decision of my life".[29]
In the 4 March 2012 presidential polling, Prokhorov gained 7.94% of the vote.[31]
- ^ a b "The World's Billionaires > Russia". Forbes. n.d.. http://www.forbes.com/profile/mikhail-prokhorov/. Retrieved 2012-04-26.
- ^ "Mikhail Prokhorov's Childhood Nickname Was Giraffe!"
- ^ a b Brown, Chip (28 October 2010). "The N.B.A.'s Oligarch and His Power Games". The New York Times Magazine. http://www.nytimes.com/2010/10/31/magazine/31prokhorov-t.html?_r=1&sq=prokhorov&st=cse&scp=2&pagewanted=print. Retrieved 2011-12-12.
- ^ a b c Ioffe, Julia, "The Master and Mikhail: Are Putin and Prokhorov running for President against or with each other?", 27 February 2012. Retrieved 2012-03-12.
- ^ a b Kramer, Andrew E., and Ellen Barry, "Amid Political Rancor, Russian Party Leader Quits",The New York Times, 15 September 2011. Retrieved 2011-09-15.
- ^ "Famous Russians: Mikhail Prokhorov". Russapedia. http://russiapedia.rt.com/prominent-russians/business/mikhail-prokhorov/.
- ^ "Oligarchs: The First Russian Capitalists". Thomas White. http://www.thomaswhite.com/explore-the-world/bric-spotlight/2010/russia-oligarchs.aspx.
- ^ a b Black, Bernard et al. "Russian Privatization and Corporate Governance: What Went Wrong". Stanford Law Review. http://hdl.handle.net/2027.42/41203. Retrieved 2/16/2012.
- ^ "Oligarchs: The First Russian Capitalists". Thomas White. http://www.thomaswhite.com/explore-the-world/bric-spotlight/2010/russia-oligarchs.aspx.
- ^ "Mikhail Prokhorov". The Moscow Times. http://www.themoscowtimes.com/mt_profile/mikhail_prokhorov/433785.html#ixzz1oHW4sno4.
- ^ Black, Bernard et al. "Russian Privatization and Corporate Governance: What Went Wrong". Stanford Law Review. http://deepblue.lib.umich.edu/bitstream/2027.42/41203/1/wp269.pdf. Retrieved 2/16/2012. P. 15; further reference to Ira W. Lieberman & Rogi Veimetra, "The Rush for State Shares in the 'Klondyke' of Wild East Capitalism: The Loans-for-Shares Transactions in Russia", George Washington Journal of International Law & Economics 29: 737-768 (1996).
- ^ a b "Prokhorov:The Russian is Coming". CBS News 60 Minutes. March 28, 2010. http://www.cbsnews.com/video/watch/?id=6795542n&tag=segementExtraScroller;housing. Retrieved 3/5/2012. "Alternative url: http://www.cbsnews.com/stories/2010/03/25/60minutes/main6333015.shtml"
- ^ "Top 10 Most Polluted Places". http://www.worstpolluted.org/projects_reports/display/43. Retrieved 2/16/2012.
- ^ "Prokhorov, Potanin to split Interros assets", St-Petersburg Times, 2 February 2007
- ^ "Prokhorov Acquires Half of RenCap"
- ^ Bagli, Charles V. (September 23, 2009). "Richest Russian's Newest Toy: An N.B.A. Team". New York Times. http://www.nytimes.com/2009/09/24/sports/basketball/24nets.html. "A Russian tycoon with a longstanding passion for basketball agreed to a $200 million deal on Wednesday that would make him the principal owner of the New Jersey Nets and a key investor in the team’s proposed new home in Brooklyn."
- ^ NBA Board of Governors approves sale of Nets to Prokhorov
- ^ "Prokhorov gets control of Nets", ESPN with Associated Press, updated 12 May 2010.
- ^ Mamudi, Sam, "NBA says Prokhorov can run Russia and Nets", MarketWatch, 12 December 2011 7:00 pm EST, Retrieved 2011-12-12.
- ^ Bryanski, Gleb (12 January 2007). "French spoil party for Russia's super-rich ski set". Washington Post. http://www.washingtonpost.com/wp-dyn/content/article/2007/01/12/AR2007011200918.html. Retrieved 2010-03-29. "French police held Mikhail Prokhorov, co-owner of the world's biggest nickel producer with an estimated fortune of US$7.6 billion, after he was detained with a group of young women in an upmarket Courchevel hotel on Tuesday."
- ^ Russen im Wintersport : Der lustfeindliche Westen, Süddeutsche Zeitung, 23.01.2007
- ^ "France drops prostitution case against Russia's richest man", Sydney Morning Herald, 29 September 2009
- ^ Bremner, Charles. "Russian playboy 'flew in callgirls'". theaustralian.com.au. http://www.theaustralian.com.au/news/world/russian-playboy-flew-in-callgirls/story-e6frg6so-1111112825075.
- ^ Blog
- ^ Sparks, Ian (March 3, 2010). "Russian billionaire loses £36m deposit he put down on the world's most expensive home ... plus another £1m interest". Daily Mail (London). http://www.dailymail.co.uk/news/worldnews/article-1254867/Billionaire-Mikhail-Prokhorov-loses-36m-deposit-worlds-expensive-home.html. Retrieved 2010-03-29.
- ^ Schwirtz, Michael (16 May 2011). "Mikhail D. Prokhorov to Lead a Russian Political Party". The New York Times. http://www.nytimes.com/2011/05/17/world/europe/17russia.html.
- ^ http://www.rosbalt.ru/main/2011/08/18/880855.html
- ^ O'Connor, Clare (16 May 2011). "Billionaire Nets Owner Prokhorov To Enter Politics…And Take On Putin?". Forbes. http://blogs.forbes.com/clareoconnor/2011/05/16/billionaire-nets-owner-prokhorov-to-enter-politics-and-take-on-putin/. Retrieved 2011-06-01.
- ^ a b Morcroft, Greg, "NBA team owner Prokhorov to run against Putin", MarketWatch citing Bloomberg, 12 December 2011 8:47 a.m. EST. Retrieved 2011-12-12.
- ^ Barry, Ellen, and David M. Herszenhorn, "Billionaire and Ex-Minister to Oppose Putin in Russian Presidential Election" (limited no-charge access), The New York Times, December 12, 2011. The Times quote also said "serious" instead of "important", v. the MarketWatch quote of the same date. Retrieved 2011-12-12.
- ^ Results of the presidential elections in Russia 2012, sobesednik.ru.
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- Formerly the New Jersey Americans, New York Nets and New Jersey Nets
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US$13.2 billion (2012)
