CHUBAIS, Anatoly Borisovich

Anatoly Borisovich Chubais (Анатолий Борисович Чубайс) is a Russian business manager who was instrumental in Russia's privatization in the 1990s. For ten years, he was chairman of Russia's state electric power monopoly, United Energy System. He is the quintessential portrait of a Russian oligarch who has held prominent posts in the government.

Chubais was born June 16, 1955, in Borisov, Belarus, then a part of the Soviet Union. He graduated in 1977 from the Leningrad Institute of Economics and Engineering with a degree in economics. He continued on as an assistant lecturer at his alma mater immediately after his graduation until 1982. He then became an assistant professor until 1990.

Throughout the 1980s, Chubais served as a center of gravity for a circle of reform-minded and democratic economists in Leningrad, now St. Petersburg. In 1987, he founded the "Perestroika" club to help push these ideas.

Starting in 1990, he served as deputy Chairman, then first deputy chairman of the Leningrad Executive Committee. He also advised St. Petersburg Mayor Anatoly Sobchak on economic matters. From this point on, he would play a central role in Russia's transformation from a Soviet to market-based economy, and he would reap the rewards of his efforts.

After the 1991 coup by communist hardliners had collapsed, Chubais was part of the team brought in to transform the Russian economy under Boris Yeltsin's watch. From the Russian White House, they played a central role in the new reformist government led by Prime Minister Yegor Gaidar.

In November 1991, he became chairman of the State Property Committee of the Russian Federation (Goskomimushchestvo). From this post, he supported "shock therapy" for the Russian financial system and was one of the strongest advocates for privatization in the post-Soviet government. He initially supported state enterprises being sold off to the highest bidder, but this raised fears that foreigners and crime bosses would buy up government assets. Instead, the Russian government instituted a voucher system wherein citizens were given shares of previously state-owned companies. This led to widespread selling of vouchers to investment banks and larger shareholders who never intended to repay the interest on the investment, making a core group of Russians very wealthy. For this, Chubais is sometimes regarded as the father of the oligarchs or the most dishonorable man in Russia. His privatization reforms were largely seen as a failure.

In June 1992, he was promoted to first deputy chairman of the Russian Government in charge of economy and finance.

In June 1993, he helped to establish a voting block before parliamentary elections called Vybor Rossii (Choice of Russia). On this ticket, he was elected into the State Duma in December 1993. While in the Duma from 1994 to 1996, he continued to lead the way in Russia's economic policies as a member of the Committee for Property, Privatization and Economics. While serving in the Duma, continued to hold influential economic posts in the government as well.

From November 1994 to January 1996, served as First Deputy Chairman of the Russian Government in Charge of Economy and Finance and head of the Federal Commission on Securities and Stock Market. From 1995, he was Russia's liaison to international financial organizations.

As an outgrowth of this work, Chubais established the Private Property and Protection Fund. The fund's objective was to raise Yeltsin's profile for an upcoming presidential election and secure his place as president. Following Yeltsin's electoral victory, he appointed Chubais chief of staff for the Presidential Administration.

In March 1997, Chubais was taken out of his position as head of the Presidential Administration and appointed first deputy chairman of the government and minister of finance. From May 1997 to May 1998, he sat on the Security Council of the Russian Federation.

In November 1997, he was dismissed from his post as Finance Minister. In March of the next year, he was also dismissed from his post as first deputy chairman. Presumably, this was to free him up for his next position. On April 30, 1998, Chubais was elected as chairman of the board at state owned electrical power monopoly Unified Energy System (UES).

On July 14, 2000, he was elected President of the Electric Power Council of the Commonwealth of Independent States. He was re-elected in 2001, 2001, 2003 and 2004.

In May 2001, Chubais entered electoral politics as elected co-chairman of the pro-Western Union of Right Forces (SPS) party. When Duma elections came in 2003, he was listed high on the party's ticket, but the party failed to garner much support at the polls. On January 24, 2003, he resigned.

2005 Assassination Attempt

In March 2005, Chubais was the target of an assassination attempt. A roadside bomb detonated underneath his care in a motorcade. Chubais said that he knew about the attack in advance but did not know who would have been responsible. What developed from this was the accusation of the following in the organization of the assassination attempt: retired colonel of the GRU (Main Intelligence Directorate {Glavnoe Razvedyvatelnoe Upravlenie}) Vladimir Kvachkov, retired GRU special forces captain Robert Yashin, retired GRU contract officer Alexander Naidenov, member of executive committee of Congress of Russian Communities (Kongress russkikh obshchin) Ivan Mironov. In the spring of 2006, the case on the assassination attempt was brought to court. Representatives of the Moscow Region court declared that the hearing on the case would be undisclosed. For various reasons, the jury for the case was changed on three occasions. On June 5, 2008 the jury reached the verdict of "Not Guilty" as the participation of the accused in the crime could not be verified beyond doubt. Subsequently, on June 16, the Moscow Region court reached a "not guilty" verdict on the basis of the jury's decision.

Moscow Blackout, May 2005

In May 2005, several million Muscovites and people from neighboring regions were left without electricity following a major accident at the Chagino electric sub-station. A fire at the power station, south of Moscow, caused a prolonged power outage that stranded passengers in the underground and snarled the capital in a traffic jam during an unseasonable heat wave. There were immediate calls for the resignation of Anatoly Chubais in his capacity as chief of UES. The then Russian president Vladimir Putin rebuked Chubais for negligence, but only a lower ranking official – Arkady Evstafyev, the head of Mosenergo, Moscow's power company – lost his job. Chubais “from himself and from [UES]” apologized to all people who suffered from the power shortage. He said “There is no question that UES and I personally as chairman, are fully responsible for the accident.” In June of that year, a special commission was set up by UES to investigate the cause of the accident; it was concluded that equipment deterioration was the reason behind the incident. In November 2005, there were media reports which suggested that UES was prepared to provide compensation to those who proved in court that they were greatly affected by the blackout.

In 2005 and 2006, Chubais lended his support to his colleague, external relations adviser of UES Valery Pasat, who was accused of money-laundering in connection with the sale of Moldovan MiG-29 airplanes in the United States in 1998 (before his arrival to UES, Pasat held various posts in the Moldovan government). In January 2006, Pasat was sentenced to ten years' imprisonment for excess of power of office. Following the sentence made at a court in Moldovan capital Chisinau, Chubais publicly promised the Moldovan president Vladimir Voronin "serious problems." In February of the same year, press reports announced that accusations of preparatory measures for a coup d'etat in Moldova, as well as organizing an assassination attempt on deputy prime-minister Yury Roshka, were brought against Pasat. However, in October 2006, Pasat's sentence was reduced to five years; in July 2007, he was pardoned, following the suspension of the investigation in his most recent accusations.

Following the defeat of the SPS in the 2007 parliamentary elections, Chubais was elected at the party congress member of the SPS Federal Political Council.

In July 2007, the managerial administration of UES (16 trustees and approximately 350 managers) acquired the right to redeem UES shares within the framework of a financial option. As a result in the option program of the holding, those concerned could have collectively earned 455 million U.S. dollars; Chubais could have received in excess of 20 million dollars. At the beginning of April 2008, the shares were acquired, and thus the portion of shares belonging to Chubais increased more than seven times - up to 0.06 percent.

Reorganization and Cessation of UES

The reorganization of UES started in 2006. The first stage of the reorganization, during which generating companies WGC-5 and TGC-5 were spun off from RAO UES, was completed on 3 September 2007. At the second stage, all other subsidiaries of RAO UES were spun off. It was seen as a massive privatization of power industry with the goal of attaining about US$79 billion in investment. As a result, on 1 July 2008 RAO UES completed the corporate reorganization and ceased to exist after its merger with and into UES FGC, a Federal Grid Company. All together, six wholesale generation companies (WGC), 14 territorial generation companies (TGC), RusHydro, FGC UES (Federal Grid Company), SO-CDA (System Operator), IDC Holding, RAO ES of the East, and Inter RAO UES continues as independent entities.

Rusnano

Following the cessation of UES, the Kremlin announced on September 22, 2008, that Russian president Dmitry Medvedev signed a decree to appoint Chubais as the director-general of the state corporation in nanotechnologies, Rusnano. In his new role, Chubais leads the corporation set up to promote nanotechnology research as part of the Kremlin's efforts to reduce the country's dependence on energy resources.

In his first statement in his new post, Chubais said Russian nanotechnology sales should reach 1 trillion rubles ($40 billion at the current rate of exchange) by 2015.

"Both the corporation's mission and its main goal - securing leading positions on the world nanotechnology market -- are understandable and important for me. By 2015, the sales of Russian nanotechnology products should be equal to the turnover of the UES affiliated energy companies - 1 trillion rubles a year," he said.

Speaks fluent English.

Married to second wife Maria, also an economist. Has two children from his first marriage, a son and a daughter.

Related articles:

Lenta.Ru, Biography of Anatoly Chubais (In Russian)
Wikipedia.Org, Profile of Unified Energy System
Petroleum Economist, "Russian infrastructure in need of investment," October 2005
Kommersant.Com, "Chubais Unplugged," May 26, 2005
RIA Novosti, "Kremlin appoints Chubais nanotechnology corporation chief," September 22, 2008
Rusnano.com