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Sergei Pugachev's father was an officer in the Soviet army and the family frequently moved in his early years before settling down in St Petersburg. While still at school, Pugachev discovered his entrepreneurial talent by setting up and running various small businesses.
With perestroika came greater opportunities for private enterprise. This allowed Pugachev to gain further business experience (and earn further capital) by becoming involved in some of the first co-operative movements in St Petersburg.
At the same time as pursuing his business ventures, Pugachev studied at a naval college in St Petersburg, where he also embarked on a degree in psychology and engineering. However, he did not enjoy his studies and left before obtaining his degree. In 1985, Pugachev took a job as a courier in the state Industrial Construction Bank of the USSR (“Promstroybank”). He was soon promoted to the position of an economist and then a credit inspector within Promstroybank.
While working at Promstroybank, Pugachev continued to pursue his business ventures which were becoming more ambitious. By the time of the collapse of the USSR, Pugachev had already established a career as an independent businessman. The opening up of the market economy following the collapse of the communist regime presented him with the opportunity to expand his operations into banking.
In 1990, Pugachev and some of his acquaintances pooled their assets to create Severny Torgovy Bank (“Northern Trading Bank” or “NTB”). Pugachev used the profits from his trading businesses as his contribution towards NTB’s initial capital.
NTB did not operate as a conventional western retail bank. Strong currency fluctuations, hyperinflation, and the lack of a credit history made lending in return for interest extremely uncertain and commercially unviable. Instead, it operated more in the manner of a venture capital fund. Through NTB, the founders invested money into businesses in return for a small share in the projects and thus a participation in the businesses’ profits.
In 1991, Pugachev moved to Moscow and opened an NTB branch there with Sergei Veremeyenko. However, his business partners wished to continue to focus on St Petersburg, and so he separated from NTB. In 1992 he withdrew his capital from NTB, partly by buying out the Moscow branch, which he used to create International Industrial Bank (the Bank, also sometimes referred to as “Mezhprombank” or “IIB”) with Mr Veremeyenko. After this, Pugachev had no further involvement in the work of NTB and did not follow its fortunes.
NTB’s banking licence was withdrawn on 2 February 1996, allegedly as a result of NTB boosting interest rates to attract retail deposits. At the time of Pugachev’s involvement with NTB, it operated as an investment business rather than a retail bank and any change in the direction of NTB’s business (and any alleged mismanagement) occurred after Pugachev had left it to focus on other ventures.
Through his involvement at the Bank, Pugachev continued to come across and evaluate diverse business projects. He did not have any formal corporate structure for his various assets and business interests. Instead, the Bank included both a banking arm, that continued to operate as a lender and deposit-taker, and an “asset management” arm.
After arriving in Moscow, Pugachev became increasingly involved in politics, initially in the role of an economic advisor to the President’s administration. At the beginning of 2000, President Putin oversaw a raft of economic reforms aimed at stimulating the economy and entrenching the free market. Pugachev, who increasingly saw his role as being at the junction of Russian politics and economics, felt that he could contribute to his country’s future otherwise than through business. In November 2000, he had been elected a member of the board of the Russian Union of Industrialists and Entrepreneurs, whose main activity was initiating new draft bills and improving existing legislation in relation to economic and financial matters.
In 2001, Pugachev was elected as an independent member of the Federation Council (the upper house of the Russian Federation) for the Republic of Tuva in southern Siberia.
Pugachev's primary duty as a senator was to work on preparing drafts of new laws for implementation. He, together with the help of his 10-strong staff, worked on a number of projects, including the anti-corruption law which was ultimately adopted by the Russian Parliament. He also worked actively to promote the interests of the Tuva region. During his time as a senator, Pugachev personally oversaw several development projects in the Tuva region and made charitable donations to projects in the region, including towards a new museum and the restoration of churches.
In addition to his duties as a senator, Pugachev was a member of several parliamentary committees, including the Committee on Federal Affairs and Regional Policies. He was also an adviser to the Head of the President’s administration.
Pugachev held his post as a senator for 10 years until January 2011, when he left Russia.
Pugachev lives in exile in London. He remains married to Galina, with whom he has two grown-up children. However, he lives with Alexandra Tolstoy, with whom he has two young sons, Alexis and Ivan and a baby daughter.
In March 2015, he said he was only worth £45,000 after most of his assets had been taken from him by the Russian government and his legal bills had emptied his bank accounts.
- Catherine Ostler, The English rose who ran away to Mongolia, her billionaire oligarch and a romance worthy of Tolstoy dated 2 July 2011 at dailymail.co.uk
- Jane Croft, 'Exiled oligarch says he cannot afford lawyers', Financial Times, 2 March 2015, p. 4
- David Linley wooed by ‘Kremlin’s cashier’. Billionaire friend of Putin set to buy stake in viscount’s furniture business. by Nick Fielding The Sunday Times 13 January 2008
- "Businessmen are ‘serfs’ in Putin’s Russia, warns Sergei Pugachev." by Catherine Belton and Neil Buckley Financial Times, 8 October 2014