Born in the USSR. After the collapse of the Soviet Union Sergei Pugachev devoted himself to attracting investments to Russia. In the beginning of the 1990s he and his family settled in France.
He founded the very first private bank in Leningrad and was also the founder of one of the largest private investment companies in Russia: the United Industrial Corporation (“OPK”).
During the 1990s he was part of the inner circle of the first President of Russia, Boris Yeltsin, and in 1996 led Yeltsin’s electoral team to victory.
In 1999 Sergei Pugachev suggested that President Yeltsin appoint as Prime Minister one Vladimir Putin, a perfectly unknown character back then. Later on, when Vladimir Putin ran for president, Pugachev acted as director of Putin’s electoral campaign.
After Putin’s victory in the presidential election of 2000, Pugachev remained for many years President Putin’s chief advisor, while staying largely involved in the international investment business.
Pugachev was a member of the Senate from 2001 to 2011 and played a prominent part in Russian politics, adhering to ultra-liberal views on the economic and social organisation of the Russian State.
Acting as vice-chairman of the Russian Union of Industrialists and Entrepreneurs (RSPP) since the year 2000, he advised Vladimir Putin to reform the Union in view of establishing a dialogue between the President of Russia and the owners of Russia’s major private companies. Pugachev also organised the first official meetings between President Putin and the Russian oligarchs. Incidentally, it was after one such meeting that a conflict arose between Vladimir Putin and Mikhail Khodorkovsky (YUKOS).
In 2011, due to broadening political divergence with Vladimir Putin, Sergei Pugachev was compelled to resign from all State duties and took the decision to liquidate all his Russian assets.
Pugachev had been investing in the Russian economy from the early 1990s and by 2010 he was the sole owner of the investment company United Industrial Corporation (“OPK”), whose overall assets were worth 15 billion US dollars.
Sergei Pugachev practically succeeded in resurrecting the Russian shipbuilding industry, not least by building a mega-shipyard in Saint-Petersburg, which comprised dozens of high-tech shipbuilding and machine-building companies. Pugachev’s shipbuilding corporation built both civil and military vessels, including: ice-class ships used for the development of fossil fuel deposits in the Artic region and offshore; naval ships for India and China; supply vessels for Norway; the world’s largest nuclear icebreaker; the world’s first floating nuclear power plant. For the first time since the Soviet years (1970s) the building of icebreakers in Russia had reached an industrial scale.
It was also on Sergei Pugachev’s personal initiative that his shipyards began to build the French Mistral class helicopter carriers. It was planned to have twenty ships of that class built.
In 2010, following increased pressure on the part of Vladimir Putin, Sergei Pugachev had to sell 100 percent of his share in the shipbuilding assets to the State, at a notably devalued price. At that moment, according to different valuations, Pugachev’s shipbuilding assets were worth c. 7 billion dollars.
Russia, however, failed to stand by its contractual obligations and expropriated the above-mentioned assets with no compensation.
Later Vladimir Putin entrusted the management of the corporation to his close aide, Vice Prime Minister Igor Sechin (who had previously conducted the expropriation of YUKOS).
A large share of Pugachev’s investment activities in Russia pertained to property development (acquiring land and building luxury real estate in Moscow and suburbs as well as in the centre of Petersburg). Several billion dollars were thus invested by Pugachev into purchasing land, in view of carrying out development projects.
The central jewel in this crown of luxury property in the Russian Federation was meant to be a 76.000 sq.m. 5-star hotel on Moscow’s Red Square, opposite the Kremlin. The architectural project was authored by French architect Jean-Michel Wilmotte. President Putin had personally asked Pugachev to undertake the building of a top-luxury hotel on the Red Square, but later this project was expropriated by order of the President of Russia.
In the historical centre of Saint-Petersburg, some five minutes away from the Ermitage, about 70 hectares of land were reserved on the bank of the Neva for the building of luxury real estate properties totalling over 4 million sq.m. of floor space.
In order to free the land for this project, Pugachev transferred most of the shipbuilding workshops from the territory of the Baltiysky shipyard to the new mega-shipyard he build in the suburbs of Petersburg, on the former location of Putilov’s historic plants. The entire project was supervised by the then governor of Petersburg Valentina Matvienko (currently speaker of the Russian Parliament), who officially approved a municipal programme aimed at transferring industrial sites from the historical centre of the city to the outskirts. The project was named “New Venice” and the city council even built a metro station next to the former Baltiysky shipyard territory.
Pugachev was also the biggest landowner in the unique and elite district of the Moscow area, on the banks of the Moskva river, where many of the wealthiest people in Russia had some property. This is also the area where Novo-Ogarevo, Vladimir Putin’s residence, is located.
After Pugachev’s conflict with Putin began, all of these projects were either cancelled, or expropriated.
During the 90s Pugachev had invested into the prospection and development of a coal deposit in South Siberia.
By the mid-2000, he had become the owner of the world’s largest deposit of coking coal, a type of fossil fuel widely used in metallurgy.
It was subsequently decided to build a 402 km railroad in the area. This was the biggest railway construction project since the “BAM”, the Baikal-Amur railway. Boris Gryzlov, president of “United Russia”, the party of power, volunteered to supervise the construction.
Pugachev signed a contract with the Japanese corporation Mitsui in order to attract investments and jointly develop the project. Mitsui was thus able to acquire 49% of the Enissei Industrial Company (EPK), which was running the coke production.
By 2010 the capitalisation of EPK reached 5 billion US dollars.
At the end of 2012, however, upon an express order of President Putin, the coal production licence granted to the Enissei Industrial Company was illegally withdrawn. The company was plundered and destroyed, and one and a half billion dollars, earmarked for the development of the coal deposit, were stolen from the company’s bank account.
This is how most of Sergei Pugachev’s assets in the territory of the Russian Federation were expropriated to the benefit of Putin’s inner circle.
For several years Pugachev attempted to challenge in court the illegal actions of the Russian government, and was eventually drawn into an endless judicial intrigue in Russia. The outcome of these legal claims was of course predetermined: Putin had personally supervised the expropriation of Pugachev’s assets and had repeatedly warned Pugachev in public pronouncements of the risks the latter was taking if he continued to fight for his stolen assets.
After Pugachev had announced to Putin that he had no choice but to file a claim before The Hague International Court, the pressure upon him increased manyfold. Some of the top managers of Pugachev’s former companies were illegally sentenced to prison.
A criminal case was fabricated against Pugachev and an international arrest warrant was issued by Interpol. Interpol eventually recognised, however, that the case launched against Pugachev was politically motivated, and officially rejected Russia’s request.
By personal order of President Putin the Deposit Insurance Agency (DIA) was appointed to represent the interests of the Russian Federation in the numerous lawsuits against Pugachev worldwide, so as to divert Pugachev’s attention and financial means from The Hague claim.
But Putin did not stop at destroying Pugachev’s economic empire in Russia. He also tried to reach Pugachev’s foreign assets, turning to his advantage Russia’s international connections, having recourse to international organisations, treaties and agreements, and abusing the law.
Specifically, by invoking the agreement on mutual legal assistance signed between Switzerland and the Russian Federation, Russia succeeded in 2013 in freezing Pugachev’s funds deposited in Swiss banks. These funds being set aside for the development of Pugachev’s foreign-based assets, this led to the bankruptcy of a number of Pugachev’s companies outside Russia (among which OPK Biotech, a high-tech American company manufacturing artificial blood of a universal kind, one that did not need any special storage conditions and was suitable for all blood groups; the company had a capitalisation worth 3,5 billion dollars and had patented over 600 inventions.)
The French delicatessen brand Hédiard, also owned by Pugachev, went bankrupt for the same reasons. Hédiard was established in 1854 and, having 320 boutiques worldwide, has been recognised as part of the French heritage: it belonged the Comité Colbert, on the same footing with the Opéra National de Paris, Chanel, Christian Dior or Givenchy.
This also caused the bankruptcy of the Swiss watch-making company owned by Pugachev, which was manufacturing unique watch movements under the Polet brand. Back in Soviet times this legendary Soviet brand (also owned by Pugachev) rivalled Rolex in terms of sales volume. It had become as recognisable a symbol of the USSR as the Bolshoi Theatre, Palekh boxes or caviar.
The Russian State has persecuted Pugachev and is still using disgraceful methods to do so, from legal abuse in foreign courts to assassination attempts. Several attempts on Sergei Pugachev’s life have been made since 2010, and in 2015 SO15, the anti-terrorist section of Scotland Yard, found an explosive device under one of his cars. Thank to efficient collaboration the British and the French special services were able to thwart this attempt.
In 2013, Pugachev had a personal meeting with Vladimir Putin and was able to discuss a potential amicable settlement between the parties, conditional upon the Russian Federation’s paying a compensation for Pugachev’s expropriated assets.
Putin agreed to compensate the losses; lengthy negotiations began, for which Vladimir Putin appointed one of his close aides, a general in the special services, as his official representative.
After one year and a half of talks Vladimir Putin said: “Let him go to court. If he wins, we’ll pay up” (sic).
On 21 September 2015 Sergei Pugachev filed a 12 billion-dollar claim before the Hague International Court against the Russian Federation, based on the international Agreement on Mutual Encouragement and Protection of Investments signed between France and Russia on 4 July 1989.
In 2016 the President of the Hague Court appointed the arbitral tribunal, composed of Eduardo Zuleta Jaramillo (Presiding Arbitrator) and Prof. Thomas Clay and Bernardo Cremades (Arbitrators).
On 10 November 2016 the arbitration tribunal ordered that for reasons of Sergei Pugachev’s personal safety the hearings take place in Paris, instead of The Hague.
The Arbitration tribunal’s first public hearing took place on 13 February 2017 in Paris, on ICC premises.
Pugachev’s struggle against Putin and the Russian state to recover his stolen assets is a unique example of one man’s fortitude in single-handedly resisting an entire state.
According to Pugachev this has already become a full-time job for him. Yet he has trust in his “business model”. He is managing dozens of lawyers worldwide and regularly wins in court against the Russian state, which motivates him to keep on fighting.
In the course of those past years he has faced betrayal, duplicity and baseness from people who once were close to him. He is convinced that Putin holds nothing sacred. The Russians have suborned the mother of his three minor children, who currently lives in his luxury mansion in Chelsea, London’s most select area. Alexandra Tolstoy-Miloslavsky, Pugachev’s former partner and mother of his children, is kept by the Russian state and, in line with her ensuing obligations, was prepared to provide a false testimony in Pugachev’s case against Russia. When she left France she took the children with her, never to return. Sergei Pugachev has not seen his children, however briefly, since 2016. All these years the children practically have been kept hostage.
Pugachev insists that this legal cause is not his alone; it is neither a personal revenge taken on Putin, nor an attempt to gain money and to get back to the life he once had. He is convinced that this case is to be fought between France and Russia, and that it is about forcing Russia to fulfil its international obligations. All of the foreign companies present in Russia are closely following this case. Pugachev further believes that this is one more area in which President Macron can deploy diplomatic action, given that he is currently trying to construct a relationship with the authoritarian leader of Russia.
This is one more opportunity to put an end to Putin’s aggression and impunity on the international arena, not only relatively to Ukraine and other Russian-occupied territories, but more largely by bringing Vladimir Putin before the UN International Court of Justice in The Hague.
This is one more opportunity to remind the world of the validity of international law.
Furthermore, it is a unique opportunity for President Macron to show the citizens of France that they can feel safe and protected wherever they be, in whatever situation, and that they can reasonably be proud of being citizens of the French Republic.
When asked how he intends to use the 12 billion that the Russian Federation is going to pay him, Sergei Pugachev answers that he intends to allocate the major part to charity projects in the field of education, new medical technologies, and also to establish funds to help children deprived of parents.
On 17 March 2017 the Russian Federation requested from the arbitration tribunal that the hearings in the Pugachev case be confidential. This is contrary to the Rules of The Hague Court, yet the Tribunal issued a Procedural Order ordering partial restriction of information disclosure.
On June 18, 2020, the Hague Tribunal made a ruling based on the hearings held in November 2019 in Paris.
The tribunal acknowledged that Mr Pugachev’s status as a legal citizen of France, allows him to rely on the protection of investor rights provided by the Bilateral Investment Treaty between France and Russia, but, nevertheless, this award did not completely suit Mr. Pugachev and on November 2, 2020, his lawyers filed an appeal with the TRIBUNAL SUPERIOR DE JUSTICIA DE MADRID.
Given that two arbitrators from the Tribunal panel refused to rule on the part concerning the claim, Mr. Pugachev’s lawyers believe that the award of June 18, 2020 is incomplete and should be amended.
Since, under the procedural terms of the Tribunal, the city of Madrid was designated as the place of arbitration, the appeal was filed with the Spanish court – TRIBUNAL SUPERIOR DE JUSTICIA DE MADRID.
An appeal date will be set shortly.