The fief­dom of Rus­sian oli­garch Oleg Deri­paska

Met­als ty­coon linked to Manafort is still un­der U.S. sanc­tions, but in his home dis­trict, his power re­sem­bles that of a feu­dal lord

The Washington Post Sunday - - THE WORLD - BY AN­TON TROIANOVSKI an­[email protected]­post.com

khutor sokol­sky, rus­sia — The live­stock stalls hold around 150 head of cat­tle. The reser­voir con­tains at least 200 tons of fish. Two geese that man­aged to sur­vive New Year’s Eve stand sen­try over the ducks. But this is no or­di­nary farm. The food grown on th­ese acres in south­ern Rus­sia is pro­duced with one main cus­tomer in mind: the met­als mag­nate Oleg Deri­paska, whose power in his home dis­trict res­onates like that of a mod­ern-day feu­dal lord.

His riches paid for the dis­trict’s schools, kinder­gartens, churches, ru­ral gas pipe­lines and sports fa­cil­i­ties, and trips to Paris for his for­mer teach­ers. He has ne­go­ti­ated agree­ments spec­i­fy­ing how his tax money is spent. The dis­trict court con­sis­tently rules in his fa­vor.

His home — and the ad­join­ing ho­tel, of­fices, em­ployee res­i­dences and farm — oc­cupy an en­tire vil­lage in south­ern Rus­sia.

“He likes do­mes­tic, tra­di­tional kinds of sausage. They’re fatty, of course,” said Deri­paska’s farm man­ager, Ralf Dreeris. The recipe for a Ukrainian-style sausage that Dreeris makes was given to Deri­paska by Ukraine’s ousted proMoscow pres­i­dent, Vik­tor Yanukovych.

The im­mense wealth and in­flu­ence of the men known as oli­garchs, who won con­trol of as­sets af­ter the fall of the Soviet Union, is one of the hall­marks of mod­ern Rus­sia.

Here in the dis­trict of UstLabinsk — a swath of plain where Deri­paska grew up, and which he still calls home — the union of riches and priv­i­lege in Pres­i­dent Vladimir Putin’s Rus­sia may have reached its apogee.

“They call this dis­trict his prop­erty,” said Alexan­der Save­lyev, who also hails from this mostly ru­ral area and works as a jour­nal­ist and at the re­gional of­fice of the op­po­si­tion ac­tivist Alexei Navalny. “He can do what­ever he wants here.”

The U.S. Se­nate last month up­held a Trump ad­min­is­tra­tion move to lift sanc­tions on Deri­paska’s com­pa­nies af­ter he re­duced his stake and stepped down from their boards, send­ing share prices back up.

The many crit­ics of the deal in Wash­ing­ton claimed that Deri­paska, 51, still re­tained con­trol of the com­pa­nies, and ques­tioned the pro­pri­ety of eas­ing the penalty on a fig­ure on the fringes of the in­ves­ti­ga­tion into Rus­sian in­ter­fer­ence in the 2016 U.S. pres­i­den­tial elec­tion.

Deri­paska’s ties to Paul Manafort, Pres­i­dent Trump’s now-jailed for­mer cam­paign chair­man and a for­mer con­sul­tant to Yanukovych, stoked spec­u­la­tion that Deri­paska may have played a role in link­ing the Krem­lin and the Trump cam­paign.

In a state­ment to The Wash­ing­ton Post, Deri­paska called the al­le­ga­tions “beyond ab­surd” and said he had no con­tact with Manafort for more than seven years.

“While I re­al­ize I’ve in­vol­un­tar­ily be­come a light­ning rod for the anger some Amer­i­cans have about the elec­tions re­sult, they need to look else­where for a scape­goat,” Deri­paska said. “I am no­body’s man, in Rus­sia, the U.S., or any­where else, for that mat­ter.”

In April 2018, the United States im­posed sanc­tions on him in re­sponse to Rus­sia’s “world­wide ma­lign ac­tiv­ity,” cost­ing Deri­paska bil­lions as his com­pa­nies’ stock price cratered.

Weeks ear­lier, so­cial me­dia posts emerged show­ing a self­pro­claimed sex ex­pert known as Nastya Ry­bka and Deri­paska re­lax­ing on his yacht with a Rus­sian deputy prime min­is­ter. Deri­paska then sued Ry­bka — whose real name is Anas­ta­sia Vashuke­vich — in the Ust-Labinsk dis­trict court. A fa­vor­able ver­dict ar­rived within 29 min­utes, along with a rare or­der forc­ing In­sta­gram to take down the posts that irked Deri­paska.

In Ust-Labinsk, few peo­ple seemed will­ing to crit­i­cize Deri­paska. Not even the priest who leads Deri­paska’s con­gre­ga­tion.

“If he did some­thing some­where that was morally or eth­i­cally wrong, then that is his per­sonal prob­lem,” said the Rev. Grig­ory Gureyev. “The man takes care of his home re­gion.”

Gureyev preaches at the Deri­paska-built Church of St. Vladimir. Deri­paska’s father, Vladimir, is buried in the ad­ja­cent grave­yard. An ar­chi­tect on Deri­paska’s staff who spe­cial­izes in churches de­signed it as a replica of the Church of the In­ter­ces­sion on the Nerl, one of Rus­sia’s most fa­mous me­dieval build­ings. An­other staff mem­ber pro­cured a rare relic of Saint Demetrios of Thes­sa­loniki.

In the dis­trict’s main town, Ust-Labinsk, pop­u­la­tion 40,000, Deri­paska is build­ing a board­ing school. The cen­tral quad’s columned ar­cade is al­ready com­plete, set against the town’s veg­etable-oil-ex­trac­tion plant and the grain el­e­va­tor.

“He be­lieves that clas­si­cal ar­chi­tec­ture, in par­tic­u­lar, al­lows school­child­ren, in par­tic­u­lar, to study aca­demic sub­jects more deeply,” said Yury Ryabchenyuk, who heads Deri­paska’s eco­nomic de­vel­op­ment fund fo­cused on the re­gion. “This isn’t a cam­pus. This is an Ital­ian palazzo.”

The sur­round­ing small-town roads don’t ra­di­ate Ro­man grace. So Deri­paska will also help pay to ren­o­vate the streets in the board­ing school’s vicin­ity.

Pub­lic of­fi­cials in Ust-Labinsk at times de­scribed them­selves as stew­ards and ex­ecu­tors of Deri­paska’s wishes rather than as de­ci­sion-mak­ers in their own right. They spoke in in­ter­views set up by Deri­paska’s foun­da­tion af­ter The Wash­ing­ton Post reached out to the foun­da­tion re­gard­ing a story about Ust-Labinsk.

“I’m like the man­ager, deal­ing with things like in­fra­struc­ture,” said Ust-Labinsk’s mayor, Sergey Vyskubov. Re­fer­ring to Deri­paska in the re­spect­ful patronymic form, he added: “Oleg Vladimirovich thinks much more longterm, in terms of strate­gic projects.”

Deri­paska has ne­go­ti­ated agree­ments with re­gional au­thor­i­ties spec­i­fy­ing how his tax money is to be spent. One of his long-term in­ter­ests is kaizen — a Ja­pa­nese busi­ness-man­age­ment ap­proach em­pha­siz­ing con­tin­u­ous im­prove­ment. A kaizen sug­ges­tion box greets vis­i­tors to City Hall, and even the kinder­gartens are de­signed ac­cord­ing to the phi­los­o­phy’s teach­ings.

Other projects ap­pear to come to­gether on a whim.

Last spring, af­ter a meet­ing with the gover­nor, Deri­paska or­dered his staff to come up with a com­pre­hen­sive plan to get chil­dren in the Krasnodar re­gion, which in­cludes Ust-Labinsk, to play rugby. He had played the sport grow­ing up.

Over the sum­mer, Deri­paska’s staff brought in pro­fes­sional rugby play­ers to teach the rules to Ust-Labinsk gym teach­ers. They bought uni­forms and equip­ment. They hired a for­mer mem­ber of Rus­sia’s na­tional team to help run the pro­gram. By the start of the school year in Septem­ber, eight Ust-Labinsk schools were of­fer­ing rugby classes.

He also per­suaded his old karate teacher, Pavel Pisarenko, who years ago em­i­grated to the United States, to come back to UstLabinsk from Colorado Springs to head a new mar­tial arts cen­ter.

In the vil­lage of Ok­tyabrsky, Deri­paska had his grand­mother’s one-story wooden house pre­served to look just like it did when she was alive — down to the nap­kins.

Deri­paska moved to Moscow for univer­sity and be­came a met­als trader af­ter the col­lapse of the Soviet Union. Start­ing out with a stake in a Siberian smelter, he built one of the world’s largest alu­minum con­glom­er­ates. Along the way, ac­cord­ing to the Trea­sury no­tice an­nounc­ing sanc­tions against him last year, Deri­paska “has been ac­cused of threat­en­ing the lives of busi­ness ri­vals, il­le­gally wire­tap­ping a gov­ern­ment of­fi­cial, and tak­ing part in ex­tor­tion and rack­e­teer­ing.”

Deri­paska has de­nied those al­le­ga­tions, but he’s been open about his sup­port for Putin — and the Krem­lin has sup­ported him. As re­cently as 2016, Rus­sian For­eign Min­is­ter Sergei Lavrov asked then-Sec­re­tary of State John F. Kerry for as­sis­tance in get­ting Deri­paska a U.S. visa, The Post re­ported.

In a writ­ten state­ment, Deri­paska said that he con­sid­ered Ust-Labinsk home and that he spent more time there than in Moscow.

“Our ef­forts are a drop in the ocean,” he said. “Un­til the res­i­dents of the dis­trict start to get in­volved them­selves, fun­da­men­tally, noth­ing will change.”

The area has come to rely on Deri­paska’s money. He paid for the seed and fer­til­izer for the chil­dren’s sugar-beet cul­ti­va­tion con­test and for the sand for a vil­lage beach vol­ley­ball court. When the di­rec­tor of the dis­trict his­tory mu­seum heard about a site where the in­vad­ing Ger­mans may have mas­sa­cred lo­cal Jews in World War II, he asked Deri­paska’s foun­da­tion for fund­ing to ex­am­ine it.

The mu­seum di­rec­tor, Furkat Bay­chibayev, said it was a no­brainer to seek money from the foun­da­tion rather than the lo­cal gov­ern­ment.

“It’s a more flex­i­ble sys­tem,” he said.

Although the U.S. Trea­sury lifted sanc­tions on his com­pa­nies, Deri­paska him­self re­mains banned from do­ing busi­ness with any Amer­i­cans. Sanc­tions helped cut Deri­paska’s wealth to $3.6 bil­lion from $6.7 bil­lion in the past year, ac­cord­ing to Forbes.

The sanc­tions have been felt in Ust-Labinsk, too.

Deri­paska’s ef­fort to bring for­eign com­pa­nies into an in­dus­trial park he built in the dis­trict broke down af­ter the U.S. sanc­tions were an­nounced, Ryabchenyuk said. So did a deal to buy a com­bine har­vester from John Deere, ac­cord­ing to Dreeris, the farm man­ager.

Dreeris said Deri­paska has been spend­ing more time on the prop­erty lately and has shown in­ter­est in ex­pand­ing his farm­ing op­er­a­tion. It al­ready boasts plums, apri­cots, 56 va­ri­eties of ap­ples, dairy and beef cows, quail, rab­bits, a food-safety lab­o­ra­tory and an an­i­mal-feed pro­cess­ing plant. Much of what Deri­paska doesn’t con­sume is sold in lo­cal mar­kets.

“It’s said that the lo­cals eat what the oli­garch eats,” Dreeris said. “It’s very pres­ti­gious for them.”

PHO­TOS BY AN­TON TROIANOVSKI/THE WASH­ING­TON POST

ABOVE: Oleg Deri­paska’s farm in­cludes 56 va­ri­eties of ap­ples, dairy and beef cows, a food-safety lab­o­ra­tory and a feed-pro­cess­ing plant. BELOW: Deri­paska is build­ing a board­ing school us­ing clas­si­cal fea­tures that he thinks help chil­dren study more deeply, an as­so­ciate said.

THE WASH­ING­TON POST

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