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Add political problems to Oleg Deripaska's financial woes.

Just as the Russian oligarch faces imminent deadlines to save his investment in UC Rusal, the world's biggest aluminum maker, his name has surfaced in the middle of a political scandal involving Britain's shadow chancellor, George Osborne, and Nathaniel Rothschild, the Atticus Capital partner and adviser to Mr. Deripaska.

It's a lurid tale of billionaire yachts, back-stabbing politicians, Tory toffs, influence peddling and financial mayhem. At summer parties on the Greek island of Corfu, Mr. Deripaska and Mr. Rothschild, along with two senior British politicians drank, dined and let their tongues wag.

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In a letter to The Times of London earlier this week, Mr. Rothschild said Mr. Osborne solicited donations from Mr. Deripaska for the Conservative party. Another leading Tory, Conservative party chief executive officer Andrew Feldman, also met Mr. Deripaska on the yacht, Mr. Rothschild said.

Britain's electoral laws prevent political parties from accepting money from foreign residents, but Mr. Rothschild's letter suggested a way around the legal controls had been found. "It was suggested by Mr. Feldman, in a subsequent conversation at which Mr. Deripaska was not present, that the donation was "channelled" through one of Mr. Deripaska's British companies. Mr. Deripaska declined to make any donation."

The timing of the political storm, and a possible probe into his relationship with Tory party members, could not have come at a worse time for Mr. Deripaska, who is under pressure to refinance international loans made to Rusal as commodity prices plunge. The financial squeeze has already forced him to relinquish a stake in Canada's Magna International.

In March, Rusal borrowed $4.5-billion (U.S.) from a consortium of international lenders, including Barclays Capital of Britain, to buy 25 per cent of Russia's Norilsk, the world's biggest nickel producer, from Mikhail Prokhorov, who is president of the Russian investment fund Onexim Group. Norilsk shares were pledged as collateral for the loan. Mr. Deripaska, through his private Basic Element holding company, owns 57 per cent of Rusal.

If the loan cannot be refinanced, Rusal may be forced to hand over the Norilsk stake to the lenders, in the same way that a margin call forced Basic Element to surrender 20 million shares of Magna International this month.

Rusal has applied to Vnesheconombank (VEB) for new loans to refinance the international loans. VEB is Russia's state-owned development bank and its board chairman is Russian Prime Minister Vladimir Putin. "Given the financial difficulties of Rusal, the government might happily assume a controlling role in Rusal," said Michael Kavanagh, the head of equity research at Uralsib Capital, a Russian investment bank. "Putin wants to reassert state control in strategic areas and the financial crisis gives him an opportunity to do so."

Mr. Deripaska has another Rusal problem. An instalment payment of unknown size soon has to be made to Mr. Prokhorov for the shares he sold to Rusal.

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Basic Element would not comment on Rusal's progress in refinancing the $4.5-billion loan. A source close to Mr. Deripaska said Rusal should know the outcome of the refinancing talks within two weeks and that he expected Basic Element to retain control of Rusal. Another source said Mr. Deripaska will have some negotiating leverage because the Russian government would not want to see 25 per cent of Norilsk - a blocking stake - seized by a consortium of foreign banks.

As Mr. Deripaska fights to protect his ownership of Rusal, he has been sacrificing other parts of the empire. Basic Element's 10-per-cent stake in Hochtief, Germany's biggest construction company, was relinquished shortly after the Magna stake was let go. There are rumours that investments in financial companies will go next.

Because Rusal is private, its cash flows are not known. But analysts assume it has been hit hard by the commodity collapse. Besides being the biggest nickel company, it is the top palladium producer. The prices of that metal have gone from the April peak of $587 an ounce to $178. Rusal is also a big copper producer, and copper prices have fallen by more than half, to about $4,250 a tonne.

While Mr. Deripaska seeks to refinance his empire, the Corfu saga of money, politics, character assassination and betrayal is being lapped up by the British media. But amid all the feasting there is also emerging a sense of betrayal. While the wealthy and powerful - among them Tory politicians - feasted on Corfu last summer, the global economy was unravelling and most Britons were being punished by soaring bills and interest rates.

Mr. Deripaska has not commented on the yacht affair, but a person close to him said Mr. Deripaska never raised the idea of making a political donation. "He has never donated to any British political party and has no intention of doing so," the person said.

The Tory party has denied that it tried to solicit funds from Mr. Deripaska or even discussed the idea of a donation. But the party acknowledged that Mr. Osborne and Mr. Feldman among themselves had mentioned "the possibility of a donation" from Mr. Deripaska.

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Mr. Deripaska "is not very happy about the situation," according to the person close to him, especially since the relationship between Mr. Osborne and Mr. Deripaska could lead to a formal probe.

"This is a very serious matter, and I hope it is investigated by the authorities," Prime Minister Gordon Brown said in Parliament yesterday.

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