You annoy an oligarch at your peril

AMID the bureaucratic prose of his dreadful book The Blair Revolution, Peter Mandelson managed to articulate one noble thought. Writing in 1996, when the old Soviet empire lay in ruins, he declared that the European Union must move into central and eastern Europe to ‘strengthen security, entrench democracy and ensure economic and social progress spread across the whole continent’.

He could plausibly believe then that Tony Blair would be at the forefront of a new Europe, free and at peace. Now, his optimism seems a dream from another age. Putin’s autocratic regime of former KGB men and crony capitalist backers laments the loss of the empire of the tsars and commissars and gives every sign of wanting to take it back. After the war in Georgia, and with the recession bringing Ukraine close to collapse, the chairman of the US Joint Chiefs of Staff had to fly to Lithuania last week to promise the former occupied territories that Nato would protect them.

MI5 says there are as many Russian spies in Britain today as at the height of the Cold War. Putin’s state security apparatus monitors Russian dissidents in London and displays no visible sign of regret when they are horribly murdered.

Yet Mandelson and politicians like him, who once wanted to entrench democracy and progress across Europe, see nothing wrong with consorting with the oligarchy, although I suspect it has taken newspapers readers a while to understand the magnitude of their moral failure.

The Deripaska affair is a puzzle to outsiders because the press can’t quite say what it is about. When George Osborne briefed the press, the story was that Mandelson was spreading poison about Gordon Brown. His stay on Deripaska’s yacht and dinners with the oligarch in Moscow’s restaurants quickly superseded tales of back-stabbing, because journalists realised Mandelson’s decisions as European Trade Commissioner affected the interests of one of the world’s richest men.

When Nathaniel Rothschild wrote that Osborne had talked about soliciting donations from Deripaska, we decided one Bullingdon Club member was punishing another for breaking the omertà of upper-class house parties. Business journalists intervened to point out that a little more than gentlemanly pride was at stake for Rothschild. Deripaska’s money helped him increase his fortune, but the Russian was not coping well with the financial crisis. Rothschild had to attack Osborne for drawing attention to a shadowy man who had contributed towards the cost of Rothschild’s Klosters chalet, where, inevitably, Mandelson was a frequent guest.

Those naive souls who worry about political – oh I don’t know – decorum then watched open-mouthed as within weeks of allowing the super-rich to pass him around like a half-drunk bottle of Cristal, Mandelson returned to Whitehall and demanded restrictions on the employment rights of working mothers. Osborne could not beat that although he tried. After staying with the Rothschilds and visiting the Deripaskas in Corfu, he announced that the Tories were the only party truly committed to tackling poverty.

For all the apparent ruthlessness, the media are dancing around the main point. It is not showing what should be at the heart of the affair: a proper sense of outrage at Mandelson, Osborne and Rothschild’s belief that the tame oligarchs of a dangerous autocracy are no better or worse than other industrialists.

My colleagues are not to blame for pulling punches. London not only offers crony capitalists Michelin-starred restaurants, security guards and discreet bankers. Our authoritarian libel laws also attract the rich. Editors think once, twice, 100 times before crossing them. They know they must contend with libel judges and Law Lords unfit to hold office in an open society because they won’t stand up for freedom of speech.

Reading between the lines, you may realise that when reporters talk about ‘the aluminium wars’ that turned Deripaska into a tycoon in Nineties’ Siberia, we do not use ‘war’ figuratively. Notice, too, how often we say that the State Department revoked Deripaska’s visa to enter the US in 2006 and how rarely we explain why.

Judges graciously lift libel restrictions when journalists report their verdicts. I can therefore give you a taste of the company the political class is keeping by quoting a ruling by Mr Justice Christopher Clarke at the High Court on 3 July.

He was hearing the claim of Michael Cherney. Like so many who try to do business in Russia, the exile alleges that the associates of the Kremlin cheated him. He feared arrest if he went home to demand $4.35bn from his former partner, one Oleg Deripaska, and asked London courts to hear his case instead. Deripaska denied he owed Cherney a rouble and insisted that any hearing should be in Russia.

In his ruling on where the trial should take place, the judge described how he had heard the evidence of Bill Bowring, professor of law at Birkbeck College, and an authority on civil rights in Putin’s Russia. It gave ‘substantial support’ to the conclusion that exiled enemies of the Kremlin and its backers would be arrested if they returned.

‘Deripaska is, by common account, a Kremlin-friendly oligarch, who heeded President Putin’s warning to the oligarchs to stay out of politics,’ the professor said. ‘Others have found themselves in exile or in a Siberian labour camp. But Mr Deripaska emerged as the triumphant leader of the Kremlin-friendly oligarchs whose ability to continue to do business is dependent on obedience to the Kremlin and who can count, in turn, on support from the government and the judicial system. He has funded President Putin’s pet projects. [His] Rusal group is one of the most important assets of the Russian state.’

Without accusing Deripaska, the judge accepted that the trial could not take place in Russia because of ‘the risk of a successful assassination’. Cherney had a ‘well-founded fear for his safety’. Nor, continued the judge, could he expect a fair trial. ‘It seems to me that there is a significant likelihood of Mr Cherney being prosecuted if he returns and a real possibility that Mr Deripaska might use his influence or his ability to orchestrate feeling against Mr Cherney.’

In a sentence that resonated with all who know the history of communist show trials, the judge added that ‘the use of criminal prosecutions [or the threat of them] as tools in a power struggle with rivals was a feature of Soviet Russia. The pattern has continued and has a new name: “zakaznye dela” [“prosecutions to order”].’

With these words, he found against the client of Rothschild, the dining companion of Mandelson and the object of Osborne’s covetous glances.

I began by describing Mandelson’s book as dreadful. Perhaps I was harsh. In 1996, he wrote that voters believed they had ‘a government that consists of business back-scratchers and a parliament made up of politicians on the make’. Ain’t that the truth.