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Fighting A Russian Billionaire For The Faberge Brand

15 Mar 2015

Brian Gilbertson woke up on New Year’s Day 2007 with a plan that he knew could cause him trouble. The former chief of BHP Billiton, the world’s biggest mining company, was about to purchase the Fabergé name from Unilever, the consumer goods conglomerate. His goal was to rejuvenate the iconic trademark, converting it into a luxury brand that sold gemstones and other accessory products.

The deal was for only $38 million, peanuts in his world. So why was Gilbertson anxious, as he later described himself in court documents? Because his most important business partner, Russian billionaire Viktor Vekselberg, would not be included in the deal.

Gilbertson’s anxiety turned out to be warranted. Feeling cheated and secretly cut out of the deal, Vekselberg later sued Gilbertson in the Cayman Islands, a suit that he has doggedly pursued and is slated for trial next year.

The Fabergé deal and the rupture it caused had other consequences. Vekselberg was about to install Gilbertson as chairman of the world’s biggest aluminum corporation when Vekselberg finished merging his aluminum company, Sual, with Rusal. He didn’t get the job. Neither man would comment.

The lesson here: Don’t mess with the emotions that the Fabergé name engenders in certain people. Vekselberg is the biggest individual owner of Fabergé eggs, having bought nine of them from the Forbes family in 2004, repatriating them to Russia. Vekselberg had intended, according to court papers, to give the Fabergé brand to his wife as a Christmas present–perhaps echoing Czar Alexander III’s decision to give his wife an Easter egg made of precious metals in 1885 that launched the imperial eggs.

Vekselberg, 53, and Gilbertson, 67, have known each other since 2004, when Vekselberg convinced Gilbertson to run Sual, the aluminum producer Vekselberg cobbled together in the 1990s. Around the same time Gilbertson started a U.K. investment firm, Pallinghurst Resources, backed by a $150 million commitment from Vekselberg. One of Gilbertson’s earliest projects: purchase the Fabergé trademark and intellectual property rights from Unilever.

But Gilbertson claims that days before the deal with Unilever Vekselberg demanded that in return for his funding he wanted to own the intellectual property himself and most of a company that would build a business around it. This last-minute demand was intended to increase “the likelihood of my agreeing to their demands,” Gilbertson says in a court-filed affidavit. So he says that instead he rounded up other investors. “I was concerned that Mr. Vekselberg would ruthlessly seek to drive his own agenda,” he said in a court-filed affidavit.

Vekselberg contends in his suit that this maneuver violated Gilbertson’s fiduciary obligations to Vekselberg’s investment vehicle, Renova Resources Private Equity. It amounted to improperly directing investment opportunities to businesses in which Renova Resources had no ownership interest.

The litigation hasn’t stopped Gilbertson from building the Fabergé business. He’s gotten his investors to spend $60 million, opening a storefront in Geneva and launching two new collections that include jewelry priced for $7 million. His investment firm currently values Fabergé at $173 million, but Gilbertson predicts it will soon be worth $1 billion.

©Nathan Vardi, Forbes Staff – Original article (source)