Cleaning Up the Game.(business elite Russia)(Statistical Data Included)

For Oleg Deripaska, life divides neatly into before and after, and the line that separates them is the rise to power of Russian President Vladimir Putin. Three years ago Deripaska was just another obscure businessman, slugging it out in Russia's lucrative and brutal aluminum industry. In the bleak Siberian towns where the metal is produced, contract killings were the order of the day. Most foreign investors were smart enough to keep their distance.

These days Deripaska, an early supporter of Putin's candidacy, controls no less than 70 percent of the Russian aluminum industry. But his net worth--rumored to be well over $1 billion--isn't the only thing that's changed about him in the Putin era. Most of his Siberian allies and enemies have been left by the wayside, and he's trying to wash away the taint of the past by adopting Western accounting standards and business practices (the kind they teach in books, not those exposed at companies like Enron and WorldCom). He's hired new managers from Australia and Canada--not to mention a Japanese sushi chef for the executive dining room. Deripaska is preparing his core company for a public offering, and he knows that success will depend on having the right reputation. "Let's call it 'learning by wrongdoing'," says Deripaska aide Konstantin Remchukov. "Russian businessmen now understand that a good reputation brings you money."

Life has changed for Russia's oligarchs. Under Putin, the country's business elite seem to be discovering the value of respectability and good manners. Part of the shift can be credited to the Russian president himself. Thanks in part to high oil prices and the devaluation of the ruble after the 1998 financial crisis, Putin has managed to ensure a climate of fiscal and macroeconomic stability that has allowed businessmen to invest and expand. Not surprisingly, they support his plans to liberalize the economy, which, if successful, could make them even richer than they already are. Perhaps most important, Putin has helped to enforce a ceasefire among the oligarchs that stands in sharp contrast to the endless turf wars of the 1990s. Now Russia's tycoons claim to have a vested interest in maintaining a civilized status quo. How deep that sentiment runs, though--or how long it lasts--is open to question.

For now, attention is being focused on the most striking turnarounds, like that of Mikhail Khodorkovsky, Russia's richest man. A few years ago he was portrayed in the press as a poster boy for everything that was wrong with the country's business elite (a characterization he denied vehemently). A onetime functionary in the Communist Party youth organization, he emerged from a dubious privatization auction in 1995 with control over one of Russia's biggest oil companies. He paid a mere $159 million for a 45 percent stake in the company, yukos--even though it has more reserves than U.S. competitor Chevron Texaco. When foreign shareholders tried to get in on the bonanza, Khodorkovsky drove them through an obstacle course of court cases and red tape that served only to reinforce outside investors' skepticism about post-Soviet markets.

Now Khodorkovsky can claim he's turned over a new leaf. Over the past three years he began laying out his financials for everyone to see. Instead of banking all of its profits offshore, as many companies did under former president Boris Yeltsin, yukos has plowed earnings into new production equipment. Investors have taken the bait: the company's market capitalization now stands at nearly $20 billion, and Khodorkovsky's personal fortune is valued at $7 billion.

The tycoon knows how to talk the new talk. "Society is calmer," he says when explaining why he has been able to be more open about his business. He is careful to underscore his charitable activities, which are vast, and is philosophical about the immediate post-Soviet years: "It was a revolutionary situation--and I was on the side of the rebels." This week, a yukos tanker full of crude oil will arrive in the United States to test the market, which Khodorkovsky portrays as an attempt to live up to the energy-cooperation agreement signed by Putin and U.S. President George W. Bush at their recent ...