Young banker becomes international oil baron

Mikhail Khodorkovsky had good reason to smile. Not yet 40, he is Russia's uncontested oil czar and a billionaire several times over.

Having announced the merger of his company, Yukos, with rival Sibneft to create one of the world's largest oil companies, Khodorkovsky is now beaming all over the front pages of Russia's media.

Some say he may be heading for politics.

Friends and foes alike use the same vocabulary - superintelligent, charming, pitiless, ambitious - to describe the shy-looking ultra-wealthy tycoon and future chief executive of YukosSibneft, which after the merger will be the world's fourth largest producer of crude oil.

With a 36 percent stake in Yukos, Khodorkovsky was Russia's richest man even without the gains that may accrue from the merger.

Ranked second by Fortune magazine on the list of the "world's richest men under 40," he is said to be worth 6.6 billion euros.

Now aged 39, he graduated from Moscow's Mendeleyev Chemistry Institute in 1980 and the prestigious Plekhanov Economics Institute in 1988, in time for him to launch himself into a business career as Mikhail Gorbachev's perestroika demolished the barriers to private enterprise.

Even before the collapse of the Soviet Union in late 1991, Khodorkovsky had begun earning millions of dollars a year via private businesses.

In 1990 he founded Menatep Bank, whose prestige and political support were such that it was soon invited to handle Finance Ministry accounts and continued, in line with the practice of the major banks at the time, to place funds in overseas accounts.

The 1998 financial crisis, however, left Menatep, like many other banks, unable to meet its commitments.

But Khodorkovsky managed to move the group's main assets to offshore havens, leaving behind an empty shell and the depleted accounts of its foreign creditors.

The sleight-of-hand did not endear the former Komsomol (communist youth) organizer and Communist Party member to investors.

But events move fast in the new Russia, and Khodorkovsky rapidly realized that he had to adapt to a more disciplined kind of capitalism in order to succeed.

In 1999 he became one of the first Russian businessmen to realize the importance of imposing international standards of accounting and business management, ordering major changes in his oil company.

"He's now an ultra in matters of transparency," one of his Western aides said. "He wants to outperform the Americans using their own methods."

As a result, Yukos, which owns 53.7 percent of Lithuania's Mazeikiu Nafta, shares have taken off and the company's capitalization multiplied 100 times between 1998 and 2003 to total $25 billion.

Khodorkovsky acquired the company in 1995 for a song - a snip at 350 million dollars - as part of the Kremlin's notorious loans-for-shares scheme.

Analysts believe Khodor-kovsky may now be pondering a political career, their speculations fed by comments some months earlier that he could sell off part of his group to a foreign investor and that he would not remain Yukos chief forever.

"Everyone agrees he's headed for politics," Zenith bank analyst Sergei Suvorov said in the daily Gazeta.

"He could well be tempted," one of the Yukos group's top executives said.

Khodorkovsky's YukosSibneft fortune gives him ample resources to embark on a political career.

His first priority, however, must be to remain on good terms with President Vladimir Putin, who has made plain that he will tolerate the "oligarchs" only as long as they steer clear of state affairs.