LONDON (Reuters) - As Russia was descending into financial crisis, some of its most influential oil and stocks traders gathered at the exclusive River Club in central Moscow at the invitation of state lender Sberbank.

Mikhail Gutseriyev, president of oil and gas company RussNeft, attends The Russia Forum 2012 in Moscow, Russia, February 2, 2012. REUTERS/Anton Golubev/File Photo

It was December 2014, and the future looked bleak as oil prices tumbled, but Sberbank had a special cause for celebration.

“We have just performed a pretty unique deal for Russia,” a Sberbank manager told guests, explaining that the lender had completed a transaction to protect a big client against oil price falls just as crude went into a tailspin. He did not name the client.

The beneficiary of the scheme, bankers and oil industry figures told Reuters, was Russian magnate Mikhail Gutseriyev who by hedging - essentially, taking out an insurance policy against the price of crude falling - made hundreds of millions of dollars.

The deal was a milestone for Russia’s energy industry. While hedges on the scale of the scheme set up for Gutseriyev are used by U.S. and British oil firms, Russian oil executives have traditionally steered clear of such complex financial transactions.

It was a lucrative scheme borne out of adversity: while others in the Russian industry avoided hedges, Gutseriyev had no option because he was beholden to his biggest creditor.

“Gutseriyev had large debts to Sberbank and was effectively told to hedge going into 2015 by Gref,” said one industry source familiar with the deal, referring to Sberbank’s chief executive, German Gref.

Maxim Poletayev, Sberbank’s first deputy chairman, confirmed to Reuters that the deal had been struck with Gutseriyev in 2014. He said Sberbank had sold the hedge contract on to a foreign banking syndicate shortly after.

Gutseriyev and Russneft, the energy company he controls, did not reply to repeated emails with questions about the deal.

The deal could help explain why Gutseriyev was able to afford to embark on a buying spree that has included banking assets and multi-million-dollar property developments at a time when his Russian energy industry peers have been retrenching.

His wealth was on display at the extravagant Moscow wedding of his son Said in March, when performers included Sting, Jennifer Lopez and Enrique Iglesias.

WINDFALL

The hedge allowed Gutseriyev’s oil firm Neftisa, which was spun off from Russneft, to effectively pre-sell 50 million barrels of future oil production in 2015 at around $85 per barrel.

At the time the deal was being worked out in the third and fourth quarters of 2014, oil was trading at between $110 and $85 per barrel, meaning he was making a short-term loss. But he was in the black again once oil slipped below the $85 mark, and kept falling. It averaged slightly over $50 per barrel in 2015.

In 2015 alone, Neftisa made $1.75 billion more in revenues than if it had stayed unhedged, according to Reuters calculations.

The deal was another twist in a tumultuous career that saw Gutseriyev start out as a warehouse porter, build a business empire, and almost lose it, before beginning an ascent to the top table of Russian business.

Gutseriyev, whose family is from the Russian region of Ingushetia, started a banking business in neighboring Chechnya around the time of the collapse of the Soviet Union. In the 1990s he was appointed president of state-owned oil firm Slavneft and, when it was privatized, ended up owning some of its assets. This was the foundation of his oil company Russneft.

He built up the firm with help from Swiss commodities giant Glencore, which lent him $2 billion in exchange for minority stakes in Russneft’s subsidiaries and the right to export its crude, and with loans provided by Sberbank.

In 2006, Gutseriyev’s company was accused of tax evasion. A year later, he was forced to sell Russneft at a fraction of his own estimates for its value, and fled to London when criminal charges were brought against him over the alleged tax evasion.

He has always denied any wrongdoing.

Without any explanation from the authorities or the businessman, Gutseriyev was allowed to return to Russia in 2010 and even fully regain control of Russneft.

“Justice does exist. I returned to the motherland and cleared my name,” Gutseriyev said in an interview with Russia’s RBC newspaper last year.

Speaking about his buying spree over the past 12 months, he told the paper the economic crisis in Russia had created cheap assets that could be picked up by a businessman who was committed to staying in the country.

“I’m not a rat to flee a sinking ship,” he said.