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Russian tug of war over tycoons Faberge eggs

The Times 30, May 2004. By Mark Franchetti, Moscow

When Viktor Vekselberg, Russias third-richest man, spent 54m bringing home nine gem-encrusted Faberge eggs that once belonged to the tsars, he thought his fellow countrymen would applaud the gesture.

Just two weeks after they were unveiled in the Kremlin, however, the jewelled eggs are at the centre of a complex legal row. Angry depositors of First Municipal, a bank that failed two years ago, claim Vekselberg owes them 22m and are seeking to have the eggs impounded.

They accuse the tycoon of using money from the bank to help buy the collection earlier this year from the Malcolm Forbes Foundation in New York. Vekselberg, 47, who has a 3.2 billion fortune, rejects the charges.

The tycoon is one of the co-owners of TNK/BP, a joint venture set up last year that is Britains single largest investment in Russia. The angry depositors are led by Armen Rshtuni, a former colleague of Vekselbergs at TNK, who alleges that the disputed funds were transferred from First Municipal to the tycoons Aljba Alyans Bank.

Rshtuni, who is personally claiming back 3.3m, says he raised problems at the bank several times with Vekselberg but was repeatedly told they would be sorted out and that he should not make a fuss.

We believe that part of the money transferred by Vekselbergs bank could have been used to buy the eggs, Rshtuni said. We are trying to get our money back and therefore we want the eggs impounded.

A spokesman for Aljba Alyans Bank claimed Rshtuni was himself under investigation by the state security force FSB for allegedly defrauding First Municipal of millions of pounds. Rshtuni has denied the allegation.

Vekselberg bought the eggs and another 180 precious objects in February before they could be auctioned by Sothebys.

The purchase was seen as part of a growing trend by the super-rich who had made their fortunes during the privatisation of state assets to improve their image by giving something back to Russian society. The treasures are still owned by Vekselberg, however, and were not given to the state.

The nine eggs were commissioned in the late 19th century by Tsar Alexander III and his son Nicholas II, Russias last imperial ruler, as gifts for their wives.

The most valuable, the diamond-studded Coronation Egg, worth an estimated 13m, was made in 1897 as an Easter gift for Tsarina Alexandra and contains a precise model of the coronation coach in which she had ridden three years earlier. Another egg, The Hen, was the first to have been made for the royal family in 1885. It is white on the outside with a golden yolk.

Fifty eggs were made by Peter Carl Faberges master jewellers. Some were lost after the 1917 revolution when they were taken from the Winter Palace in St Petersburg to the Kremlin in Moscow. In 1930 Stalin ordered most of those left to be sold.

Malcolm Forbes, the founder of Forbes magazine and a staunch anti-communist, began collecting the eggs and eventually realised his ambition of owning more of them than the Kremlin. Others are owned by the Queen and by Prince Rainier of Monaco.