The oil producer offered the rich returns of Russia’s vast energy sector but boasted Western management and a stock listing in London. It had political cover, too: Its top shareholder was Chalva Tchigirinski, a well-connected Russian billionaire who got his start peddling Orthodox icon paintings. Investors lapped it up, and the stock became the biggest by market capitalization on London’s junior stock exchange.
The oil producer offered the rich returns of Russia’s vast energy sector but boasted Western management and a stock listing in London. It had political cover, too: Its top shareholder was Chalva Tchigirinski, a well-connected Russian billionaire who got his start peddling Orthodox icon paintings. Investors lapped it up, and the stock became the biggest by market capitalization on London’s junior stock exchange.
It all crumbled this year as Mr. Tchigirinski’s empire unraveled in the global financial crisis. When Sibir announced it had lent him hundreds of millions of dollars without shareholders’ knowledge in a doomed bid to keep him afloat, investors dumped the stock, racking up billions in losses. The 60-year-old Mr. Tchigirinski left Russia for an undisclosed location, and Sibir became the latest Russian oil company to be effectively nationalized.
The fall of Sibir is a cautionary tale of the risks of investing in emerging markets, the kind investors face not only in Russia but also across parts of Asia and Latin America. Two court battles now unfolding in London over Sibir’s near-collapse are opening a rare window into the murky world of Russian crony capitalism, where tycoons fall in and out of favor and Western lenders are sometimes only too happy to provide ample credit with few questions asked.
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