Prominent Russians: Mikhail Prokhorov

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“I have three joys in my life: work, sport and food. All these come in one and do not make a hobby.” (Prokhorov in an interview with Russian GQ magazine 02/10/2009)

Russia’s most eligible bachelor made his name in the financial sector and went on to become one of Russia’s leading industrialists in the precious metals sector. With his more than two-meter height and impressive business achievements Mikhail Prokhorov is the most noticeable figure in Russian business in all senses. In 2009 Forbes magazine named him Russia’s richest man. In 2010, according to the Russian business magazine Finans, with his fortune of US$17.85 billion Prokhorov moved to second place. He made headlines across the globe when French police detained him in January 2007 in the ski resort of Courchevel – to question him on allegedly bringing in prostitutes for a party.

Mikhail Prokhorov was born in Moscow on 3 May 1965. His story is that of a man who hasn’t made a single career mistake. He’s often referred to as a “self-made man.” Moreover some say he even managed to be born at the right time into the right family – something that allowed him to use all the advantages of the time of economic reforms in Russia. His parents were placed well enough to give him everything he needed for a successful career.

Young years and jeans laundering

According to Prokhorov’s website, “Mikhail’s family instilled in him a strong work ethic and a great love of learning and sports training, which would serve him well in his professional endeavors.” His father worked as Head of the International Relations Department of the Soviet State Sports Committee; his mother did scientific research work at the Moscow Chemical Materials Institute. He also has an older sister, Irina, who works in publishing.

It was a classical Soviet “intelligentsia” family with all the traditional habits of Soviet intellectuals: they subscribed to a number of thick literature and science magazines, books were read out loud in the evenings and in winter everyone would go skiing with friends (cross country). In the absence of material goods the Soviet intelligentsia believed education was their main asset. So Misha was sent to study at a special school with emphasis on learning English.

It turned out the boy had a taste for knowledge and sports. He tended to do the things that he liked with passion – forgetting about everything else. Misha took life for an exciting and entertaining game. While his friends ran around after girls, Misha read books and played with his Rubick’s cube.

In the 10th grade he was as careless as in the first and hardly behaved like a grown up. He left school with top marks, which allowed him to take the entrance exams for the Moscow Finance Institute (currently known as the Finance Academy under the government of Russian Federation). He only needed to cross the park next to his house – and there he was – at the doors of the Institute – ready for his geography exam.

Image from www.mdprokhorov.ru

It was then that he met Aleksandr Khloponin (Vice-Premier of the Russian Federation and Plenipotentiary Envoy of the President to the North Caucasus Federal District and ex-governor of Krasnoyarsk Region). The story has it that Khloponin asked Prokhorov for a hint during the exam and both were nearly kicked out. In the end the professor allowed them to stay and pass their exam. Ever since they’ve been close friends.

Once they took part in a New Year’s production in English: Khloponin played Father Frost (Russian Santa Claus) and Prokhorov was Snowmaid (Father Frost’s granddaughter). That performance is still remembered in their alma mater: tiny Father Frost and gigantic Snowmaid! At school Prokhorov earned the nickname of “Giraffe” for his height. While still a student he reached his full height of 204cm (or six foot seven) – and “Giraffe” turned into the tenderly mocking “Little Misha.”

Soon after becoming a student Mikhail proved to be an eager Komsomol (the Soviet youth organization) activist. “Little Misha” took up almost all the voluntary workload in his group. His enthusiasm as a young Komsomol member was encouraged with a promotion within the organization. However neither that nor his excellent studies helped him to avoid the army. In 1983, at the age of 18, in the Soviet Union even full time students were drafted. For two years he served in elite missile troops – during that time he also joined the Communist Party.

Image from www.mdprokhorov.ru

Mikhail continued his education only in 1985. He was an A-student and went on playing an active part in the life of his alma mater – participating in sports competitions and Subbotniks (voluntary Saturday clean-ups), performing at concerts and celebrations, etc. Four years later he graduated with an honors degree in International Financial Relations. His thesis was devoted to the problems of forecasting the exchange rate in the market economy. Thanks to the subject of his expertise and his general brightness the young financier was given a managerial job at the International Bank for Economic Cooperation – as head of a department. Despite the impressive sounding position Prokhorov was in fact a civil servant with a relatively modest salary.

However, the low salary didn’t disturb Prokhorov. By then the future billionaire together with his mate and future vice-premier Aleksandr Khloponin had set up the production of stone-washed denim that was extremely popular in the Soviet Union at the time. Rumor has it that the roles in this first business were clearly divided: Khloponin was in charge of production (with students from his alma mater working for him) and Prokhorov was responsible for distribution of the “home-made” jeans among his colleagues at the bank. How much they earned remains a mystery – but it was obvious that the “washing” of denim didn’t get in the way of the young banker’s career.

Fortunate acquaintance

Life would have probably gone on like this – divided between jeans and finance – if in 1990 the bank hadn’t been joined by another civil servant – Vladimir Potanin, who had already evaluated the scale of the collapse of the centralized Soviet economy and the opportunities that the new era was offering. Potanin was looking for a bank to start his own business and for reliable associates. At the Bank he found both. Very soon the bank went bankrupt and passed under Potanin’s control – together with its client base and state assets. And Mikhail Prokhorov became Vladimir Potanin’s business partner for many years. The future revealed this tandem attracted money like a magnet.

In 1992 the two created a joint-stock commercial bank “International Finance Company” (MFK) and Prokhorov became Chairman of the Board for the first time with many top positions to come. At the beginning of 1993 Onexim Bank was created. At 28 Prokhorov turned from a former colleague into the young and energetic Chairman of the Board of the new privately owned Onexim Bank.

Image from www.mdprokhorov.ru

In 1993 Onexim Bank became the paying agent for Finance Ministry bonds and a servicing bank for the City of Moscow’s external economic activities. In 1994 it became the depository and paying agent for treasury obligations and in 1995 the authorized bank for the federal agency dealing with bankrupt enterprises.

Prokhorov was a bit too young for the big game of dealing on the top level. However he was ideal for the role Potanin meant for him: that of an easy-going guy, the life and soul of the party who at the same time was devoted to the fascinating game of managing a huge company. And Prokhorov lived up to the expectations. No matter what position he took – he always delivered brilliantly.

In 1993 during the privatization of state controlled industries, Prokhorov and Potanin decided to buy Norilsk Nickel, one of Russia’s huge but lumbering and inefficient industrial conglomerates. They paid US$250 million and invested US$300 million as part of the deal. Their efforts nearly collapsed in 1998, when Onexim, amid a run on Russian assets, racked up US$2 billion in losses – the bank had heavily invested in Russian government bonds. Onexim pulled out of the crisis by merging with another bank and Prokhorov learned an expensive lesson: always diversify.

From 1998 to 2000 he added the top job of Onexim Bank President to his title of Chairman of the Board. In 2000–2001 he also served as president of the joint-stock commercial bank Rosbank. It wasn’t until 2001 that Prokhorov took up the posts of Chairman of the Board and General Director of Norilsk Nickel. His stewardship turned the company into the world's largest producer of nickel and palladium and one of the leading producers of platinum and copper.

In 2006 he became Chairman of the Board of Polyus Gold – Russia’s largest gold producer. He also has shares in Rusal, the world’s largest aluminum company.

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Wealth, women and scandals

In 2004 Mikhail Prokhorov featured for the first time in Forbes magazine – as the youngest Russian billionaire with a net worth of US$5.4 billion. He was 39 but continued living at his older sister’s place, not burdening himself by creating his own family. His sister Irina even claims that every year on Misha’s birthday – she comes out with a banner “I want to have nephews!”

At 40, in 2005, he was already the 89th richest man in the world worth US$6.4 billion and his “marital status” was: “single, not married.” Roughly at that time Prokhorov came out of the shade of his business partner and became the center of public attention.

Here is what Forbes wrote about Prokhorov in 2006:

“With Vladimir Potanin, he built the large holding company Interros by winning over the corporate customers of two huge Soviet-era banks in 1992. The group now has interests in metals, engineering, agriculture and media. Since 2001 Prokhorov has been chairman of its most valuable holding, metals conglomerate Norilsk Nickel. A bachelor, Prokhorov is often featured in the gossip pages for his blowout parties on the French Riviera. But then it’s back to work at his metals plant in the Arctic Circle.”

It seemed Mikhail Prokhorov had been so busy “doing business” that women became his hobby relatively late: after he turned 40 and had already earned his billions. The change was striking – from a low-key businessman he turned into a celebrity with a lavish lifestyle who traveled the world in a private jet.

He became known as a “jet-setting, model-dating, free-spending, party-loving playboy – and purported purveyor of prostitutes.” Often surrounded by beautiful women, he was reported to have dated Ksenia Sobchak, the "Paris Hilton of Russia" , as well as supermodel Naomi Campbell.

The story of his arrest in France made headlines across the globe. He was a regular in the Alpine ski resort of Courchevel where he liked to spend his winter holidays. Prokhorov and his entourage were arrested in January 2007. He was accused of allegedly arranging prostitutes for his guests (Prokhorov flew young women from Moscow into Courchevel to join his party). All of them were later transferred to Lyon, where they were held in custody as part of an investigation into an international prostitution ring. Prokhorov told the police that he had brought the women because he enjoyed the company of clever, beautiful and young female companions. He spent four days in detention and was released without charge. According to his blog, he even received apologies from French officials during his visit to France in November 2009.

Soon after the Courchevel scandal, Mikhail Prokhorov was in the news again – this time with an alleged marriage. “Russia’s most eligible bachelor” was rumored to have planned a US$10-million wedding in the Maldives to an unnamed bride. The media speculated on who would be the lucky lady – but it turned out the marriage was going to be strictly defined by a contract and end in divorce shortly after. Thus Prokhorov would have fulfilled a childhood bet that he’d marry before he turned 42 while at the same time keeping his fortune to himself. The wedding never happened.

Image from www.kp.ru

Another party that grabbed the headlines was on board the Russian Cruiser “Avrora,” famous for firing the opening blast of the 1917 Revolution and now a naval museum in St. Petersburg. A scandal developed in June 2009, when a party was thrown celebrating the anniversary of Russky Pioner (Russian Pioneer), a magazine owned by Prokhorov. Selected guests included the governor of Saint Petersburg Valentina Matvienko and other prominent government and business figures. Press reports had it that strong beverages made the guests lose control of themselves and some decided to jump overboard to swim in the Neva River. The news caused outrage.

Prokhorov later proposed to cover the costs of transferring the ship from the Ministry of Defense to the city of Saint Petersburg and upgrading the museum facilities: “I see a danger that the cruiser Aurora, which has recently become a place for holding events and celebrations and shooting films, could turn into an entertainment center,” Prokhorov wrote in the letter. He said his charity could better care for the ship than the Navy, which is currently responsible for its upkeep.

Meanwhile Prokhorov’s reputation of a playboy and growing publicity sped up the divorce with his business partner of 16 years – Vladimir Potanin. In 2007 Prokhorov resigned as Norilsk Chairman with media reporting that the embarrassing Courchevel incident “forced him to stand down.” A year later, in April 2008, Prokhorov sold his 25% stake in Norilsk, getting US$7 billion in cash for the holding, in addition to a 14% stake in the Russian aluminum giant UC Rusal. Later he was praised for “the foresight to sell his multibillion-dollar stake in Norilsk mining just before the global credit crunch took hold” and branded by the media “The Russian Billionaire Who Saw The Crisis Coming.” He was riding the wave again.

Surfing through life

Prokhorov’s activities go beyond international banking, finance, natural resource investments and innovations in energy production. Mikhail Prokhorov is also a keen sportsman. According to his website, he leads an active lifestyle and takes an interest in kickboxing, track athletics and skiing. He is also reported to have built a private surfing base in Turkey.

“For some sport is a hobby but for me it is a way to survive. It makes me calm, balanced and well-rested. Not tired but vice versa. I think sport balances off my work load.” (Prokhorov in an interview to Russian GQ magazine 02.10.2009)

Image from www.mdprokhorov.ru

Even during his four-day detention in France, he managed to keep exercising. In one of his interviews to the Russian newspaper Kommersant, Prokhorov shared the details: “Conditions weren’t too good – a tiny cell and quite a dirty one. But I’ve been kickboxing for more than 20 years – and shadow fighting can be done anywhere – 1.5 square meters is quite enough and if you use your imagination you can always busy yourself for an hour and a half easily.”

Even during his four-day detention in France, he managed to keep exercising. In one of his interviews to the Russian newspaper Kommersant, Prokhorov shared the details: “Conditions weren’t too good – a tiny cell and quite a dirty one. But I’ve been kickboxing for more than 20 years – and shadow fighting can be done anywhere – 1.5 square meters is quite enough and if you use your imagination you can always busy yourself for an hour and a half easily.”

His love of sport has led him to become the head of Russia’s Union of Biathlonists  – he took up the post in October 2008 explaining it simply: “I had been the owner of professional basketball, hockey and football teams in Russia. Each one of them reached certain heights in their disciplines. I already had 12 years of experience in team sport management. And when you reach a certain level you feel like “What’s next?”

In December 2009 Prokhorov also signed formal contracts to buy a controlling stake in the New Jersey Nets (a professional basketball team in the National Basketball Association) and to invest in its new home, a billion-dollar arena planned as part of a development in Brooklyn, New York. Under the terms of the deal, Prokhorov would become the principal owner of the Nets and the first overseas owner of an NBA team.

He may be a regular on the Moscow disco circuit, but when asked what he likes apart from having fun, he says: “Whatever a normal person likes. I like work, sport and charity.”

In 2004 Mikhail Prokhorov founded the Cultural Initiatives Charitable Foundation (Mikhail Prokhorov Foundation) with his sister as a co-founder.

He says, “It is precisely these investments that bring the most valuable benefits to our society, to the region, to our company and to each and every individual. While culture and education cannot be directly converted into money - they find their value in their effect on people, by improving their ability to compete, and in increasing their value in the job market.”

Image from www.kp.ru

Awards and acknowledgments

In 2006 he was awarded the Order of Friendship (given to Russian citizens for strengthening cooperation between nations and nationalities) for his contribution to the development of Russia’s economic potential. Mikhail Prokhorov is also a Chevalier of the French Legion of Honor. He received the award personally from France’s ambassador to Moscow, Jean de Gliniasty, in March 2011. The ambassador noted Prokhorov’s contribution to cultural cooperation between the two countries and underlined his “sincere desire for art” and special attention to new technologies. A martial arts enthusiast, as of 2011 Prokhorov is also an ambassador for Peace and Sport, a Monaco-based international organization committed to serving peace throughout the world through sport. He’s also been a member of Russia’s Government Council for Nanotechnology since 2007. 

Hitting the road

In January 2010 Mikhail Prokhorov announced an ambitious project to be carried out by Prokhorov’s Onexim group. Although the group has never owned or managed assets in the car industry, it decided to launch production of a low-budget automobile using the latest technologies. It was going to be a joint project - with a Russian truck-maker Yarovit Motors – to produce the so called Yo-Mobile - a small hybrid-engine car, the first of the kind Russia.

The project benefited from a richly backed PR-campaign, including an endorsement from Prime Minister Vladimir Putin – who drove the little car’s prototype to a meeting with President Dmitry Medvedev.

 In the first 24 hours after ordering began – there were more than 50 000 potential customers willing to become owners of the eco-friendly hybrid. After all doing business is something Mikhail Prokhorov knows all too well. So it seemed like a good idea to finally try something new – applying his business skills to politics.

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Riding a political wave

He’s never tried his hand at politics before. At least – never publicly. Summer 2011 marked the start of a new life when Prokhorov decided to delve into the world of politics and joined the rightwing Right Cause party. He agreed to become the Party’s sole leader under conditions that he would be given a carte blanche to change its structure and attract new people. Media outlets immediately speculated he wanted to create a party of billionaires.

Prohkorov promised to make Right Cause Russia's second largest party on a pro-business platform that will "totally transform" the country. In a television interview, Prokhorov said: "we have got to return to a 14 percent tax, leave small business alone, simplify paperwork and let small business work in peace ... I think we won't recognize the country in five to 10 years."

His criticism of the government’s internal policy and his businesslike approach to politics inspired many people at first. Prokhorov claimed he would have never gone into politics if he wasn’t sure of his own potential and the support from ordinary people in Russia.

“I’m not the kind of person who tends to dream or plunges into illusions - he said in June. We have particular goals: to get into Russia’s lower house of parliament with a maximum number of votes. What I also understand, is that I could be a good prime minister. If the party’s successful, I would fight for this position.”

Instead of intended four years he only spent a brief four months as head of Right Cause. The Party’s congress in September descended into chaos and Prokhorov parted with the Party. Evil tongues claimed Prokhorov had only topped the party with the Kremlin’s alleged blessing and was removed in a party coup. 

At the time, he blamed his ousting on Kremlin’s strategist Vladislav Surkov, accusing him of being a “puppet master” behind “a puppet Kremlin Party”, the Right Cause. Prokhorov claimed the Kremlin's political mastermind was unhappy with his independent stance and promised to stay in politics – if only to achieve Surkov’s resignation.

And so he did. After two months of total political silence Mikhail Prokhorov emerged again with a decision to seek the Russian presidency in the upcoming elections in March 2012. When asked how exactly he would sort out his conflict with one of the most influential people in Russian politics – deputy head of the Presidential Administration – Vladislav Surkov, Prokhorov said:

“I think I found the most elegant way out – to become his boss and then decide his destiny”. 

It may come as a surprise to many in Russia, but Prokhorov believes – his wealth won’t stand in the way of his campaign, despite Russians’ dislike of wealthy people.

“I consider myself a worker/toiler. I work a lot. And those people who work and have a goal of living a good life, should work. There are no miracles.”

A miracle or love from the first sight

For a man who claimed at some point not to use even a computer or a cell phone Mikhail was surprisingly up to date on new technologies. However the new twist in his career seems to have given a twist to his habits. Not only he’s been seen with a phone in his hand – he might even give up his liberty. At least that’s what people close to Prokhorov claim.

Just a few years ago Mikhail Prokhorov claimed he found his balance – “I do feel like a happy man,” he was saying.

Joining political games gave a twist to his position too. Rumors have it might have to go as far as getting married if he were to become serious in his presidential ambition. In an interview to a widely popular Komsomolskaya Pravda newspaper (7 September 2011) he was challenged – a married politician has more trust from the people. Prokhorov though has never been lost for words:

“I take private life very seriously. And it may seem strange but I really believe in love. And so far I simply haven’t met my second half. I hope I will meet her one day. And if I do I’m sure it would be love from the first sight.”   

And that would truly be a miracle.

Written by Darya Pushkova, RT correspondent