The Russia Conundrum

The constitutional immunity from prosecution that Putin enjoys has facilitated his acquisition of the fabulous levels of wealth referred to by William Browder and his gracious distribution of largesse to his friends and family. Forbes

magazine has published an annual list of those who benefit most from Putin’s patronage, a remarkable number of whom have turned out to be his own relatives and childhood chums. Arkady Rotenberg, Putin’s judo partner, figured in every edition of Forbes

’s ‘Kings of State Contracts’ roster from the year it first appeared, receiving annual orders from the Kremlin worth over $7 billion for his engineering and construction companies. Another fixture on the list, Kirill Shamalov, improbably became deputy CEO of SIBUR at the age of 30. The petrochemical conglomerate was the recipient of multibillion-dollar state contracts. Shamalov’s own company, Yauza 12, was reported in the media to have received a $1 billion loan from the state-backed Gazprombank (where his brother Yury happens to be the deputy chairman), which he used to buy 17 per cent of SIBUR from Putin’s old pal Gennady Timchenko. It was perhaps no coincidence that Kirill Shamalov was Putin’s son-in-law, married to his second daughter, Katerina; or that when relations with the president’s daughter faltered, he was forced to sell out to Leonid Mikhelson. Both Timchenko and Mikhelson also feature prominently on Forbes

’s ‘Kings of State Contracts’ list. Helping to keep things in-house, Katerina herself, having achieved some success in the little-known discipline of acrobatic rock ’n’ roll, was appointed to head a $1.7 billion publicly funded project to build a new science hub at Moscow State University. Arkady Rotenberg’s son, Igor, whose assets have included the drilling company Gazprom Bureniye and power generation company TEK Mosenergo, has also powered his way up the Forbes

list, underlining the extent to which people close to Putin now run Russia’s key industries and are passing down their wealth to sons and daughters.

Putin and his cronies have acquired a fondness for building themselves luxury residences – palaces, according to some reports – a trend that has been exposed and lampooned by Alexei Navalny’s Anti-Corruption Foundation (FBK). In January 2021, Navalny released a video titled Putin’s Palace: The World’s Biggest Bribe, which broke all records for social media views in Russia. The film showed footage of an opulent coastal property near the Black Sea resort of Gelendzhik that has been built for Putin by the grateful recipients of his state-funded business deals. According to Navalny, $1.35 billion of illicit funds went into the construction of the palace, which extends to more than 17,000 square metres, making it the biggest private residence in Russia. Putin can enjoy the services of a private port, a vineyard, a chapel, a casino, an indoor hockey rink and toilet brushes costing $850 each. Among those reported to have funded the president’s gift was Nikolai Shamalov, who worked with Putin during his time in the St Petersburg mayor’s administration in the 1990s and who had benefited from lucrative Kremlin contracts following Moscow’s annexation of Crimea. Nikolai also happens to be the father of Kirill, who married Putin’s daughter.

When other members of Putin’s inner circle, including Dmitry Medvedev, State Security Council chief Nikolai Patrushev, former Russian Railways boss Vladimir Yakunin and even Putin’s press secretary Dmitry Peskov, were all revealed to live in multimillion-dollar homes, the response was swift and indicative: Putin decreed that property ownership records would henceforth become classified information, no longer available to the general public. ‘They want to hide the truth about their homes and yachts,’ declared Alexei Navalny, ‘but our investigations will continue – we can still take photographs…’