All over for Russia's oligarchs?

In this story: Police raid Tax allegations Reduced to 'simple industrialists' RELATED STORIES, SITES

(CNN) -- They hail from humble origins: there is the mathematics professor, the Communist Youth League stalwart and the theater director.

But Russian investigators poring over the balance sheets of the tycoons disparagingly dubbed "the oligarchs" say they are finding few signs of humility.

After years of pampered treatment in the post-Soviet state, observers say the noose is finally tightening around Russia's business elite and their banking, media, oil, gas and metals empires.

The post-Soviet privatizations -- under which a small, but politically well-connected elite snapped up state assets at bargain prices - are now universally scorned.

President Vladimir Putin pledged in a meeting last month with 21 business leaders not to overturn the outcome of these privatizations.

At the same time, he has done little to halt a growing list of official probes into the oligarchs' business practices, suggesting tacit encouragement. This signals a sharp break from the policies of his predecessor, Boris Yeltsin.

"They (the oligarchs) are not in a combative mood," said Ajay Goyal, editor of The Russian Journal, a weekly independent magazine. "They are not feeling powerful at all. They do not get called to take advice and their advice is not listened to. I think the purpose of this (Kremlin) meeting was to go and judge, 'should we be running scared?'"

Police raid

Notably absent from the recent Kremlin meeting were two prominent oligarchs: Boris Berezovsky, the media and oil magnate who helped bankroll Boris Yeltsin's re-election campaign in 1996. In 1997, Forbes magazine named Berezovsky as Russia's richest man, worth an estimated $3 billion.

Another no-show at the meeting was Vladimir Gusinsky, owner of Russia's largest private television station, NTV. Gusinsky was arrested in July after tax police raided the offices of NTV's parent company, Media-MOST.

Charges of alleged financial fraud against the state were subsequently dropped, abruptly, amid speculation -- denied by Gusinsky -- that he cut a deal with the Kremlin to tone down NTV's often critical coverage of the Kremlin and the war in Chechnya.

In July, Berezovsky, a former math professor who holds large shareholdings in the state airline Aeroflot and in oil company Sibneft, relinquished his seat in the Russian parliament in a dramatic protest against what he sees as the Kremlin's "totally destructive" attack on business. The move means he no longer carries immunity against prosecution granted to Russian lawmakers.

Tax allegations

Among others feeling the Kremlin fire are Vladimir Kaddanikov, head of auto giant Avtovaz and Vagit Alekperov, the president of Lukoil, Russia's largest oil company. Both companies are fighting allegations of tax evasion.

Vladimir Potanin, whose business interests embrace the sprawling metals complex, Norilsk Nickel, has struck a conciliatory tone in public statements after initial fears that the Kremlin might seek to overturn its privatization.

"Business has at last understood that everything we gain by exploiting various holes in the law is much less benefit than the loss we suffer because such methods exist," Potanin recently told reporters in Moscow.

Then there's Mikhail Khodorkovsky, a thirty-something oligarch who gave up the Communist Youth League to start Menatep Bank. When Russia's financial crisis struck in 1998, Khodorkovsky eschewed finance to concentrate on industrial holdings. Khodorkovsky today controls Yugos, Russia's second-largest oil company, with diversified interests in chemicals, shipping and real estate.

Some oligarchs - mostly those who put all their eggs into one financial basket -- have dropped virtually out of sight.

Reduced to 'simple industrialists'

Russians rarely hear the name these days of Aleksandr Smolensky, former head of the defunct Stolichny Bank. Another former high-flyer, Inkombank President Vladimir Vinogradov, has also fallen from the firmament. Meanwhile Viktor Chernomyrdin, a former prime minister who offered political cover to the oligarchs as head of Russia's largest gas company, Gazprom, is barely a blip on the political radar these days.

"What has happened today is that all the oligarchs have been reduced to simple industrialists," Goyal said. "They might control huge oil and gas companies, but they are now dependent on state support in almost every way. So now the tables have turned."

Or as Boris Nemtsov, a liberal-minded politician once touted as a possible future Russian president, put it after Putin's recent meeting with the business leaders:

"The oligarchs are tired of being oligarchs."

Douglas Herbert, CNN.com Writer and Reuters contributed to this report.

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Government of the Russian Federation
The Russia Journal
Media-MOST

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