Mikhail Fridman is in the strange position of being an oligarch with essentially no cash.
When I first called Mikhail Fridman to ask if he would talk about what it's like to be sanctioned, he all but hung up on me. A couple of days later, he said he still didn't think it was a good idea. After further back and forth he finally agreed, proposing we meet at a hotel in London's Mayfair district. I countered with his home, Athlone House, a Victorian estate he bought in 2016 for 65 million pounds ($85 million at the current exchange rate). He didn't like that, which is how we ended up at a cafe in North London, speaking for almost two hours against the constant sound of an espresso machine grinding in the background.
Wearing a blue cashmere sweater, a T-shirt, and jeans, he arrives a few minutes early, looking slightly frazzled. In the two weeks since Russia invaded Ukraine, the world as he knew it - as we knew it - had ended. Fridman hadn't thought Putin would launch a full-scale invasion; in the runup to the war, he says, he'd told colleagues at LetterOne, his private equity firm in London, that he couldn't imagine Russians fighting Ukrainians. This thought reflects his personal story: Fridman, 57, was born and raised in the Soviet Union in the western Ukrainian city of Lviv. He was a first-wave oligarch, making a fortune in banking and energy before Putin's rise to power. His parents are Ukrainian citizens who until recently lived part of the year in an apartment in Lviv, a city known for anti-Russian sentiment and leadership in Ukrainian nationalism. "I know every corner of that city," he tells me. "I always thought Ukraine would resist."
On the day the invasion began, Fridman was in Moscow on a routine business trip. He quickly hightailed it back to London, where he spent the following days fielding frantic calls from Ukraine. He and his partners own one of the country's biggest banks and hold a stake in its largest telecom operator, KyivStar. His message to his executives: Use as much company money as you need to ensure the safety of employees and their families. On Feb. 25, the day after Russian troops crossed into Ukraine, he sent a letter to his staff at LetterOne, later released to the public, decrying the conflict as a "tragedy" and saying "war can never be the answer." For Fridman, it was a rare political statement, and he stopped short of directly criticizing Putin. Even so, he says that statement could make it dangerous for him to return to Russia. The following Monday, his charity organization, the Genesis Philanthropy Group, announced it would donate $10 million to Jewish organizations supporting refugees in Ukraine.
None of this helped him avoid the fate of some fellow Russian tycoons. Nor did his years of networking in the U.S. and Europe. On Feb. 28 his lawyer pulled him out of a meeting with the news that the European Union had sanctioned him and his longtime business partner, Petr Aven, who was heading Alfa-Bank, Russia's largest privately held bank and a key part of Fridman's Alfa Group Consortium. The lawyer started to rattle off what it meant: travel bans, frozen accounts. Fridman could barely register the words. "I was in shock," he tells me. "I almost didn't understand what he was saying."
What's clear to him now, he says, is that the EU doesn't get how power actually works in Russia. If the point of sanctions is to motivate people like him to apply pressure on Vladimir Putin, he says, that's worse than unrealistic.
"I've never been in any state company or state position," Fridman says. "If the people who are in charge in the EU believe that because of sanctions, I could approach Mr. Putin and tell him to stop the war, and it will work, then I'm afraid we're all in big trouble. That means those who are making this decision understand nothing about how Russia works. And that's dangerous for the future."
Fridman was worth about $14 billion before the war, according to Bloomberg. He's now worth about $10 billion on paper and is in the strange position of being an oligarch with essentially no cash. When the U.K. followed the EU and sanctioned Fridman on March 15, his last working bank card in the U.K. was frozen. He tells me he now must apply for a license to spend money, and the British government will determine if any request is "reasonable." It appears that this will mean an allowance of roughly 2,500 pounds a month. He's exasperated, but careful not to compare his woes with those of Ukrainians suffering from the war. "My problems are really nothing compared with their problems," he says.
The penalties against Fridman are merely one salvo in an unprecedented round of measures that make Russia the world's most-sanctioned country. Its economy has been devastated by measures such as freezing much of the Russian central bank's $640 billion in reserves, kicking some of the country's biggest banks out of the financial messaging system known as SWIFT, and banning or limiting imports of Russian oil. The country's economy is expected to shrink 35% in the second quarter.
The moves that have grabbed the most attention, however, have been the freezing of the assets of Russia's oligarchs, a seeming endless list of billionaires with yachts, jets, and mansions in some of the most exclusive enclaves of the Western world, including London, the south of France, and Italy's Lake Como. (Fridman says that he doesn't own real estate apart from his London home, a house in Moscow, and a flat for his parents in Latvia, and that he has neither a yacht nor a plane to seize.) Juxtaposed with the scenes of Russian troops destroying towns and killing innocent civilians in Ukraine, pictures of confiscated yachts make the public feel good.
Fridman's "Why me?" might be beside the point. "Personal sanctions against the oligarchs are not a precise instrument," says Sergey Parkhomenko, an adviser to the Kennan Institute at the Woodrow Wilson Center in Washington. "I know a lot of much worse oligarchs in Russia than Fridman and Aven. The sanctions are not a fair instrument. It's a weapon of mass destruction."
"It's an indirect approach, with one of the strategies being that if the oligarchs close to Putin are being pressured, they will pressure Putin," says Adam Smith, a partner at the law firm Gibson, Dunn & Crutcher and a former senior U.S. Department of the Treasury official who advised on sanctions from 2010 to 2015. "The U.S. sanctioned oligarchs before - starting in 2014 and then several in 2018 - and the success of that strategy is spotty, both in terms of whether the oligarchs stopped supporting Putin and whether they were harmed."
Even so, the sanctions imposed so far look scattershot - some hits, some misses, and some mere scrapes. The U.S. hasn't sanctioned Fridman, Aven, or their partner German Khan. The EU sanctioned Fridman and Aven as individuals, but the U.S. and EU have imposed only light restrictions on Alfa-Bank, which generated much of their wealth. Other inconsistencies jump out. The U.S., the U.K., and the EU sanctioned Alisher Usmanov; he's blocked from accessing his yacht and private jet, but the U.S. immediately turned around and gave licenses to allow some of his companies to continue doing business. A number of high-profile targets have dodged restrictions. State-controlled Gazprombank has largely remained untouched because of its central role in Europe's gas trade.
Fridman's argument that he's not positioned to exercise influence over the Kremlin reflects how the role of Russia's billionaires has been turned on its head since the 1990s. Back then, Fridman was one of the original seven oligarchs, the semibankirschina. As a group they backed President Boris Yeltsin's reelection campaign and had sway over the Kremlin. When Putin came to power in 2000, he imposed his own model: The new deal was that if they stayed out of politics, they could continue running their businesses. Putin destroyed oligarchs who violated that arrangement, most notably Mikhail Khodorkovsky, who spent 10 years in jail after he tried to get into politics. In his 22 years in power, Putin has helped create a new crop of oligarchs, who have grown rich from state contracts and running state-controlled companies.
For Fridman, the sanctions represent an end to a decades-long campaign for acceptance outside Russia. For 20 years he and Aven have made annual trips to Washington to meet with members of Congress and think tanks in an attempt to cultivate what Fridman calls a "constructive relationship" between Americans and Russians around business. He and Aven were often sought after for their insight into the country's ever-changing political landscape. In 2004 they set up an Alfa fellowship program that funded more than 200 American, British, and German citizens to work and travel in Russia in an effort to "advance knowledge of Russia in the West." Fridman tells me that when talk of sanctions arose, he expected that those relationships would protect him. "We sincerely believed we are such good friends of the Western world that we couldn't be punished," he says. "The Alfa fellowship program has probably hundreds of alumni, a lot of them pretty successful people."
Fridman and Aven have been among the most prominent billionaires to take money off the table in Russia. In 2013, Alfa Group pocketed $14 billion from the sale of oil company TNK-BP to state-controlled Rosneft. That deal came less than a year before Putin annexed Ukraine's Crimean Peninsula, triggering an initial wave of sanctions against Russia. It looked as if Fridman and Aven had gotten out just in time, though they retained such Russian assets as Alfa-Bank and a stake in X5, the country's biggest supermarket chain. They plowed the proceeds into stakes in a string of European assets, including Spanish supermarket Dia, health-food retailer Holland & Barrett, and energy company Wintershall DEA AG. Fridman and his partners consolidated their mobile phone investments in a series of deals to create Veon Ltd., chaired by Gennady Gazin, a Ukrainian American who joined Ukrainian President Volodymyr Zelenskiy's national investment council last year. Because neither Fridman nor his other partners individually have majority control over those businesses, they are expected to escape sanctions.
I ask Fridman why he didn't just get out of Russia and offload Alfa Group. After all, he'd already made a fortune. "It's not easy to sell such a big company," he says. "Besides, it's the company I built from the first brick, so emotionally it's not so easy. These businesses are like my kids."
The EU flagged Fridman and Aven's meetings in the U.S. as one justification for sanctions, citing their 2018 trip to Washington, which it called an "unofficial mission to convey the Russian government's message on U.S. sanctions and counter-sanctions by the Russian Federation." Fridman disputes this characterization, saying a think tank called the Atlantic Council invited them, as it had done several times previously, to discuss what was happening in Russia. "We've never ever been sent by the Russian government in any capacity," he says.
Brussels also alleged that Fridman and Aven were connected to Putin's eldest daughter, Maria, who the EU said ran a charity project set up by Alfa-Bank called Alfa-Endo, a health-care program for Russian children. The allegation came from a Reuters report in 2015 that said she worked on the project as a doctoral candidate. "She never ever used to work with us in any capacity," Fridman says. "I haven't ever seen her in my life. I don't know who she is."
Fridman says he's tried to stay out of politics, a difficult thing for a billionaire overseeing one of Russia's biggest taxpayers. In practice he's had to strike a balancing act. He was friends with Boris Nemtsov, the opposition leader who was assassinated outside the Kremlin in 2015. The following year he took part in a Russian documentary about Nemtsov alongside other opposition leaders - an unusual move for a Russian oligarch - and expressed regret that he'd spent less time with Nemtsov in the years before his death because of concerns it would be toxic to his business. Other moves were consistent with a desire to not anger the Kremlin. In 2012 he asked Vladimir Ashurkov, then a top executive at Alfa Group, to step down because he was working with opposition leader Alexei Navalny.
"Fridman said that they had to deal with authorities on a daily basis and they didn't want to be involved in politics," says Ashurkov, now executive director of Navalny's Anti-Corruption Foundation. "I can see his point. If you run a big business in Russia, even if you don't agree with what the government does, you still need to be on good terms with them to avoid raiding or some other kind of punishment." Fridman and Aven were not on Navalny's much publicized list in 2021 of 35 oligarchs he said should be sanctioned because of human-rights abuses and corruption.
Others still see Fridman as a massive beneficiary of Putin's system and deserving of sanctions. Ilya Zaslavskiy, who worked at TNK-BP until 2010 and is now at the Center for International Private Enterprise in Washington, called for sanctioning Fridman and Aven as part of a list of eight billionaires he drew up in 2021 called "Kremligarchs," calling out their "proximity to Putin." His report points to Alfa Group working with figures closely associated with the Kremlin, including Alexander Vinokurov, the son-in-law of Foreign Minister Sergey Lavrov, who ran A1, Alfa's investment arm, from 2014 to 2017. Both the EU and the U.K. have sanctioned Vinokurov. Fridman and his partners have engaged in multiple lawsuits against journalists in efforts to quash allegations that they were close to the Kremlin.
The EU, in its sanctions listing, had less to say about Fridman than Aven. It called Aven one of about 50 wealthy Russian businessmen who regularly meet with Putin in the Kremlin, quoting from the Mueller Report into Russian meddling in the 2016 U.S. elections. Aven told Mueller's investigators that "any suggestions or critiques that Putin made during these meetings were implicit directives." The EU said Aven doesn't "operate independently of the President's demands."
Fridman says he's never met Putin one on one but has met him in groups of business leaders. He dismisses the significance of Aven's meetings with Putin. "The power distance between Mr. Putin and anybody else is like the distance between the Earth and the cosmos," he says. "Mr. Aven was just approaching this like, 'Thank you very much for taking the time.' To say anything to Putin against the war, for anybody, would be kind of suicide."
Even though the U.S. has not sanctioned Fridman, the EU and U.K. measures led his accounts to be frozen; the day after Brussels announced sanctions, he found his bank card didn't work. Now he's trying to figure out how to pay for small things such as a house cleaner. "Maybe I should clean the house myself," he says with a nervous chuckle. "That's fine. I used to live in a small dormitory room with four men when I was a student, but after 35 years it's unexpected."
Fridman and Aven have stepped down from all their company boards and management positions, including Alfa-Bank and LetterOne, which told them not to come into the office anymore. Their partners, Khan, Alexey Kuzmichev, and Andrei Kosogov, also resigned from LetterOne at the same time that its board announced it would donate $150 million to support the relief effort ongoing in Ukraine.
Fridman says he has two months to challenge the EU's sanctions. He's working with Roger Gherson, a lawyer in London known for working with Russian clients on visas, though not on sanctions. Fridman holds an Israeli passport, but when I ask whether he might move to Israel, he waves off the idea. He doesn't own a home there and doesn't have access to money to buy one. "I'm a prisoner here," he says.
As we talk, Fridman returns more than once to what he sees as the illogic of the sanctions. While the EU hit him personally with blanket sanctions, the U.S. and the EU restricted only Alfa-Bank's ability to raise debt or equity financing of longer than 14 days. Is he actually suggesting that these allies should impose harsher sanctions on Alfa-Bank? "I don't think it would be effective, and I would not be happy, but at least I would understand why they did it," he says. "I don't understand the logic behind punishing me. The general perception of ordinary Westerners is that, 'Oh those greedy oligarchs could approach Putin and tell him to stop.' Why do they think this?"
Just before we met, he says, he got a call from a Ukrainian friend who was helping relatives flee Kharkiv, Ukraine's second-biggest city, which Russian forces have indiscriminately bombed. Fridman says he offered his parents' two-bedroom apartment in Lviv, which has so far avoided direct Russian hits. He says the flat is now a temporary home for 15 refugees. Meanwhile, Jewish organizations in Ukraine keep asking where his $10 million donation is.
A few days after our meeting, the U.K. sanctioned Fridman, and this time he calls me, with no obvious reason except to say that things are getting worse. He sounds at a loss. "I don't know how to live," he tells me. "I don't know. I really don't know."