Alexander Lebedev is concerned.

“Russian businessmen are very scared,” the 54-year-old formerbillionaire, who served in the Soviet embassy in London during theCold War and owns Russia's National Reserve Corp., said by phone.“There are risks to the Russian economy. There could be margincalls, reserves might be drawn down, exchange rates may fall, andprices will rise. This worries me.”

Billionaires in Russia and Ukraine risk further losses as marketvolatility and the threat of Iran-style economic sanctionsintensify following Russia's incursion into Crimea. Since Feb. 28,the day unidentified soldiers took control of Simferopol Airport insouthern Ukraine, Russia's 19 richest people have lost $18.3billion, according to the Bloomberg Billionaires Index, a dailyranking of the world's 300 richest wealthiest people.

“The instability caused by the situation in Crimea could be aproblem for the oligarchs,” Yulia Bushueva, who helps manage $500million at Arbat Capital in Moscow, said in a telephone interview.“If a billionaire pledged their stakes in publicly traded companiesas collateral for a line of credit, they could face margin callsand have to re-negotiate with banks.”

The U.S. and the European Union are threatening sanctionsagainst Russia if it doesn't back down from annexing the Black Seaprovince, which is holding a referendum in two days to joinUkraine's former Soviet-era master.

“All sides now understand each other's positioning andunderstand the constraints each other face,” Michael O'Sullivan,chief investment officer of Credit Suisse Private Banking, said ina telephone interview. “It's now clear as well that an escalationwould have negative consequences on pretty much all theplayers.”

The European Union last week froze the assets of 18 Ukrainians,including “hundreds of millions of euros” in the Netherlandscontrolled by former President Viktor Yanukovych and his son,Oleksandr, Dutch Finance Minister Jeroen Dijsselbloem said March 6on the television show Pauw & Witteman.

Dmitry Firtash, a 48-year-old Ukrainian billionaire who made hisfortune importing Russian natural gas, was arrested in ViennaWednesday by an organized-crime unit of the Austrian police on awarrant issued by the U.S. Federal Bureau of Investigation,according to a statement by the country's Interior Ministry.

He is alleged to have paid bribes and formed a criminalorganization, according to the warrant, issued after an FBIinvestigation that began in 2006, the ministry said.

Outside Russia

One Russian billionaire, who asked not to be identified becauseof the sensitivity of the situation, said he was concerned aboutthe effect potential sanctions might have on business. He said he'dconsider buying assets outside of Russia if sanctions wereimposed.

Dmitry Peskov, a Kremlin spokesman, said in a March 11 telephoneinterview that “there were no consultations” with Russianbusinessmen and that they “have not expressed any concern” over thesituation.

According to a March 13 report in the Wall Street Journal, aspokesman for President Vladimir Putin acknowledged that businessleaders in Russia have been in “constant contact,” and that Putinhad not met with any of them. The report said a recent meetingbetween the country's industrialists and high-ranking governmentofficials turned “tense” when the subject of sanctions came up.

Doing business under sanctions might not be all bad for Russianentrepreneurs, according to South African billionaire NatieKirsh.

“There are opportunities that come out of sanctions,” the82-year-old, who started building his $5.9 billion retail and realestate empire during apartheid, said by phone from Johannesburg.“Sanctions can be broken. It always depends on the extent of thesanctions and how they take.”

F.W. de Klerk, South Africa's last president during theapartheid era, said the country and businessmen were able to workaround the sanctions levied by the U.S. beginning in 1986.

“The sanctions delayed change in South Africa because it made uslook for ways to evade them,” de Klerk, 77, said in a telephoneinterview from Cape Town. “We worked with the business community tofind ways to keep companies going. In the end, not many factoriesshut down; they just changed ownership.”

Kirsh said the Cold War could reemerge out of Russia's incursionin Ukraine, and energy suppliers outside of Russia will benefit ifsanctions are levied.

“It's a different story with Putin,” Kirsh said. “South Africadoesn't supply 30 percent of Europe's oil and gas. There will besome people outside of Russia that will see a huge benefit. Somepeople who supply oil and gas for Russia will not believe how busythey will be.”

'Maintain Relations'

Rinat Akhmetov, Ukraine's richest person, has lost more than$550 million since Feb. 28. The 47-year-old billionaire, who ownsDonetsk, Ukraine-based conglomerate System Capital ManagementGroup, expanded his business with help from Yanukovych. Akhmetov'sDTEK Holdings BV was the only bidder in two of five auctions ofstate-owned energy assets, which were organized by the formerpresident's government.

The billionaire no longer supports his longtime ally and hascommitted to rebuilding the government of Ukraine, according to aMarch 10 report in London's Telegraph newspaper. Elena Dovzhenko, aspokeswoman for Ahkmetov, said the billionaire wasn't immediatelyavailable to comment.

“He understands that the previous state of things is over,” IhorBurakovsky, head of the Board of the Institute for EconomicResearch and Policy Consulting in Kiev, said by phone. “He will tryto maintain relations with all the significant players in thecountry.”

Ahkmetov on March 9 met with Vitali Klitschko, leader ofUkraine's UDAR party and a potential candidate for Ukraine'spresidency, to discuss the situation, according to a statement fromUDAR.

“The use of force and lawless actions from outside areunacceptable,” the billionaire said in a separate statement onMarch 2. “I state with all due responsibility that SCM Group, whichtoday employs 300,000 people and represents Ukraine from west toeast and from north to south, will do everything possible tomaintain the integrity of our country.”

The 19 Russian billionaires on the Bloomberg ranking havebusinesses, homes, and bank accounts scattered around the globevalued at more than $208 billion. Some of that wealth wasaccumulated through government ties that enabled them to acquireformer state assets during privatization in the 1990s, transactionsPutin called “unfair” in 2012. They have since moved control of theassets out of Russia and into the West.

Alisher Usmanov, the country's richest person, controls his mostvaluable asset, Metalloinvest Holding Co., Russia's largest ironore producer, through three subsidiaries, one of which is locatedin Cyprus, an EU member nation. The 60-year-old also owns aVictorian mansion in London that he bought in 2008 for $70 million,according to a May 18, 2008, Sunday Times newspaper report.

He's lost $1.5 billion since the crisis began, according to theBloomberg ranking.

“We are concerned with the possible sanctions against Russia butdon't see any dramatic repercussions for our business,” IvanStreshinsky, CEO at USM Advisors LLC, which manages Usmanov'sassets, including stakes in Megafon OAO and Mail.Ru Group Ltd.,said in an interview at Bloomberg's offices in Moscow today.

“Mail.Ru and Megafon revenue is coming from Russia, and peoplewon't stop making calls and using the Internet,” he said.“Metalloinvest may face closure in European and American markets,but it can re-direct sales to China and other markets.”

Transferring ownership abroad may prove problematic if sanctionsare imposed. The U.S. Securities and Exchange Commission and otherregulatory authorities may tell U.S.-based banks to exhibit greatercompliance with the existing Foreign Corrupt Practices Act,Standard Bank Group Ltd. said in a March 11 report.

The report also said the U.S. might investigate Russia'scompliance with the Financial Actions Task Force on MoneyLaundering and Terrorism Financing in an effort to push the countryonto a black list, a move that would prevent global banks fromdealing with Russian lenders.

'Nuclear Blow'

The third escalation would be actual asset freezes, whichperhaps would be “the nuclear blow, as it would riskcountermeasures from the Russian authorities,” according to theStandard Bank report.

“Currently, there is no clear link between events taking placein Ukraine and any steps that might be available to freeze assetsof wealthy Russian citizens overseas,” Marta Khomyak, a partner ofLondon-based PCB Litigation, said in a telephone interview.“However, given the pace of events and the underlying politicaltensions, I would not rule out attempts being made to attackvarious Russian interests overseas.”

Sanctions related to the Crimea crisis so far have been leviedon individuals the EU said were responsible for the“misappropriation of state funds” and “human rights violations,”according to the regulation passed by the Council of the EuropeanUnion on March 5. President Obama echoed the language in a briefingwith journalists at the White House the next day.

“Russians who are making bank transactions and opening newaccounts will now be confronted with increased suspicion,” ValeryTutykhin, an attorney with John Tiner & Partners, aGeneva-based law firm that specializes in wealth management, saidin an e-mail.

The crisis also threatens to derail the relationship between theWest and the Russian businesses the billionaires control. Among thecompanies potentially affected is OAO Novolipetsk Steel, thecountry's most-valuable steelmaker, which is controlled by VladimirLisin, Russia's 13th-richest person. The company derived 21 percentof its $12.1 billion in 2012 revenue from Europe, according to datacompiled by Bloomberg. Sergey Babichenko, a spokesman for NLMK,declined to comment.

“In the event of a European and U.S. ban on exports of themetal, NLMK's position would be weakest among Russian steelmakersbecause it ships steel slabs to its own mills in Europe,” KirillChuyko, head of equity research at BCS Financial Group, said. “Wesee such actions as unlikely for the time being.”

With its stock market falling and interest rates rising, Russiahas suffered most of the financial pain the crisis hasinflicted.

“To the extent that they can, the businessmen in Moscow will bemaking their sentiments and voices heard,” said Credit Suisse'sO'Sullivan. “I'm not sure the Kremlin will listen to them.”

Billionaire Naguib Sawiris, Egypt's second-richest person, who'sdone business with North Korea, Russia, and Pakistan through histelecommunications companies, said he's concerned about potentialsanctions.

“Putin has proven that toward the end of any crisis, he alwaysgoes back to reason and finds compromises,” Sawiris, 59, said in aMarch 14 e-mail. “Therefore, I bet this crisis will endamicably.”

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