Lord Peter ‘Mandy’ Mandelson, George Osborne, Nat Rothschild, Russian Oligarch, Owner of – bankrupt – LDV Vans Oleg Deripaska, ‘holidays’ in Corfu

Lord Mandelson: A little older, a lot richer. But as MPs demand an inquiry, questions about his fascination for the mega rich are as pertinent as ever. MPs have called for a Commons debate over links between Lord Mandelson and a Russian billionaire who benefited from massive EU tax cuts. The Labour peer is understood to have had at least two dinners with Oleg Deripaska. One of the meals is alleged to have taken place around the time – or even before – the EU made trade concessions that reportedly netted the aluminium tycoon up to £50million a year. Late winter in Moscow, and while the temperature outside had fallen to minus 20 degrees, the interior of one of the city’s most expensive restaurants was heating up. Two men – two powerful men – were locked in a passionate argument over dinner. One was Peter Mandelson, the EU Trade Commissioner who had twice resigned from the UK Cabinet over sleaze allegations. The other was Oleg Deripaska, owner of the world’s largest aluminium producer, Rusal, and Russia’s richest man, with a fortune estimated at £14 billion. Lord Mandelson is under scrutiny over his links to Russian billionaire Oleg Deripaska. But there is another side to him, with the FBI having asked the U.S. State Department to cancel his American visa. Currently, he is denied entry to the United States. Yet now, over caviar and blini, the tycoon was debating with the EU’s trade supremo such esoteric matters as Russian timber tariffs and the World Trade Organisation (WTO). We know this because there was a third diner at their table – Mandelson’s old friend and former Westminster aide Benjamin Wegg-Prosser, now a Moscow-based internet tycoon. Despite the raised voices, there was no reason to suppose a rift between commissioner and oligarch that February night this year, Wegg-Prosser wrote on his internet blog yesterday. After all, he revealed: ‘Their friendship was founded on these sort of jousts and arguments.’ Friendship? Before Wegg-Prosser’s intervention, his newly enobled former boss – who left Brussels this month to return once again to the British Cabinet – was already facing questions about conflicts of interest from MEPs and the EU business community regarding Deripaska. These were sparked by the leaking of Mandelson’s August holiday appearance on the Russian’s £80million super-yacht, Queen K, off Corfu. The concerns are understandable. During Mandelson’s commissionership, there have been two cuts in EU aluminium import tariffs which have benefited Rusal by tens of millions of pounds a year.   More… MPs call for debate on Mandelson’s links with Russian billionaire after former aide claims ‘they met twice for dinner’ According to Wegg-Prosser, one of Mandelson and Deripaska’s matey suppers might have taken place before the second of these cuts. There is also a serious allegation by a Czech-Italian investment group that Deripaska acted to freeze them out of a Russian insurance firm in which they were partners. In early summer, the EU investors sent a letter to Mandelson pleading with him to intervene. The next thing they knew, their potential white knight was on the sundeck of the Queen K  –  not to upbraid the oligarch, but in his ‘private’ capacity as the freeloading, tycoon-friendly, sleazetainted, Mandelson of old. The Czechs and Italians are understandably furious. A series of typically evasive statements by Mandelson and his spokesmen in London and Brussels followed the yacht story. First, it was said that he was only aboard briefly for drinks, because he was holidaying in the area. Next, it emerged that he had, in fact, been staying on the yacht – as had his Brazilian boyfriend, Reinaldo Avila da Silva. Business or pleasure? Or a very sleazy combination of both? ‘He (Mandelson) has never, ever had any discussion with Mr Deripaska about aluminium or anything else in relation to any of his company interest,’ one spokesman claimed, to widespread incredulity. Another statement argued: ‘He (Mandelson) sees no legitimate interest in how he chooses to spend his private time. He is not going to respond to inquiries about what he does in his private life.’ Alas, Mandelson has apparently long held the belief that he can live parallel lives in which his public office is untainted by his pursuit of rich friends and mutual favours. And, if it is, it is no business of ours. No doubt Wegg-Prosser’s intervention yesterday was meant to help Mandelson recover from his embarrassment about the yacht allegations. Last night, the former aide even claimed to have consulted his old boss before posting his recollections on the web. But by setting out in detail the depth and timescale of Mandelson’s friendship with the oligarch, the blog appears more of an iceberg than a rescue launch. Will Lord Sleaze be sunk again? Lord Mandelson has twice had to resign from the Cabinet after being involved in controversy Peter Mandelson first resigned as Trade Secretary in December 1998, when it was revealed he had received a secret loan from millionaire and fellow minister Geoffrey Robinson. He resigned again, as Northern Ireland Secretary, in January 2001, when it was disclosed he had assisted one of the billionaire Indian Hinduja brothers in gaining a UK passport. At the time, the Hindujas were mired in a criminal investigation back home. Indian money seems so passe now. The new kids on the block are the Russians – and the richest of them all is Oleg Deripaska. Born 40 years ago, he grew up impoverished in the wild Cossack areas of southern Russia. But Oleg was a bright kid. He studied quantum physics at university, and, after communism collapsed, threw himself into the country’s nascent world of capitalism as a metals trader. At the age of 25, he was a manager and shareholder in a Siberian aluminium smelter. It was a time of great opportunity but also extraordinary danger, as a number of ruthless business groups strove for control. The so-called ‘aluminium wars’ lasted several years, with disputes over smelter ownership often ending in bloodshed. ‘The number of deaths was probably as many as 40 or so when you take into account all the lower-profile guys,’ said James Fenkner, a former money manager at Red Star Asset Management. ‘Certainly, it was not a clean business.’ But once the dust of battle settled, the two men left standing and in charge were Deripaska and the future Chelsea FC owner, Roman Abramovich. In 2000, they combined their aluminium interest to form Rusal, with Abramovich selling out to his friend four years later. ‘I’m always asked the question, how did I do it?’ Deripaska mused earlier this year. His answer is always ‘hard work’. However, rivals and former associates have a more cynical view of his success. Certainly he knew the right people when the old Soviet Union’s natural resources were carved up by the Yeltsin regime. Indeed, Deripaska is married to the Millfield educated daughter of Yeltsin’s old chief of staff, whom he met through Abramovich. She is now the publisher of the Russian Hello! magazine. One of their many houses is a £25 million Belgravia mansion. However, question marks are being raised over his integrity. A £30 million wire transfer is being investigated by money laundering experts at the Justice Department in the United States. His U.S. entry visa was cancelled last year, but the American authorities refuse to explain the decision. The banker: Nat Rothschild One source also alleged that he is on an Interpol watch list, which means he is stopped and questioned about his trip every time he crosses a foreign border. A strange bedfellow, you might think, for the Rothschilds – that most distinguished of British banking families. But the Rothschilds have huge financial interests in the emerging Russian markets, and it is through Lord (Jacob) Rothschild and his playboy-turned-hedge-funder son Nat that Mandelson is believed to have met Deripaska. The Rothschilds have been advisers to the oligarch, who, until last year, planned to float Rusal on the London Stock Exchange for some £30 billion. One City source said: ‘The Rothschilds have given Deripaska a vanilla coating in this country. Without them, bankers would normally hold their noses, but they have vouchsafed for Oleg around town.’ But the relationship is closer than that. As long ago as 2003, Lord Rothschild and Deripaska co-sponsored an exhibition of chess pieces at Somerset House in London. The Rothschilds and Deripaska are also coinvestors in a ‘millionaire’s playground’ yachting complex being built on the coast of Montenegro. Mandelson, too, has been a good friend of the Rothschilds for some years. Indeed, he has said glowingly of Nat: ‘Nothing fazes him. If his plan receives knocks and setbacks, he revises, adapts and moves forward. He’s unflappable.’ It was perhaps inevitable that Mandelson and Deripaska should meet in the Rothschilds’ orbit. What happened after that was a matter for Mandelson’s integrity and political judgment. According to Wegg-Prosser, who arrived back in London from Moscow last night, Mandelson has known Deripaska for ‘a couple of years’. He added: ‘I have said that they have met each other a few times, and are friends and acquaintances.’ In his blog, which he posted earlier in the day, he is more detailed. He wrote: ‘I have seen these two men together at first hand on a couple of occasions. Upon taking up his role in Brussels, trips to Moscow became a regular feature in Peter’s schedule. ‘The first time I met them ( Mandelson and Deripaska together) was a while back when he dined with Deripaska, German Gref (then the Russian trade minister) and Nat Rothschild, at a neighbouring table to our own, in Moscow’s Pushkin Cafe. I recall my wife shared a long conversation with Gref about their time at Omsk University.’ Wegg Prosser said last night that he thought that this meeting was ‘six to 12 months’ before this February. If it was a year before, then it would have predated the EU’s aluminium tariff cut in May 2007, which was massively lucrative to Rusal. In his blog, Wegg-Prosser recalls the February 2008 dinner. ‘On one of his more recent trade trips to Moscow, Peter spent a day at our dacha. We tried to go for a walk but it was minus 20c and we only got as far as the end of the path before turning back. ‘We then went into Moscow and ended up having dinner with Deripaska. My main memory from the evening was the fierce disagreement, to the point of raised voices, that both men had on two issues. ‘First, on Russia’s entry to the WTO. Peter wanted them to join, Deripaska didn’t. Second, the tariffs which the Russians were imposing on Finnish timber imports. Peter said they were illegal, protectionist and wrong; Deripaska argued that they were a necessary defence mechanism to protect a key national industry in an emerging economy.’ Then that doubled-edged pay-off: ‘Their friendship was founded on these sort of jousts and arguments.’ There are other unsavoury matters concerning Deripaska. For example, one of his old associates from the aluminium wars, Mikael Cherney, is suing him in the British courts for an alleged £2 billion share in Rusal. In May, a British High Court judge, Christopher Clarke, reportedly accepted that Cherney’s life would be in danger if the case were heard in Moscow. He said: ‘I am persuaded that the risks inherent in a trial in Russia – assassination, arrest on trumpedup charges and lack of a fair trial – are sufficient to make England the forum in which the case can most suitably be tried in the interests of both parties and the ends of justice.’ The oilgarch: Oleg Deripaska But there was another business dispute which directly involved Deripaska and his new friend Mandelson. It concerned the Russian insurance giant Ingosstrakh, in which the Italian-Czech investors purchased a minority shareholding in December 2006. They claim that Deripaska, who had the controlling interest, subsequently used the Russian court system to dilute their shareholding and their ability to have any say in how the company was run. They approached the Italian MEP Mario Mauro, who, on July 8, wrote a letter to the trade commissioner. In it, he told Mandelson: ‘The decision handed down by Moscow Arbitration Court means that Russian companies can impose specific requirements relating to the composition of boards of directors, for example making citizenship an absolute requirement. ‘There is no precedent for this practice in the developed countries.’ He finished by asking Mandelson a series of questions: ‘Is the Commission aware of this case? What instruments will it use to secure just and non-discriminatory treatment of European Union companies in Russia? Would it not be desirable to make official representations to the Russian authorities urging them to put an end to the discrimination against European investors in the Russian Federation?’ A source close to the Italian-Czech investors said last night: ‘Mandelson was approached by an MEP and two major EU companies with serious allegations and a request for assistance. ‘He gave every indication that he would act, and then a month later he was being entertained by the subject of these allegations on the subject’s yacht.’ The source added: ‘He had either to say: “The person you are making allegations about is a personal friend of mine and you should have another commissioner investigate it.” Or he could have said to Deripaska: “While the commission investigation is under way, I cannot have anything to do with you.” He did neither. ‘He does not seem to understand that he cannot divorce his private life from his public life,’ continued the source. ‘It is a matter of procedure and judgment.’ By late August, Mandelson was on the Queen K superyacht. It has been reported that, far from being a drinks guest, he had stayed aboard for a week, telling people that he was only ‘billette’ there because Nat Rothschild’s mansion on Corfu was full. It was also reported that this was not the first time that Mandelson had stayed on the Queen K. His Brazilian boyfriend had been a guest too. On October 3, Mandelson resigned from the EU Commission. Days later he was ennobled and back at the heart of power in Britain. Did he really want Wegg-Prosser, the man who typed his first resignation letter back in 1998, to ride to the rescue again? In his blog, Wegg-Prosser argues that Mandelson was merely being the ace-networker that he has always been, and that is how the world works. He writes: ‘When Gordon Brown appointed Peter to his new job, he made a point of highlighting the experience which he’d acquired in Europe and beyond. Peter was a success in Brussels, in part down to the network of contacts which he built up … And surprise, surprise, that meant socialising with them. ‘But these people are experienced enough to know that large cumbersome bureaucracies such as the European Commission make decisions on things like tariffs after considerable thought and process, not over deals done on gin palaces drinking cocktails overlooking Corfu.’ So that’s all right then. Heaven forbid that the Russian oligarch – who is barred from the U.S. and is being sued in London and pursued by various EU companies – and his mate Peter should talk about anything so sordid as tariff deals that were worth millions to him. But then, one is reminded of another piece that Wegg-Prosser wrote about Mandelson on his 2001 resignation: ‘I do not believe he deliberately lied . . .he provided an answer that was at best economical and at worst evasive.’ Seven years have passed since. But while Peter Mandelson has grown a little older and a lot richer, questions about his judgment, integrity and fascination for rich but controversial businessmen remain as pertinent as ever. Plotting and poison in a billionaire’s playground By Richard Pendlebury Last updated at 12:42 PM on 22nd October 2008 Source: Daily Mail Along a remote stretch of Corfu’s north-eastern coast, high summer traditionally attracts the immensely rich and powerful. Smart motor launches and taxi boats ply to-and-fro between the pebble beaches and tavernas of Kerasia and Agni, and any number of gargantuan yachts anchored offshore. In private estates on the wooded hillsides above, captains of industry and finance loll by their infinity pools, waited upon by armies of staff. Agni is best reached by boat. Once there, the tavernas will valet park your craft (unless, of course, it’s the size of the Queen K) while guests lounge on outdoor sofas. Lord Rothschild’s summer pavilion and swimming pool in Corfu, Greece The Rothschild family estate long ago earned the nickname ‘Kensington-on-Sea’ as the hub of holidaying high society. The Agnelli family, which controls Fiat, are regulars and have their own place near the Rothschilds. As far as eminent Brits are concerned, it is a holiday favourite for Harold Pinter with his wife, Antonia Fraser, and Lord Weinberg. David Cameron also stayed on the Rothschild estate during a summer holiday, two years ago.   More… Osborne is forced to admit he met oligarch FIVE times after crossing Mandelson (and just look who’s smiling now) So why did the black sheep of the Rothschilds stab his friend in the back? BBC’s ‘double standards’ after keeping quiet on Mandelson’s link to oligarch until now Cameron’s fundraiser Andrew Feldman: The other Tory on Deripaska’s yacht George Osborne is an exciting and talented politician. I just hope crashingly poor judgment is ALL he is guilty of The full Tory statement issued on behalf of George Osborne MAIL COMMENT: A modern tale of money and sleaze Mandelson sat cat-like, all eager to help. Suspiciously so The monied have long been drawn to this particularly beautiful corner of Corfu but this August, conspiracies were being hatched around the Greek island. Who is telling the truth about what was said and done is as yet unclear. What we do know is that in the space of a week Peter Mandelson and George Osborne and his family arrived on Corfu at the invitation – or at least with the blessing – of their then mutual friend, the financier Nat Rothschild. It’s perhaps not too cynical to imagine the ambitious trio were there to acquire more than a sun tan. After all, two of the world’s most powerful figures, the controversial Russian billionaire Oleg Deripaska and the media mogul Rupert Murdoch, would also be within the Rothschild orbit that week. Both tycoons had their yachts moored close to the extensive Corfu estate which has been the Rothschild family’s holiday home for three decades. George Osborne was forced to admit yesterday that he discussed a potential £50,000 donation to the Tory Party from Russian millionaire Oleg Deripaska Naturally, both Deripaska and Murdoch also have an interest in cultivating men of influence. This was a networking opportunity of the gilt-edged kind, with political patronage or even financial support potentially at stake. The festivities began on the night of August 15, when Lord Rothschild, Nat’s father, threw a 50th birthday party for his close friend Maya Schoenburg, the former wife of Mercedes-Benz heir Mick Flick. Among the 40 diners at the bash were Tory Shadow Chancellor Osborne and his writer wife, Frances. No surprise there. Osborne and Nat Rothschild have known each other since childhood, and were members of the notorious Bullingdon drinking club while at Oxford together. Although Osborne and his wife would later move to a villa on the Rothschild estate, they were initially staying in a rented house nearby. Tight-lipped: Peter Mandelson Mandelson was also nearby. The then EU trade commissioner, now the UK’s Business Secretary – was telling people that he was supposed to have been staying with the Rothschilds. Alas, he claimed, Nat’s villa was already full when he arrived. And so he had had to be ‘billeted’ on the 80 million, 238ft yacht Queen K, owned by Deripaska. During Mandelson’s time in Brussels the EU aluminium import tariffs had twice been cut and Deripaska, who is barred from the U.S. for reasons undisclosed by the authorities, is the biggest aluminium producer in the world. While Mandelson has refused to comment on the relationship, we now know that the commissioner and the oligarch had dinner on a number of occasions before last summer. Yesterday afternoon, Osborne revealed that he had also met Deripaska – once – before Corfu. That took place at the World Economic Forum at Davos in January, an occasion at which Mandelson was also present. According to the Shadow Chancellor, on Friday, August 22 – a week after the Rothschild party – the Osbornes were invited on to the Queen K by Nat Rothschild. Mr Rothschild, it should be noted, is a financial adviser to the oligarch and has substantial interests in the Russian economy. The Shadow Chancellor recalls that Mandelson was also present during his hour-long drinks with Deripaska on the yacht. He adds: ‘There was no conversation of any kind about political donations.’ That evening, Osborne says, he attended a party at the Rothschild villa and sat on the same table as Nat, Mandelson and Deripaska. Again, Osborne states, donations were not a topic. On the night of August 23, Osborne recalls going to dinner at a local taverna, an event also attended by Mandelson and Rothschild. This is probably the now notorious meal at which Mandelson is alleged to have ‘dripped pure poison’ to Osborne about the Prime Minister, Gordon Brown, who would shortly recall Mandelson to the Cabinet. The Queen K, docked here in Capri in August, is the boat owned by Deripaska on which Mandelson and Osborne are reported to have visited the millionaire Osborne’s subsequent leaking of the conversation was a catalyst for the furious row between Rothschild and the Tory Party. The meal took place at the Taverna Agni in a small bay near the Rothschild estate. According to staff the dinner was hosted and paid for by Ben Silverman, the flamboyant co- chairman of the American TV network NBC. Silverman had been staying on Murdoch’s 183ft yacht the Rosehearty, along with the media tycoon, his wife Wendi and daughter Elisabeth, whose 40th birthday they celebrated while on Corfu. Elisabeth Murdoch and an American actress friend were also thought to have been among the party of 20 at the taverna that night. A member of staff said: ‘They sat down and ordered red wine and a meze dinner. The man who I now know is Ben Silverman sat at one end, and the man who I recognised from a picture as Mandelson sat at the other end.’ Another source at Taverna Agni said: ‘Silverman told the waiters to look after the table and he also said to look after Mandelson, who, he said, was a very important guest.’ A staff member added: ‘They must have spent around two hours here before getting on the tenders to go back to the yacht. ‘At some stage before they left I saw Mandelson talking to a man I now know to be George Osborne, I saw his picture in the newspaper and recognised him. They were talking together for quite a while, although it seemed as if Mandelson was doing most of the talking, the other man was listening and occasionally nodding his head.’ Family holiday: Mr Osborne was on holiday with his wife Frances and children at the Rothschild’s villa in Corfu when he met Mr Deripaska The following evening – August 24 – saw the second Osborne visit to the Queen K. This time he had in tow Andrew Feldman, Conservative Party fundraiser. Osborne recalls that he had mentioned to Rothschild that Feldman was holidaying with his family half-an-hour away from the estate. Mr Rothschild then invited Mr Feldman to join them for an early evening drink at the villa. Osborne says that this was a social occasion, attended by two other, unnamed house guests. ‘There was a discussion about British and U.S. politics in the course of which Mr Rothschild suggested to Mr Feldman that his friend, Mr Deripaska could be interested in making a party donation. Mr Feldman had not met Mr Deripaska previously and was not aware who he was,’ says the Tory statement. ‘Mr Feldman made clear that there are very strict rules on donations to political parties in the UK. ‘At no point did Mr Osborne or Mr Feldman solicit or ask for a donation, suggest ways of channelling a donation or express any wish to meet with Mr Deripaska to discuss donations.’Some time later, Rothschild invited the two Tories and one other house guest to the Queen K for ‘a further drink’. This account of events is starkly contradicted by Rothschild, who in his letter published in The Times yesterday fulminated: ‘Osborne… found the opportunity of meeting with Mr Deripaska so good that he invited the Conservatives’ fundraiser Andrew Feldman… to accompany him on to Mr Deripaska’s boat to solicit a donation… Mr Deripaska declined to make a donation.’ Sun, sea and… sleaze: Inside Nat Rothschild’s pavilion in Corfu Yesterday, the BBC Business editor Robert Peston, who has good contacts with the company handling Nat Rothschild’s PR, suggested that at least one witness to these disputed conversations was willing to stand up in court and support Rothschild’s version against that of Osborne. The following lunchtime, Osborne recalls, he met Deripaska and Mandelson again at the Rothschild villa. No talk of donations, he claims. And that, as far as the Corfu roots of this increasingly bitter and politically dangerous row is concerned, was that. So far Mandelson has chosen to be less candid than Osborne. Typically, his view is that he owes no one an explanation. He has said he was merely in Corfu to attend Ms Murdoch’s birthday party. The detail of his activities from other sources puts a very large question mark over that assertion. He also says that the last time he has seen Mr Deripaska was at a dinner hosted by Mr Murdoch. That might well be true. What we are left with is an ugly war of words between two old friends, suspicions of political revenge and, sadly, the shadow of sleaze once again stalking the Tory Party. As the winter nights bring a chill to Westminster, the sun-kissed world of Corfu’s millionaire’s playground must seem a very long way away.     Source: Daily Mail By: Richard Pendlebury, 7th October 2008