Andrei Borodin is a prominent Russian financier, economist and businessman who until 2011 was President of Bank of Moscow

Bank of Moscow

The Bank of Moscow is the fifth largest bank in Russia.In 2011, following a hostile takeover by VTB Bank, USD$ 9 billion in fraudulent loans were discovered and the bank received an unprecedented $14 billion bailout. Russia has issued an international arrest warrant for Andrei Borodin for his...

. His ousting as President was precipitated by the takeover of Bank of Moscow by VTB, a Russian state-controlled bank. Borodin has argued that the takeover was politically motivated and violated Russian law. He currently lives in London and is wanted by the Russian authorities on charges relating to mismanagement during his stewardship of Bank of Moscow.

Education and early career

In 1991, following military service, Borodin graduated in International Economics and Finance from the International Economics Department at the Moscow Finance Institute. From 1989-1990 he was a visiting student at the University of Passau, Germany. He worked for Dresdner Bank in Germany on an 18-month training course in Dortmund. He then moved to Frankfurt to work at the bank’s head office in the Financial Institutions Department. He left Dresdner Bank in late 1993 and in March 1994 started working for the Government of Moscow as an economics and finance adviser to the Mayor of Moscow, Yury Luzhkov. His links with Luzhkov, currently persona non grata in Russia since his sacking by Dmitry Medvedev

Dmitry Medvedev

Dmitry Anatolyevich Medvedev is the third President of the Russian Federation.Born to a family of academics, Medvedev graduated from the Law Department of Leningrad State University in 1987. He defended his dissertation in 1990 and worked as a docent at his alma mater, now renamed to Saint...

 in 2010, have been important for both his rise and current problems.

Bank of Moscow

What became one of the biggest players in Russian banking began as a six-person operation founded in 1995 by the Moscow City Government, which originally held a 51% stake. Under the political patronage of Luzhkov and the leadership of Borodin it weathered the crisis of 1998 and subsequently grew rapidly from a local bank largely serving the City Government to a national bank with a greatly enlarged client base and offering a broad range of services. The bank became increasingly independent of the City Government, which in 2008 reduced its stake to 46.6%, with a corresponding reduction in the number of bank-appointed directors. As the bank expanded, Borodin and his ally Lev Alaluev purchased significant stakes of their own. Bank of Moscow enjoyed the confidence of the international markets, with both Goldman Sachs and Credit Suisse acquiring small stakes in 2010 (3.88% and 2.77% respectively).

Takeover

When Luzhkov was sacked in September 2010, the new administration of his successor, Sergei Sobyanin - and by implication the Federal government of Medvedev which had appointed him - soon acted against Bank of Moscow. The City Government announced its intention to sell its stake and VTB, a state-controlled bank whose supervisory board includes leading figures in the Presidential administration, stepped up as a buyer, announcing its intention to acquire 100% of the bank, an ambition it later scaled down, though it acquired control. Other banks, such as Alfa Bank, also expressed interest. The VTB takeover was opposed by Borodin. In December, before the sale of the City Government's stake proceeded, the Audit Chamber of the Russian Federation unusually announced that it had launched an audit of Bank of Moscow at Sobyanin's request and an investigation was initiated into a loan provided by the bank to Premier Estate Company. This loan was later used as the basis of criminal charges against Borodin. VTB purchased the City Government's stake at the end of February 2011. Borodin has contested the legality of this on a number of grounds, including that competitive tender ought to have been used to maximise the share price. Borodin and his allies were dismissed and VTB's Chairman Andrey Kostin and first deputy Mikhail Kuzovlev became the Bank’s Chairman of the Board of Directors and President respectively. Borodin asked that his outstanding remuneration be paid to a children's charity he had founded; this has not happened. In April he announced that he had sold Vitaly Yusufov the 20.32% stake held by Alaluev and himself, complaining that he had been forced to sell at a knock-down price because of the pressure put upon him.

Bail-out and criminal charges

After the takeover, VTB and finance minister Alexei Kudrin

Alexei Kudrin

Alexei Leonidovich Kudrin was the Minister of Finance and Deputy Prime Minister of Russia from 18 May 2000 to 26 September 2011. After graduating with degrees in finance and economics, Kudrin worked in the administration of Saint Petersburg's liberal Mayor Anatoly Sobchak. In 1996 he started...

 (who was chairman VTB during the takeover) announced that to their great surprise a central bank review had revealed that 150 out of the 250 billion roubles in Bank of Moscow loans associated with Borodin were 'very bad' and lacked collateral, a claim hotly disputed by Borodin, who is now facing criminal charges in Russia relating to a 12.8 billion rouble ($460 million) 2009 loan to Premier Estate Company, controlled by Yelena Baturina

Yelena Baturina

Yelena Nikolayevna Baturina is a Russian oligarch, Russia's richest woman and the only Russian woman worth more than a billion dollars. She is the joint 993rd richest person in the world currently, after tumbling from a much higher wealth...

, the billionaire wife of ousted Mayor Luzhkov. In July, 2011 it was announced that Bank of Moscow would receive a $14 billion bail-out from the Russian state. Besides the obvious connection with the political fortunes of Luzhkov, and the involvement of Kudrin, Borodin claims that peculiarities during the takeover point to the centrality of political as opposed to commercial concerns. For example, he made an offer on 22 March 2011, which lapsed 8 April 2011, to buy the stake from VTB as the same price they had, despite VTB's claims of the mess they had discovered. This was refused.