A yacht, an oligarch and the British politicians

It is a tale of political intrigue, mutual accusations and an awful lot of cash. The British media has been sent into a frenzy over the links between two of the country’s leading politicians and Russia’s richest man.

Dramatis Personae

Oleg Deripaska

40 year-old Deripaska is thought to be the richest man in Russia with a fortune worth $28 billion. His wife, Polina, is the daughter of Russia's late president Boris Yeltsin. The couple is said to be close to Vladimir Putin.
The bulk of Deripaska's wealth has come from his control of Rusal, the world's largest aluminium producer. His business interests also lie in insurance, car manufacturing and banking. Last year, his application for a US visa was rejected, with no reason being given.
In light of the world financial crisis, Deripaska’s assets have suffered. This has been further worsened by an investigation into his finances by the UK and US governments in connection with a $57.5 million wire transfer last year.

George Osborne

Since 2005, Osborne has been serving as the Shadow Chancellor of the Exchequer of the UK. Having assumed office as MP for Tatton, Cheshire in 2001, he became the youngest Tory MP ever elected, becoming a rising star of the Conservative Party. He has been vehemently critical of Gordon Brown's economic policies and the Prime Minister’s ability to handle the UK economy.
Some suggest that this may be a Tory attempt to lead an assault on Gordon Brown without tarnishing David Cameron’s soft public image. Osborne, 37, is the son of a baronet and a debutante. He has an estimated private fortune of around 4 million pounds and is married to the daughter of Lord Howell of Guildford, a former Conservative minister.

Nathaniel Rothschild

Considered to be a playboy in his youth, Rothschild, 37, has recently settled into being a successful and up-and-coming financier. He is co-chairman of Atticus Capital, an investment fund. Among his friends are many of the world's richest people, such as Roman Abramovich and Oleg Deripaska. He lives in Switzerland, but he also owns five properties in the Greek island of Corfu.
Whilst at Oxford, he befriended both George Osborne and David Cameron, the current Tory party leader. He was a key figure in persuading the latter to run for leadership.

Lord Peter Mandelson

Having helped the Labour Party to come to power in 1997, Lord Mandelson (commonly referred to as Mandy by the British media) was later forced to resign twice from his post as Secretary of State, becoming the first person to ever do so in the history of British politics. In 1998 he was forced to quit his post at the Department of Trade and Industry after it was revealed that he accepted a 373 000 pound loan to buy a house. Having been a member of the Communist Party in his youth, Mandelson has been quoted as saying that he was “intensely relaxed about people getting filthy rich”. He served as the European Commissioner for trade for four years and has recently returned to mainstream British politics as Secretary of State for Business.

The story unfolded among the quiet groves which line the coast of the Greek island of Corfu. It is here that, according to a report in the Times newspaper, Russian oligarch Oleg Deripaska and George Osborne, the British Shadow Chancellor for the opposition Conservative party, discussed a donation of 50 000 pounds.

The British financier Nathaniel Rothschild, a friend of Osborne’s, alleged in a letter to the newspaper that Osborne and Andrew Feldman, the Tories’ chief fundraiser, spent time at Deripaska's yacht. It was during one of those meetings that, according to Rothschild, the Shadow Chancellor attempted to solicit a donation from the oligarch.

Such a move would have been illegal under UK law, since donations for political parties can be made by British citizens only. However, according to Rothschild, it was suggested that the cash could be channeled through one of Deripaska's British companies. However, such funding-by-proxy is also illegal under legislation passed in 2000.

Rothschild's claims have been met with furious reactions. The Conservative Party was quick to issue a statement, saying no donation was solicited or discussed with Deripaska. However, when the Times asked Osborne directly about whether the possibility of a donation was mentioned in his conversations with Deripaska, his answer was unclear.

“We have very rigorous checks and make it absolutely clear that any donations must be legal,” he said.

Osborne said that he and Feldman did meet with the tycoon on two occasions. One of those times was with Britain’s newly-appointed Business Secretary Peter Mandelson from the ruling Labour Party. On both visits, according to the Shadow Chancellor, he simply shared a few drinks with the oligarch.

The official party line on the issue is more straightforward. A Conservative Party statement said: “The allegations made in Mr Rothschild’s letter are completely untrue. Both Andrew Feldman and George Osborne deny absolutely that they attempted to solicit a donation from Oleg Deripaska. Nor did they suggest a method by which he could conceal a donation via a British company.”

Nevertheless, the party's spokesman admitted that in September, Deripaska himself had made an offer to give funds to the Tories through one of his British companies. The offer, according to the party’s representative, was not taken up.

Furthermore, according to unnamed sources close to Rothschild, as quoted by The Daily Mail, a “mystery witness” exists, whose comments could prove that pledges for a donation from Deripaska were in fact made.

Rothschild's letter caused further controversy since Osborne and him had been on friendly terms ever since their years spent together at Oxford University.

Deripaska's 80-million-pound yacht, Queen K, has already received substantial media attention, most notably because it was revealed to have been the meeting base when the oligarch hosted Mandelson. Claims were leaked to the Daily Mail stating that the pair's friendship dates back to 2005, much earlier than previously thought. Crucially, it was before Mandelson, a former EU Commissioner, scrapped EU tariffs on Deripaska's aluminium imports – the oligarch's primary source of income.

Mandelson's supporters stand strong in believing that it was Osborne who disclosed the extent of the friendly relationship between the Business Secretary and the Russian tycoon.

However, it was claimed that Mandelson and other guests who were attending a function at the Rothschilds' villa were hosted on the yacht as there was no longer any room in the house.

Gordon Brown has called for an official inquiry into the alleged connections between Oleg Deripaska and British politicians. The British Prime Minister said the allegations are very serious.

However, the Electoral Commission said that no formal complaint has been filed. Furthermore, there is no offence in British electoral law in soliciting a donation and there is no evidence that any criminal offence has been committed.

Some Conservatives go as far as suggesting that the new claims of the 50 000 pound deal are nothing more than Mandelson's machinations to shift the media's attention from his links to Deripaska. Nevertheless, other sources suggest that the political feud between Osborne and Mandelson is artificially constructed. Some reports suggest that they were seen having dinner together at one of the family tavernas.

Fun fact:

As was revealed in The Daily Mail on 7 April 2007, whilst studying in Oxford, George Osborne and Nathaniel Rothschild were members of the Bullingdon Club, an elite dining society reserved for the very rich.
Members of the club have reportedly included David Cameron, the current leader of the Conservative Party and Boris Johnson, the Conservative Mayor of London. The Club has a notoriously raucous reputation. Its members are said to have smashed entire restaurants, including windows, doors and lamps.

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