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Business oligarch is a near-synonym of the term "business magnate", with a divergence in that business oligarchs represent informal power over a certain region or country because of their increased wealth. The choice of the word oligarch, which theoretically means "one of the few rulers", denotes the significant influence such wealthy individuals may have on the life of a nation.

At the outbreak of the American Civil War, Captain Doubleday noted the Union officers stationed at Fort Sumter referred to the Confederacy as controlled by an "oligarchy." The term was poorly used during the commercialization of United States of Americamarker in late 19th and early 20th centuries to describe those who applied their own rules to a region where the common law representatives were scarce (such as in some Western cities or in Alaska). Over time, the term went out of use.

Today this term is used most often to describe the fast-increased wealth of some businessmen of the former Soviet republics (mostly Russiamarker and Ukrainemarker). In these countries, it is very common to apply the word oligarch to any business tycoon, regardless of whether or not he or she has real political power. For example, during the 1990s, small groups of individuals who acquired tremendous wealth in Russia called themselves oligarchs soon after they started to express significant political influence or even control mass media and entering politics.

American oligarchs (late 19th/early 20th century)

In the late 19th century and early 20th century, a business oligarchy emerged in the United States.

During this period of economic boom for the US economy, a few businessmen often depicted as magnates or even robber barons built industrial empires and took control of vast portions of the country's economy.

This oligarchic situation built by such businessmen as Andrew Carnegie or John Rockefeller pushed US congressmen to pass anti-trust laws in the early years of the 20th century.

Andrew Carnegie

Andrew Carnegie built an industrial empire of steel centered around the Carnegie Steel Company in Pittsburgh.

Carnegie who was the largest steel producer in the world merged his company with several smallest steel companies to create in 1901 the U.S. steel Corporation.

This integrated structure is often considered as one of the first and most important trusts in US history. It was shaped by Carnegie and the American banker John Pierpont Morgan to reduce costs and improve rentability.

John Rockefeller

John Rockefeller founded the Standard Oil Company, an oil cartel which made him the richest man of his time.

Standard Oil gradually gained almost complete control of oil refining and marketing in the United States through horizontal integration.

At that time, many legislatures had made it difficult to incorporate in one state and operate in another. As a result, Rockefeller and his associates owned separate corporations across dozens of states, making their management of the whole enterprise rather unwieldy.

In 1882, Rockefeller's lawyers created an innovative form of corporation to centralize their holdings, giving birth to the Standard Oil Trust. The "trust" was a corporation of corporations, and the entity's size and wealth drew much attention.

Standard Oil business practices improved the quality and availability of kerosene products while greatly reducing their cost to the public (the price of kerosene dropped by nearly 80% over the life of the company), but it created intense controversy and gave the momentum to US antitrust laws.

Antitrust Laws

As a consequence of Carnegie, Rockefeller and other robber barons's business practices, US congress passed late 19's and early 20's century anti-trust laws to limit oligarchic business practices in the United States.

In 1890, US congress passed the Sherman Antitrust Act. It was the first legislation passed in order to limit business monopolies, cartels and trusts.


American oligarchs of the 19th and early 20th centuries are now mostly remembered for their late "philantropic" activity.Andrew's Carnegie legacy is mostly linked to the creation of "public libraries" across the United States and other English speaking countries.John Rockefeller aimed his philanthropic action to "Education" and "Public Health".

Post Soviet Russian Oligarchs

The Russian oligarchs are business entrepreneurs who started under Gorbachev during his period of market liberalization.

It is generally admitted that two generations of business oligarchs have existed in Russia since the fall of USSR: Yeltsinian oligarchs and Putinian oligarchs.

Yeltsinian oligarchs

By the end of the Soviet era and during Gorbachev's perestroika, a group of Russian businessmen smuggled into the country and sold on the black market for a hefty profit such goods as PCs and jeans.

During the 1990s, once Boris Yeltsin took office, the oligarchs emerged as well-connected entrepreneurs who started from nearly nothing and got rich through participation in the market via connections to the corrupt, but democratically elected, government of Russia during the state's transition to a market-based economy.

The oligarchs became extremely unpopular with the Russian public, and are commonly thought to be the cause of much of the turmoil that plagued the country following the collapse of the Soviet Union. The Guardian described the oligarchs as "about as popular with your average Russian as a man idly burning bundles of £50s outside an orphanage".

Post-Soviet business oligarchs include relatives or close associates of government officials, even government officials themselves, as well as criminal bosses who achieved vast wealth by acquiring state assets very cheaply (or for free) during the privatization process controlled by the Yeltsin government. Specific accusations of corruption are often leveled at Anatoly Chubais and Yegor Gaidar, two of the 'Young Reformers' chiefly responsible for Russian privatization in the early 1990s. According to David Satter, author of Darkness at Dawn, "what drove the process was not the determination to create a system based on universal values but rather the will to introduce a system of private ownership, which, in the absence of law, opened the way for the criminal pursuit of money and power." In some cases, outright criminal groups in order to avoid attention assign front men to serve as executives and/or 'legal' owners of the companies they control.

Although the majority of oligarchs were not formally related with the communist party of the Soviet Unionmarker, there are allegations that they were promoted (at least initially) by the communist apparatchiks, with strong connections to Soviet power structures and access to the monetary funds of the communist party. In official media, oligarchs are usually pictured as the enemies of "communist forces". The latter is a stereotype that describes political power that wants to restore Soviet-style communism in Russiamarker.

During Yeltsin's presidency, oligarchs became increasingly influential in politics and played a significant role in financing the re-election of Yeltsin in 1996. With the insider information about financial decisions of the government, oligarchs could easily increase their wealth even further. The 1998 Russian financial crisis hit some of the oligarchs hard, however, and those whose holdings were based on banking lost much of their fortunes.

The most influential and exposed oligarchs from the Yeltsin era are Boris Berezovsky, Mikhail Khodorkovsky, Mikhail Fridman, Vladimir Gusinsky, Vitaly Malkin or Vladimir Potanin .

Potanin is the only one of the list to have made it to the Putin era. The others "have been purged by the Kremlin", according to The Guardian .

Oligarchs under Putin's presidency


In the Putin era, other oligarchs have come under fire for various alleged illegal activities, particularly tax evasion in the businesses they acquired. However, it is widely believed that the charges are politically motivated, as these tycoons have fallen out of favour with the Kremlin. Vladimir Gusinsky (MediaMost) and Boris Berezovsky both escaped justice by running out of Russia, and the most prominent, Mikhail Khodorkovsky (Yukos oil), was arrested in October 2003, and sentenced to 9 years.

Their defenders (often associated with Chubais's party—the Union of Right Forces) argue the companies they acquired were not highly valued at the time because they were still run on Sovietmarker principles, with non-existent stock controls, huge payrolls, no financial reporting and scant regard for profit. They turned the businesses—often vast—around and made them deliver value for shareholders. They obtain little sympathy from the Russian public, though, due to resentment over the economic disparity they represent.

In 2004, Russian Forbes listed 36 billionaires of Russian citizenship, with an interesting note: "this list includes businessmen of Russian citizenship who acquired the major share of their wealth privately, while not holding a governmental position". In 2005, the number of billionaires dropped to 30, mostly because of the Yukos case, with Khodorkovsky dropping from #1 ($15.2 bln) to #21 ($2.0 bln).

Billionaire, philanthropist, and art patron Alexander Lebedev has criticized the oligarchs, saying "I think material wealth for them is a highly emotional and spiritual thing. They spend a lot of money on their own personal consumption." Lebedev has also described them as a bunch of uncultured ignoramuses, saying "They don't read books. They don't have time. They don't go to exhibitions. They think the only way to impress anyone is to buy a yacht." He also notes that the oligarchs have no interest in social injustice. According to Lebedev, some members of this exclusive list - known as the golden 100 - are now down to their last $100m USD, the über-rich equivalent of skid row, due to the 2008 global economy downturn and credit crisis.

Moscow on Thames

A significant number of Russian oligarchs have bought homes in upscale sections of Londonmarker, England, which has been dubbed "Moscow on the Thames". Some, like Boris Berezovsky and Abram Reznikov, are expatriates, having left Russia permanently. Most own homes in both countries as well as property and have acquired controlling interests in major European companies. They commute on a regular basis between Europe and Russia; in many cases their families reside in London, with their children attending school there. In 2007, Abram Reznikov bought one of Spain's mega recycling companies, Alamak Espana Trade SL, while Roman Abramovich, considered the wealthiest of the oligarchs, bought the English football club, Chelsea F.C., in 2003, and has spent record amounts on players' salaries.

Putin's influence behind Russian oligarchs

Former State Duma Speaker Ivan Rybkin claimed that President Vladimir Putin "is the biggest oligarch in Russia" and that he is a billionaire.

Russian officials denied Rybkin's theory and claimed he had not given any evidence for his accusations. Putin was quoted as saying at a press conference on February 14, 2008: "This is true. I am the richest person not only in Europe, but also in the world. I collect emotions. And I am rich in that respect that the people of Russia have twice entrusted me with leadership of such a great country as Russia. I consider this to be my biggest fortune. As for the rumors concerning my financial wealth, I have seen some pieces of paper regarding this. This is plain chatter, not worthy of discussion, plain bosh. They have picked this in their noses and have smeared this across their pieces of paper. This is how I view this."

Many other observers believe that Putin has built a state-controlled economy in order to dismantle Yeltsin era oligarchs' empires who had become too powerful, according to the geopolitical magazine Stratfor.

To replace them, Putin placed those he considered the most trusted and useful members directly under him in the Kremlin .

The most famous oligarchs from the Putin era include Roman Abramovich, Oleg Deripaska, Mikhail Prokhorov, and still Vladimir Potanin and Vitaly Malkin.

2008 global recession and credit crisis

Since July 2008, according to the financial news agency Bloomberg L.P., Russia's wealthiest 25 individuals have collectively lost $230bn (£146bn). The fall in the oligarchs' wealth is closely linked to the meltdown in Russia's stock market, as the RTS index has lost 71% of its value, due to the capital flight after the Russia/Georgia conflict.

Billionaires in Russia and Ukraine have been particularly hard hit by lenders seeking repayment on balloon loans in order to shore up their own balance sheets. Many oligarchs took out generous loans from Russian banks, bought shares, and then took out more loans from western banks against the value of these shares.

One of the first to get hit by the global downturn was Oleg Deripaska, Russia's richest man at the time whose net worth was $28 billion in March 2008. As Deripaska borrowed money from western banks using shares in his companies as collateral, the collapse in share price forced him to sell holdings to satisfy the margin calls.


  1. David E. Hoffman, The Oligarchs: Wealth and Power in the New Russia, PublicAffairs (2003) ISBN 1-58648-202-5
  2. Profile: Boris Berezovsky BBC Retrieved on April 28, 2008
  3. What a carve-up! The Guardian Retrieved on April 28, 2008
  4. [1]
  5. Billionaires boom as Putin puts oligarchs at N2 in global rich list The Guardian, 19 Feb 2008
  7. According to British journalist Nick Watt, reporting for ABC's Nightline. (broadcast of June 1, 2007)
  8. "Over there: American and other foreign owners are revolutionizing British football", Boston Globe, May 25, 2007
  9. "Что касается различных слухов по поводу денежного состояния, я смотрел некоторые бумажки на этот счёт: просто болтовня, которую нечего обсуждать, просто чушь. Все выковыряли из носа и размазали по своим бумажкам. Вот так я к этому и отношусь." The President's annual press conference for the Russian and foreign media, February 14, 2008,
  10. The rise and fall of the Russian oligarchs Stratfor, 22 may 2009

External references

David E. Hoffman, The Oligarhs: Wealth and Power in the new Russia, Perseus Book Group, New York, 2002

Mark Hollingsworth and Stewart Lansley, Londongrad; From London with cash: The inside story of the oligarchs, London, 2009

See also

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