Mikhail Prokhorov

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Mikhail Prokhorov, 2010.

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Mikhail Prokhorovis a Russian businessman and famed “oligarch" who made his fortune in the wake of the Soviet Union’s collapse by buying shares in formerly state-run corporations. He ran for the Russian presidency in 2012.

Prokhorov’s father worked for the Soviet sports committee, and his mother was a chemical engineer. An apt student, Prokhorov gained entrance to the Moscow Finance Institute (now the Russian Financial University) in 1982. A year later, however, he embarked upon a voluntary two-year stint in the Soviet army. He had previously been involved in Komsomol, the Soviet youth league, and eventually joined the Communist Party.

Following the completion of his army service in 1985, Prokhorov did manual labour for a year before returning to the finance institute. While still a student, he started a business treating blue jeans to appear fashionably distressed and then reselling them. The venture was a success and ultimately employed several hundred workers. Prokhorov graduated in 1989 and accepted a position as a clerk at the International Bank for Economic Cooperation (IBEC). There he met Vladimir Potanin, who had worked for the foreign trade ministry and was eager to capitalize on the rapid privatization occurring as the Soviet Union collapsed in 1991.

Prokhorov was briefly chairman of an early commercial bank that he and Potanin established using deposits moved by their owners from the increasingly insolvent IBEC. In 1993 the partners formed United Export Import Bank (UNEXIM), with Prokhorov as chairman and Potanin as president. In 1995 Potanin used his ministerial connections to create an arrangement whereby Russian banks would make loans to the struggling Russian government, which would put up its mining, oil, and telecommunications holdings as collateral. UNEXIM was situated as one of the auctioneers of the loans. Prokhorov and Potanin then marshalled UNEXIM’s resources and bid (through a subsidiary and at only slightly above the reserve price) on a loan attached to a controlling stake in Norilsk Nickel, the largest nickel and palladium producer in the world, among other companies. UNEXIM was also the auctioneer of the Norilsk loan and rejected another, higher bid in favour of its own. The “loans for shares” program enabled Prokhorov, Potanin, and a select few others to seize control of the Russian economy; that cohort came to be known as the “oligarchs.”

UNEXIM obtained full control of Norilsk in 1997 when the government defaulted on the loan. However, the bank failed in 1998 when the Russian government defaulted on its sovereign debt entirely. UNEXIM’s assets were moved to another bank formed for the purpose of holding them; that bank eventually merged with UNEXIM in 2000. In 2001 Prokhorov assumed the directorship of Norilsk, where he slashed the workforce and brought in incentive programs to improve conditions at the Soviet-era Siberian refinery. Under his leadership the company began to show a profit, some of which Prokhorov diverted into a gold-mining venture, Polyus, in 2006.

He stepped down from Norilsk in 2007, following his decision to acquire a Russian power company. Many observers believed that a growing rift between Prokhorov and Potanin had been exacerbated by an embarrassing scandal at a French ski resort in which Prokhorov had been accused of providing prostitutes to his guests. (He denied the allegations and was never charged.) The partners began dividing their shared assets, largely held under the holding company Interros, in April 2007. Prokhorov formed ONEXIM Group, an investment fund with interests in nanotechnology and hydrogen fuel cells, in May. He completed the sale of his shares in Norilsk in 2008. His timing proved fortuitous; the liquidation occurred just prior to the global financial meltdown that began in the latter part of that year.

In 2010 Prokhorov purchased a majority stake in the American professional basketball team the New Jersey Nets (which relocated to Brooklyn, New York, in 2012). He turned to politics in 2011, assuming the leadership of the liberal Right Cause party in Russia and announcing his intention to run for parliament. He was thwarted, however, by internecine conflict that resulted in his ouster from the party. In 2012 he ran for president against prime minister and former president Vladimir Putin. Though he placed behind a victorious Putin (who, according to Russian election officials, garnered more than 60 percent of the vote) and Communist Party leader Gennady Zyuganov (about 17 percent), he edged out far-right Liberal Democratic Party leader Vladimir Zhirinovsky and social democratic A Just Russia leader Sergey Mironov for a third-place finish (nearly 8 percent). Prokhorov attempted to link himself to groups that questioned the legitimacy of Putin’s win, but an appearance at a protest rally in Moscow’s Pushkin Square the day after the election was met with little enthusiasm. In 2018 he sold 49 percent of his stake in the Brooklyn Nets to Taiwanese Canadian businessman Joseph Tsai, who acquired Prokhorov’s remaining shares the following year.