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War Vet Turns Billionaire
by Natalya Alyakrinskaya The Moscow News
Within the space of one decade, Nikolai Tsvetkov has risen from Air Force lieutenant colonel to billionaire. This year the Afghan war veteran has made it onto the Forbes list
Recently, yet another individual joined the ranks of Russian oligarchs. Meet Nikolai Tsvetkov, 43, the president of Nikoil, a finance and investment corporation. First, in a sensational twist in his business career, he made it onto the Forbes list of the worlds richest people: The newcomers net worth was estimated at $1.3 billion. Then, as if to confirm this estimate, he disclosed Ni-koils shareholder structure. This was followed by reports of Tsvetkovs royal present to his wife: Galina Tsvetkova got a 75% stake in the Lomonosov porcelain factory.

Cinderella, Prince Charming & Co.

"Mr. Tsvetkov does not give interviews. He has a heavy schedule," Nikoils press service said in response to my attempts to get first-hand information. Unlike other oligarchs, Tsvetkov appears to be publicity-shy. His military background is another thing that makes him stand out in this milieu.

Tsvetkov graduated from the Zhukovsky Air Force Engineering Academy with top honors. He served in Tambov, Moscow, and Russias Far East. He fought in Afghanistan. By the early 1990s, Tsvetkov had attained the rank of lieutenant colonel and a near-penury status. He retired and got a job on the stock exchange. Before long he realized that he lacked specialist training. So he did a course in business management at the Plekhanov Academy of National Economy.

Tsvetkovs life story recalls that of Cinderella: Both worked hard and then met their Prince Charming. Tsvetkov was certainly lucky with the prince. Vagit Alekperov, the incumbent president of Lukoil, was highly instrumental in propelling the retired lieutenant colonel into business.

They met in 1992. At the time, Tsvetkov was working at Brokinvest, a small brokerage company he had established, while Lukoil was looking for business partners. A lucky chance? Perhaps. But Tsvetkov should be given his due, too: They say the retired lieutenant colonel has always been a can-do man. Thus his obscure company became an investment and financial adviser to Lukoil, then still a state-controlled concern.

Alekperov and Tsvetkov have been together ever since. A year after their first meeting, they founded Nikoil, an investment vehicle - a first on the domestic stock market. Tsvetkov placed his bet on oil, landing a trump and hitting the big time. The oil market was up for grabs, and Nikoil got closely involved in the process, buying up oil company vouchers, or investment checks, for Lukoil, taking part in the privatization of oil enterprises, and rendering them financial services.

In return, Lukoil transferred to Nikoil for trustee administration its check-investment fund - in fact, a financial pyramid scheme. As everybody knows, those pyramid schemes collapsed overnight, wiping out peoples savings. But the Nikoil owner found a way out by reorganizing his check investment fund (ChIF) into a unit investment fund (PIF). As a result, shareholders were able to swap their shares for money while Tsvetkov avoided legal unpleasantness. By revealing recently his firms shareholder makeup Tsvetkov only confirmed what the business community have known all along: Alekperov is Nikoils co-owner.

Private Life

Very little is known about Tsvetkovs private life. Only a few years ago, Nikoils president beamed from glossy magazine covers, making small revelations, but today his life is absolutely off limits to the public. It is known that Tsvetkov has a family - a loving wife and two daughters. The younger is still at school while the elder is in her final year at the Plekhanov Academy.

Galina Tsvetkova once admitted that since Nikolai Tsvetkov became the head of a successful business corporation very little had changed in her own life. The couple have been together for 20 years. They say it was Nikolais military tours of duty that cemented the Tsvetkovs union. It is not ruled out that Galina in fact was the one who prompted the retired lieutenant colonel to go into business: As head of a post office, she made more than her husband did. Rumor has it that he could not put up with the fact. When Nikoil needed start-up capital, a modest dacha that Galina had inherited from her parents was contributed to the incorporation capital. True, later on the house was withdrawn.

At present, Galina Tsvetkova heads Nikoils corporate family club: Her duties include organizing parties for corporate staff. Judging by Nikolai Tsvetkovs official comments, family values hold pride of place in Nikoil. The president makes a point of spending at least one day-off a week with his family. But it is "business performance" that he puts first, without any provisos. This must be why, in line with the current trend toward business "purity," about a year ago Nikoil wanted to hire Father Ioann, better known under his lay name of Ivan Okhlobystin, author and former movie personality, as the companys full-time psychologist. Unfortunately, it did not work out in the end. According to Father Ioann, he inadvertently mentioned his upcoming appointment with Nikoil in a newspaper interview, whereupon company management gave him to understand that his employment was a non-starter. "We had discussed my work schedule and program in detail," Father Joann complained. "I was quite happy with the compensation package, too: I have five children to support, and I hate to accept money from the church as it has to find its feet yet. I am disenchanted with businessmen."

Judging by this story, Tsvetkov puts corporate image above all else.

Buying Up Everything that Moves

Today Nikoil is a real financial octopus, and omnivorous at that. Whereas before 1997 it fed exclusively on oil, now the corporation, by its own admission, is in a leading position on the credit market, controlling over 30% of unit investment funds (about 80,000 inves-tors), 10% of the voluntary insurance market, and 7.5% of the precious metals market.

The octopuss head is the IBG Nikoil joint-stock bank, which is among Russias top 20 banks. Tsvetkov himself, judging by the National Managers Association ratings, is among the top 10 financial market managers in Russia. Experts attribute Nikoils success to, among other things, the corporations structure - a horizontal model wherein powers and responsibilities are delegated to its subdivisions. Incidentally, only two companies in Russia follow this model - Nikoil and the no less successful MDM group.

According to Andrei Kolyagin, executive director of the Guild of Investment and Finance Analysts, it is also important that right from the outset the corporation has been in the charge of just one person, which minimized the risks involved in changing top executives.

Military Bearing

Although he has become part of the business elite, Tsvetkov never forgets about his military background: His corporation employs a large number of ex-servicemen, in particular those who fought in Afghanistan. One of Nikoils subdivisions is especially "militarized" - the Law Enforcement Insurance Company, most of whose top executives are former law enforcement officers.

Tsvetkovs tactics are quite aggressive - well in line with his military past. Today he is actively promoting an idea that is new to Russia - that of a financial supermarket for the rich, a one-stop center for banking, insurance, and investment services. To this end, Nikoil took over Avtobank (a leader in the number of private depositors in Russia) and the Promyshlenno-strakhovaya kompaniya industrial-insurance company. Furthermore, recently it took control of UralSib, a major regional bank. According to some sources, this latest acquisition came as part of an arcane tradeoff ahead of presidential elections in Bashkiria: In return for his assured victory, Murtaza Rakhimov, the incumbent head of the republic, promised Moscow a number of key regional assets, including UralSib, his pocket bank. In addition, Nikoil signed with the Bashkortostan government an agreement whereby, for the next five years, the corporation will be defining investment priorities in the region. The UralSib case is further evidence of the fact that Tsvet-kov enjoys the trust of the federal authorities.

Nikoil also has a hand in the Novorossiysk merchant marine port: Tsvetkov is chairman of the ports board of directors while his company holds a 30 percent stake in the port. Today, the port of Novorossiysk handles one-third of Russias entire oil and grain export, the port itself being of strategic importance. A well informed source in labor union circles described Tsvetkov as "master of the Black Sea," pointing out that as Nikoil strengthened its positions, the leadership of the ports labor union was replaced with someone more amenable and cooperative while the board of directors started meeting not in Novorossiysk but in Moscow, which made the presence of union representatives there all but impossible.

Tsvetkov is actively taking on everything that moves - both at sea and on land. Recently, the federal government authorized his corporation (along with the Troika-Dialog company) to look for investors for reforming the railway monopoly. The Railways Ministry hopes that Tsvetkov and company will attract at least $1 billion in investment capital. One of Tsvetkovs latest acquisitions is a 50 percent stake in the Kopeika economy-class trading house that retails goods at wholesale prices, and an almost one-third of stock in OAO Ais-Fili, a major ice-cream producer. The buying of the Lomonosov porcelain factory for his wife is also a long-term investment in the Tsvetkov empire: The factory with a 250-year history is today a highly profitable enterprise. They say that the factory management was a bit nervous of the new "mistress." Rumor has it, however, that with Galina Tsvetkovas advent, the factory has once again become an official china purveyor for the Kremlin.

By expanding his empire and acquiring more and more new assets, the former lieutenant colonel was simply destined to emerge from the shadows into the public light. Even so, it is unlikely that Nikolai Tsvetkov, who has until recently shunned publicity, rejoices over his inclusion on the Forbes list of billionaires. Modern history shows that ending up on this list is a mixed blessing for a Russian billionaire, one possible outcome being banishment or even prison. It is unlikely that Nikolai Tsvetkov relishes such a dramatic turn in his career.

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