Oligarchs, Mandelson and Osborne

Jeremy Warner – The Independent October 22, 2008

The Russian oligarch, Oleg Deripaska has rather weightier matters to worry about right now – such as, with credit markets still closed, where he’s going to find the money to refinance the $4.5bn (£2.7bn) he borrowed to buy a 25 per cent stake in Norilsk Nickel – but that hasn’t stopped him playing centre stage in Britain’s latest political bunfight.

It was unwise, to put it mildly, for the shadow Chancellor, George Osborne, to use confidences learnt while holidaying in Corfu as a guest of his old college friend Nat Rothschild to attack a political bruiser as formidable as Peter Mandelson. Mr Rothschild saw the smear campaign as a betrayal of his hospitality and has given Mr Mandelson all the ammunition he needs to bite back.

This is one of those stories that has got it all – luxury yachts, billionaire oligarchs, luxury villas, lavish cocktail parties, old money, new money, political chicanery and so on. The only thing missing is sex. That may only be a matter of time. But is it of any long-term significance? Despite the denials, the suspicion that Mr Osborne illegally attempted to solicit a political donation from Mr Deripaska will linger and may further erode the fast-dwindling lead the Tories enjoy in the polls.

My only excuse as a business editor in writing about what is essentially political mudslinging is that the newly ennobled Mandelson is now Britain’s Business Secretary. Wherever he goes, fireworks seem to follow, so his new charge can at least expect a lively couple of years, assuming he lasts that long. The trouble started almost immediately Mr Mandelson was summoned back from exile in Europe to be part of Gordon Brown’s political fightback.

According to stories leaked by Mr Osborne to newspaper diaries, he had by “chance” bumped into Mr Mandelson in a Corfu taverna over the summer holidays, and in the ensuing chat, the prince of darkness had dripped pure poison on the Labour Party leader he now claims to be so supportive of. This latter part of the story is entirely believable, but the former was a bit of an exaggeration.

There was little chance in their meeting and the taverna in question was as much the Rothschild holiday home – a beautiful place of peace and tranquillity with its own private beach which I once chugged longingly past in a motor boat – as the kebab house down the road. But there was much worse to come. Mr Osborne then briefed The Sunday Times to the effect that Lord Mandelson had holidayed with Mr Deripaska on his yacht, moored nearby. This was at best inappropriate, as Mr Mandelson was still at the time EU Trade commissioner, and as such responsible for rule changes that might have benefited the Russian aluminium tycoon.

But it wasn’t half as stupid as Mr Osborne, who it turns out also drank with Mr Deripaska on the yacht and at the villa, and even brought along Andrew Feldman, the Tory party’s chief fundraiser, also by chance staying just down the road, to entertain and keep him company.

Mr Rothschild’s motivation in accusing Mr Osborne of attempting to solicit a donation is a bit of mystery. Friends say that he was simply offended by Mr Osborne’s clumsy use of private meetings and confidences while a guest at his house. Yet Mr Rothschild is also a long-standing adviser to Mr Deripaska, who would not have taken kindly to seeing his name splashed over the UK press in connection with Mr Mandelson. In any case, Mr Rothschild claims to have a witness to the alleged solicitation – one Jim Goodwin, an American business associate.

Nat Rothschild is an interesting character in his own right. A former playboy, he once showed worrying signs of following other doomed young members of the Rothschild dynasty into oblivion, but was rescued when family money enabled him to buy into Tim Barrakett’s Atticus Capital, a hedge fund group which at the time was down on its uppers.

In the subsequent bull market, Mr Rothschild made hay and is now said to be worth $200m in his own right, assuming he didn’t keep his share of the profits in the hedge fund, which, along with the rest of the industry, has bombed over the past year. If it was privacy he was trying to defend, stepping into the row between Osborne and Mandelson was hardly the way to go about keeping it. Dangerous place, that Corfu. But perhaps the biggest lesson is that it doesn’t pay to mess with Mandy.

Interesting to note how one of the lesser members of the Rothschild clan can have such influence despite his relative youth.

Comment – October 22, 2008


If nothing else, the above report illustrates how he is courting senior members of both leading British political parties. This is an old trick whereby backing both parties in a political contest the family are assured of a winner – whoever wins.

Even more intriguing is Rothschild’s involvement with the Russian oligarch. The Rothschild family have a history of shifting their base of operations with an uncanny foresight. One branch of the family moved to England before Victoria ascended the throne and made rich profits while the British Empire was at its height.

Then the family backed Barney Barnato, who was born Barney Isaacs in a Victorian London slum and together with Rothschild lackeys the Oppenheimers went on to reap rich pickings in South Africa’s gold and diamond fields.

Now they appear to be moving into Russia, which leads us to suspect that Putin’s apparent enmity toward the Russian oligarchs is no more than an act.

Whatever happens the Rothschild family appear to be preparing for a shift eastwards towards Moscow.