Andrew Carnegie needed a lifetime; the Rockefellers required several generations. And how long does it take nowadays to win respectability in Washington? About two years. That, at any rate, is how long it took Mikhail Khodorkovsky, CEO and main shareholder of the Russian oil company Yukos. Two years — and several billion dollars.
For those who don’t know Khodorkovsky — and his rise has been so rapid that there’s no reason anyone should — he got his start in the late 1980s when he used his contacts as a leader of the Soviet Communist youth organization, the Komsomol, to move into the computer import business and then a bank. By 1995 Khodorkovsky had generated enough money to buy 78 percent of the shares of Yukos, a state-owned company. There were complaints at the time about the propriety of the sale, as well there might have been. Khodorkovsky’s company paid $300 million for a business that is now thought to be worth more than $17 billion — of which his personal stake is worth $8 billion.
Khodorkovsky spent his first few years at Yukos defending lawsuits and suing journalists, denying accusations of financial skulduggery and even murder, before wising up — and starting to think about how he might float his company on the New York Stock Exchange. About two years ago, I got a telephone call from the office of Prince Michael of Kent — a member of the British royal family who moonlights in public relations — asking if I wanted to join a party of journalists on an exclusive, all-expenses-paid trip around Russia. I didn’t, although it sounded tempting. All travel (by corporate jet) from St. Petersburg to Siberia was to be paid for by an unnamed tycoon, who was, it turned out, Khodorkovsky.
Good businessman that he is, Khodorkovsky has since thought of much smarter ways to spend his money. Rather than waste time with freeloading journalists, he started to bring Western standards of corporate governance and financial transparency to Yukos, even to reveal who actually owns the company’s stock. He began improving his image with deeds instead of words, funding schools and hospitals in the decrepit northern cities where Yukos does its drilling, donating money to democratic politicians, and starting the Open Russia Foundation, which really does fund exceptionally good causes, among them Western-Russian exchanges, archaeological digs and (in the Carnegie tradition) libraries.
Most of all, though, he appears to have figured out that the swiftest road to respectability runs through the respectable. His company’s international chairman is now Lord David Owen, former British foreign minister and Balkans negotiator. His foundation’s board members include Henry Kissinger and Sir Jacob Rothschild. James Billington, the librarian of Congress, presided over the foundation’s U.S. launch, during which James Wolfensohn of the World Bank introduced Khodorkovsky. The British have an expression that well describes the sort of person Khodorkovsky has befriended: the Great and the Good.
Now, there isn’t, in principle, anything wrong with Khodorkovsky’s behavior, nor is there any real reason why the Great and the Good shouldn’t embrace him as they have. As I say, the charities he supports are excellent ones, and whenever I’ve run across him, he is invariably making a speech promoting the Westernization of Russia, not a cause anyone wants to oppose. There’s no reason not to applaud when former oligarchs start to behave like capitalist philanthropists — as long as everyone understands what’s at stake.
Khodorkovsky has a direct financial interest in his own respectability. It potentially raises the price of his stock: More than one potential investor will feel better about a company with Lord Owen on the board. Khodorkovsky also has a direct financial interest in what gets said and written about Russia in the United States: If Russian business is perceived as cleaner than it used to be (or than it is), that could raise the value of Yukos too. He even has a direct interest in bringing Western values to Russia: He might someday need support to prevent his company from being re-nationalized. His civilized, modest presence at Washington soirees also helps ease American fears about Yukos’s purchase of the Lithuanian petrochemical industry, as well as other planned investments in Poland and Hungary. These aren’t reasons to show Khodorkovsky the door — quite the contrary — but they are something to bear in mind. Russian money is a new force in the land of lawyers, lobbyists and think tanks, and we ought to remember that it’s there.