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The Romanov dynasty


CLUTCHING flowers and a bottle of cheap wine bought at the local grocer, Vladimir Romanov, the apparent saviour of Hearts Football Club, arrived on Lord George Foulkes' doorstep in Ayr last Sunday evening.

The Lithuanian tried his best to appear friendly. But his cheery smile and warm handshake masked a determination to persuade Lord Foulkes, the Labour peer and Hearts chairman, to back his latest, apparently crazy decision to sack a successful club chief executive, having the week before sacked Scotland's best-performing manager. This time Foulkes felt enough was enough, and decided he himself should quit.

The doorstep scene was a world away from the glamorous image Romanov has cultivated over the past year. Controlling a £300m business empire, with banking, property and textile interests, from a yacht in the Mediterranean, he seemed an unlikely saviour for a struggling Edinburgh football club. But for better or worse, that is exactly what he has become.

Since Romanov arrived at Tynecastle last year mystery has surrounded his every move. Who was this mysterious white knight from the east? Why would he want to own a Scottish football club? Why would he want to inherit its failures, including nearly £20m of debt? The team's phenomenal success on the pitch put those questions on to the backburner until the frenetic events of recent weeks.

Today Scotland on Sunday raises new questions about Romanov's business interests, and apparent inconsistencies over the educational background of his son, Roman, who last week was appointed the new Hearts chairman and acting chief executive. Our investigations will add to the mounting crisis over the Lithuanian family's involvement in, and growing grip on, Hearts.

In the year since Romanov stepped into Tynecastle Park, he has gradually increased his control. He recently, for the first time, became the club's majority shareholder. Yesterday, the two other largest Hearts shareholders agreed to sell their shares to him, giving him more than 70% control. He now stands on the cusp of a greater prize: 75% will allow him to delist the club from the stock exchange. If he can achieve 90%, that will allow him to turn Hearts into a private company.

Romanov and his associates are now firmly established on the Edinburgh map. His closest aide, Sergejus Fedotovas, has lived in Edinburgh's plush New Town for nearly two years.

His niece, Julija Goncaruk, has settled in the Murrayfield area of the city. Romanov, who is said to split his time between his main residence in the Lithuanian city of Kaunas and his yacht in the Mediterranean, jets in and out of Edinburgh, staying in the city's most luxurious hotels, notably The Scotsman, The Balmoral and The Caledonian.

It is a world away from his underprivileged upbringing. Born in 1947 in the region of Tver, north-west of Moscow, Romanov's family moved to the then Soviet republic of Lithuania at the age of nine. His mother had survived the siege of Leningrad and his father had fought in the Red Army, taken part in the storming of Berlin and remained in the military after the war.

The young Romanov drove a taxi, and sold smuggled Western pop records to support his family before signing up for six years in the Soviet Navy, during which time he met the woman who was to become his wife.

Throughout his life, Romanov seems to have made a speciality out of taking what were seen as middle-ranking or even unlikely bets, and then turning them into money-spinners.

Romanov made money in textiles under Mikhail Gorbachev, then joined some others to found Lithuania's first private bank, Ukio.

Following Lithuanian independence in 1991, Romanov moved in on a series of businesses, including metal and food-processing. The jewel in his empire's crown is a steel mill, in one of Europe's most unstable regions, the Serbian sector of Bosnia.

Here, in the murky world of post-Soviet, Eastern European business, Romanov has seen his bank linked to a money laundering investigation. Scotland on Sunday can reveal between May 2002 and July 2003, Ukio was linked in a series of controversial cash deals with the now-defunct Moscow-based Sodbiznesbank (SBB), a favourite bank for Russian criminals and mafiosi.

SBB became notorious through a grisly episode in May 2003. A Russian industrialist Viktor Faber, along with a senior colleague, Natalia Starodubtseva, were kidnapped in central Russia. Despite receiving a ransom, the kidnappers killed the duo and buried their bodies on a river islet, then paid the ransom into an SBB account.

Investigators looking into SBB found a cavalier disregard for Russian money-laundering laws. It emerged huge amounts of cash were being regularly deposited into SBB accounts and being transferred to three Baltic banks, including Ukio, over an 13-month period. When the money arrived in the Baltic banks' coffers it was converted into foreign currency, credited to foreign currency accounts in the banks, and then transferred to deposit accounts. There were more than 500 such deals, worth £500m. The Central Bank of Russia (CBR) auditors, reviewing the deals, believed they were highly suspicious and should have been flagged up to authorities.

SBB's licence to operate was revoked last year and angry creditors and depositors have beaten a trail to the bank's door demanding their savings. The debacle still haunts Russia: just last month SBB's former director, Alexander Slesarev, his wife and their daughter, who attended private school in Yorkshire, were shot dead near Moscow.

A spokeswoman for the CBR said: "We conducted an investigation and we have delivered our file to the office of the Procurator General. Any decision to prosecute will be up to them."

No-one from the office of the Russian Procurator General or the Russian Embassy was available for comment.

Ukio and Romanov claim they have been the victim of dodgy dealing rather than culprits. A spokesman for Romanov said: "It is correct that cash was transferred from SBB to accounts at Ukio. But the management at Ukio, along with the other banks which cash was transferred to, became suspicious and we alerted the Lithuanian authorities. That helped bring about the investigation."

But questions remain, especially over the amount of time the situation was allowed to continue before investigations began.

It is not only Romanov senior whose background appears controversial. One of the most amazing factors of last week's sacking of Hearts chief executive Phil Anderton was the emergence of his replacement: Romanov's only son, Roman.

The 30-year-old had attended games at Tynecastle but that appeared to be the limit of his involvement. Previously, there was no hint he would take charge. But that is what he did, replacing both Anderton as acting chief executive, and former club chairman Foulkes.

When questioned last week about his qualifications for running a football club Roman pointed to his experience in his father's business empire. Much has also been made of his academic background, at Marietta College, in Ohio, Moscow University and an American business school. A spokesman for Roman told Scotland on Sunday that he had spent 18 months at Pace University in New York.

But this cannot be verified. Although Pace University officials confirmed that Romanov registered there in 2000, they have no trace of what, if anything, he studied. A university spokeswoman said: "We do not have a record of Roman Romanov having taken classes at Pace University."

Romanov's spokesman insisted: "That would suggest to me that their records are not as up to date as they should be."

The troubles suddenly engulfing Hearts seemed unthinkable last month. Things were going incredibly well. The team had enjoyed its best-ever start to a season, was top of the league, feared by its rivals and written about worldwide.

But Romanov's unexpected decision to sack manager George Burley left the Scottish football world astounded.

The task of justifying the move fell to Foulkes. Hard as he tried, he couldn't. Under pressure, and unconvincingly, he told the media that "irreconcilable differences" with Romanov were to blame for Burley's departure.

Foulkes thought the worst of it was over, but he was wrong. A week later he was summoned to see Romanov, this time staying in the Radisson SAS Hotel. The Lithuanian did not want to talk about Sir Bobby Robson as a possible successor to Burley. He wanted to sack Anderton.

Romanov's lawyer was there, as was Hearts' director of communications, David Southern. For the next two hours Romanov, in between sips of fizzy water - he does not drink alcohol according to associates - tried to persuade Foulkes that he should back his decision.

Foulkes said: "There wasn't one thing he said that made me think the decision could be justified. I urged him to reconsider what he was doing but he didn't seem in the least bit interested in what I had to say. I guess I should have known, by then, that I wasn't going to change his mind."

The next day Romanov turned up on Foulkes' Ayrshire doorstep, flowers and wine in hand, and made one final effort to get his chairman's support for the Anderton sacking.

Despite his own resignation, Foulkes remains convinced that Romanov wants success for Hearts. He just doubts the Lithuanian's methods.

"He is, and remains, the only show in town," Foulkes said. "If he hadn't come along, we would be playing at Murrayfield before crowds of 7,000. We'd be struggling to get into the top six."

But Hearts may not be the final conquest of the Romanov empire. The businessman has also been linked with the mid-table Russian club FC Saturn, which is based in a modest suburb of Moscow.

Like Hearts' travails with the Old Firm, Saturn struggles to top the table and defeat the bigger Moscow clubs such as Dynamo, Spartak, and CSKA. Romanov has admitted in interviews with Russian media he is interested in links with a Russian club and Saturn - whose most famous player is former Rangers, Manchester United and Dynamo Kiev star Andrei Kanchelskis - is a likely option. So far Hearts' travails have not led to any panic among Saturn fans.

Since they lost Burley, Hearts' unbeaten record has gone. Some fans have been asking themselves if any self-respecting manager will want to live in the Romanovs' shadow but last night Graham Rix, the former Arsenal and Chelsea midfielder, emerged as the front-runner.


Foulkes, who watched yesterday's Hearts' 3-0 victory against Dundee United take the side back to the top of the league, for at least 24 hours, added: "I genuinely think any suggestion he is going to sell Hearts off and turn the ground into flats or run away is not the case. He has an absolutely clear idea of what he wants. But if people don't go along with him he pushes them aside."

Vladimir Romanov is ruthless, and usually gets what he wants. But the questions remain: what does he really want with Hearts - and Scotland?

Taken from the Scotsman

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