Usmanov says he’s no oligarch, focusing his efforts on Uzbekistan now

Usmanov says he’s no oligarch, focusing his efforts on Uzbekistan now
Uzbek-born metals tycoon Alisher Usmanov made his fortune in Russia but has been sanctioned by the EU, accused of being "close to Putin", an allegation he denies. Now approaching retirement he is winding down his Russian business and has moved to Uzbekistan, where he is helping the country reform. / bne IntelliNews
By Ben Aris in Berlin February 19, 2023

Russia’s sanctioned Uzbek-born metals tycoon Alisher Usmanov is worth an estimated $19bn and made his money in Russia. But these days he spends most of his time in his native country helping with reforms, and told Italian journalists that he has devoted himself to philanthropy, even if “the sanctions have very much complicated this work.”

Usmanov, who was added to the EU sanctions list year while accused of being an oligarch “close to Putin,” today is mainly based in Uzbekistan’s capital of Tashkent. He recently met with journalists from the Italian media outlet Tgcom24 and told them he denies the charge, claiming that as a businessman and a philanthropist he gained recognition in many countries, including Russia, his native Uzbekistan and Kazakhstan.

“The second part of the accusation [in the EU sanctions explanations] is that I am not just an oligarch, but Putin's ‘favourite’ oligarch. I have never had such a relationship [with him],” Usmanov said in the interview.

Usmanov has repeatedly denied he is an oligarch, saying: “those who decided to label me as such have only demonstrated their own ignorance,” adding he made his fortune solely from doing business on the open market, not by receiving benefits from the state.

Now that Usmanov is older than the Prophet Muhammad was at the time of his death – Usmanov is a devout Muslim – he plans to transfer ownership of his business empire to his family and to the businesses’ top managers, he told The Financial Times in an interview before the war in Ukraine. In the meantime, he has been devoting himself to helping Uzbekistan with its rapid modernisation drive since a new president took over in 2016 and launched a wholesale reform of the economy. Usmanov believes that “together with Kazakhstan, Uzbekistan will emerge as a true leader in Central Asia to drive the region’s development in the direction that its people will determine.”

Starting his career in the twilight years of the Soviet Union, he made his first million producing plastic shopping bags before going on to build an empire that included investments in the banking, metallurgy, telecoms and tech sectors.

He is also active in the telecoms sector in Uzbekistan, where his mobile phone operator Megafon entered into a $100mn joint venture with local operator Ucell in February 2021.

In his interview with Italian media, Usmanov said he has witnessed three distinct eras of Uzbekistan. The first was when Uzbekistan was part of the Soviet Union; the second, when Uzbekistan became independent in 1991; and the third and current one is the new Uzbekistan, which began in 2016.

“After 30 years of independent development, today's team led by President Shavkat Mirziyoyev is beginning a colossal reorganisation of the economic structure of the state,” Usmanov told the journalists. “An extraordinary reform is underway, aimed at restoring the normal functioning of the country's economy, improving the well-being of its citizens, and, above all, allowing Uzbekistan to achieve a position of respect not only within the region, but also worldwide.”

His approach to investments in Uzbekistan has been to look for entrepreneurship in sectors related to the core focus of his USM Group holding – mainly telecoms and technology. He earlier said that all money he makes in Uzbekistan would stay there. Usmanov said he continues to receive dividends from his companies but removed himself from day-to-day management to focus on his charity work.

“Today, sanctions have made things pretty difficult, but I’m not closing down our charity projects and am trying to keep working anyway,” Usmanov said. “I’m going to use all of my effort and resources to help Uzbekistan and be of use to my country. This is my greatest ambition, for which I have stepped back from actual business management, and even from being a shareholder in many of my projects.”

The oligarch accusation clearly rankles Usmanov, and he is one of many businessmen on the EU sanctions list who have filed lawsuits disputing the designation.

“Oligarchs are businessmen who make money with the help of power. First thing. Secondly, they are people who, by earning money, influence the authorities,” Usmanov said. “That is not my case. I have never received gifts from the authorities. In our holding, everything we have done has been done at market conditions. Oligarchs are defined as those people who, taking advantage of the first stage of capital development in Russia, received huge resources at almost no cost. Instead, I acquired everything on a competitive basis… What can be the fault of a person who declares all his income down to the last penny?”

His sister, Soadat Narzieva, a gynaecologist in Tashkent, was also sanctioned by the EU after a report by the Organised Crime and Corruption Reporting Project (OCCRP) linked her to her brother’s businesses. However, a bne IntelliNews investigation showed the accusations were baseless, and she was removed from the sanctions list after filing a lawsuit.

Usmanov’s second sister, Gulbakhor Ismailova, remains on the sanctions list and has also brought a lawsuit with the intent of clearing her name as well. Usmanov transferred the ownership of his €600mn yacht, “Dilbar,” to a trust in her name years ago and long before the war in Ukraine. The yacht was seized by Germany in the port of Hamburg last year. While Usmanov holds an Uzbek and a Russian passport, he said both of his sisters have lived in Uzbekistan their entire lives and have no connection to Russia.

Usmanov, who has a degree in international law, said he is disappointed with how the European legal system has handled his case. “In Italy they at least read the documents provided by our lawyers. In some European countries they don't want to read them at all anymore; they just say you're guilty and that's it,” he said.

When asked about the war in Ukraine, Usmanov said: “I was in a state of shock at first, just like everybody else. How can one not be shocked by what is happening? In the 21st century, war will benefit no one as far as humanity’s goals are concerned… And that is probably why I believe that any conflict should end in peace, and most importantly, people shouldn’t have to die.”