I first learned from Andy over at Siberian Light about the press brouhaha over Putin’s alleged $40 billion tucked away in banks in Switzerland and Lichtenstein. Intrigued, I set my sights on said press accounts for the story.
Claims of Putin’s hidden money bags comes from an interview Stanislav Belkovsky recently gave to Die Welt. There Belkovsky perhaps spells out the true nature of “Putinism,” a nature that harks back to Andrei Pointkovsky’s claim that Putinism is “the highest stage of robber capitalism.” Indeed, except Russian capitalism is more like collective thievery. Under Putin’s tenure, says Belkovsky, “all the interest groups are represented in the Kremlin. The people who sit there are the direct advocates and co-owners of large enterprises.” Nothing new here. What is new is the claim that Putin himself has reaped the spoils of Russia’s economic might. “Putin is a big businessman. He control 37 percent of Surgutneftegaz stock, which has a market value of $20 billion. In addition, he contols 4.5 percent of Grazprom stock. In the oil firm Gunvor Putin holds 50 percent more than its founder Gennady Timchenko.” In an interview with the Guardian, Belkovsky claims that Putin’s stake in Gunvor is as high as 75 percent. However, the numbers are mostly speculation since the paper trail confirming Putin’s stash has yet to be found.
If the estimates of Putin’s wealth are believed, the $40 billion he has tucked away would instantly make him Europe’s wealthiest man. Moreover, if true, then the comparisons between Mexico under the PRI and Russia under United Russia might gain whole new resonance. Putin’s fortune simply makes him a Slavic caudillo equipped with all the benefits the office bestows. As Robin Leach used to say in his signature accent, “With champagne wishes and caviar dreams, these are the lifestyles of the rich and famous!”
The real question is why now? Why is Putin’s wealth not only being revealed, but also discussed? For this we have to turn to Luke Harding’s take on the matter. According to him, the reason for why what was once taboo is now suddenly out in the open has to do with the machinations of those damn siloviki. Harding explains,
Discussion of Putin’s wealth has previously been taboo. But the claims have leaked out against the backdrop of a fight inside the Kremlin between a group led by Igor Sechin, Putin’s influential deputy chief of staff, and a “liberal” clan that includes Medvedev.
. . .
Insiders say the struggle has little to do with ideology. They characterize it as a war between business competitors. Putin’s decision to endorse as president Medvedev – who has no links with the secret services – dealt a severe blow to the hardline Sechin clan, they add.
. . .
Critics say the wave of renationalisations under Putin has transformed Putin’s associates into multimillionaires. The dilemma now facing the Kremlin’s elite is how to hang on to its wealth if Putin leaves power, experts say. Most of its money is located in the west, they add. The pressing problem is how to protect these funds from any future administration that may seek to reclaim them.
True. Multimillionaires they be. Sechin, as Chairman of Rosneft, might be the next carcass for the Kremlin vultures to feast from. He’s been hit, and hit hard over the past several weeks. So does this mean that a battered and beleaguered Sechin is going to the mattresses? Is the leak of Putin’s alleged wealth simply a black PR hit against the Don? Stay tuned, dear reader. Stay tuned. Because the siloviki war might have just been ratcheted up a notch.
Right – does that mean that someday Putin is going to have to sue to prove his ownership in one of these companies – and thereby incriminating himself for tax evasion?
That wasn’t exactly my point, but in answer to your question, I doubt it. The issue arose with SNG because it is publicly traded and has large US investors who exercise their legal options when they think they are being cut out of their fair share. The same cannot be said of “Guvnor.”
By the way, in case anyone is interested in doing a bit of reading about Timchenko, here is anticompromat’s collection of links and stories about him. And here’s the collection on Belkovsky.
As far as I can tell nobody believes the accusation.
Not entirely true. I wouldn’t have run with the story as it stands, but I’m not convinced it’s totally wrong.
Hey Guys,
sorry I havent been on line lately, on holidays in my parents village at the moment! I just want to say Happy Christmas and s Novum Godom to ye all – Sean, Tim, Chris, Mike, Lyndon, Kolya, ivanov, everyone!
Thanks Ger! I wll be celebrating the holidays by — doing work! Which I will be forced to continue to do, like a character in a Dickens novel, untl Sean pays me my cut.
I just had a bizarre image in my mind of Putin starring in Leprechaun XV: “Where is me gold?!?”
Or perhaps Putin has found the evil Leprechaun’s pot of treasure, this being the source of his billions. How will the former KGB-man escape the Leprechaun’s wrath? Watch and see.
Which I will be forced to continue to do, like a character in a Dickens novel, untl Sean pays me my cut.
I’m expecting my fortune to arrive the day after never, so expect your cut the day after that.
Thanks Ger! Merry Christmas! S novym godom! To all you too!
I’m coming after me gold, Sean.
ps. did you see Perry Anderson’s new piece in New Left Review? I thought it was truly awful.
Hey, you’re in the eXile! Cool.
I’ve been waiting to get my hard copy pf NLR in the mail instead of reading it on the web. I’ve only started reading Piterberg’s article on Arendt, but that is because he’s a friend. I’ll let you know what I think of Anderson’s piece when I get to it. I hope its not as awful as you say. But I didn’t like his last one he did in NLR on Rawls, Habermas and Bobbio in 2005.
Oh the eXile article is out. Now I can announce it. Thanks.
I am really not a fan of Arendt. My dissertation was partially on her, but that was a “gotta get the grant money” kind of thing.
Practically every sentence Anderson writes about Russia in his NLR jottings is factually wrong (Russia has high levels of social spending?). It is embarrassing to read.
С Новым Годом!
And if you don’t have anything to drink – read this good piece (in Russian only)
http://www.expert.ru/printissues/expert/2007/01/obval_russkoy_istorii/
I think most of us posting here are batting our eyes about it. As far as I can tell nobody believes the accusation.
I had the impression that people were only debating the scale of deception, and not whether or if he had been taking from the till, as it were.
“I think most of us posting here are batting our eyes about it. As far as I can tell nobody believes the accusation.
I had the impression that people were only debating the scale of deception, and not whether or if he had been taking from the till, as it were.”
This has been an interesting little debate but I would repeat the concept that is difficult for the normally well informed to accept “…what do you actually “know”? Answer – nothing”. Since having the honour to make the opening comment here I found Naomi Klein’s ‘Shock’ in my stocking and have read it through a bout of the flu’ brought to me by my city dwelling visitors. It is not necessary to accept all her conclusions to be startled by the assembled carefully sourced facts, as she goes about her demolition job on the Chicago Monetarist School and their undoubted mistakes and misdeeds. All of which makes me wonder what on earth we are all doing worrying about Putin’s alleged take amongst the hundreds or thousands of billions of misappropriated cash washing about in the West. The answer is that our attention is being drawn to it precisely to distract us from, and make routine, what is going on here at home. This I have noticed is a regular NATO/US/EU/Western technique. If we bully some small country, we like to muddy the waters by accusing Russia of doing the same thing. Why Russia especially, because it is Putin’s Russia that has taken on the leading role of providing a counter balance to untrammelled (and in my view largely disastrous) Western influence and action. The Chinese clearly believe that it is in their interests to take a back seat for the moment.
Happy New Year and may 2007 be as interesting as 2008 – but not too interesting.
“I had the impression that people were only debating the scale of deception, and not whether or if he had been taking from the till, as it were.”
I don’t know if he has or not. But it is a rare politician (nay, human being) who will pass up the opportunity.
But it is a rare politician (nay, human being) who will pass up the opportunity.
I have (so far) passed up many an opportunity to line my own pocket whilst conducting my affairs in Russia. $40bn might make me cross the line though.
See you all on my yacht for drinks!
So you claim, so you claim…
“But it is a rare politician (nay, human being) who will pass up the opportunity.”
Perhaps from the world perspective such politicians are rare, but in certain countries such politicians are not rare at all. As to human beings, once again it depends on the country, but I don’t think such individuals are as rare as you imply.
In any event, when people ask me why, despite all my criticism, I like to live in the US, I often reply that it is because it is easy to be honest here. It is not too hard to live a comfortable life while staying honest and not involving oneself in corruption–even petty corruption such as paying off a traffic cop or feeling the necessity to give a “gift” to some bureaucrat for one reason or another. This does not mean that there is no corruption in the US, but a normal human being can get by without it with little difficulty.
Clinton, Bush and Cheney of course would never ever use their positions for personal gain!
That’s right, let’s beat hearsay with more hearsay!
Chris, even if Clinton, Bush and Cheney are as corrupt as you imply they are, you did not refute my point at all.
Actually I think the difference between the US and Western countries more generally on the one hand and most of the rest of the world on the other is that in the former corruption is mostly a high-level affair. The average person will rarely encounter it, if ever, in his or her daily life.
It is also true that many practices in the US and Western countries more generally have been legalized and systematized and so are no longer considered corruption (financing of political campaigns in return for favorable legislation, pork politics, etc.), even though effectively they are.
“Actually I think the difference between the US and Western countries more generally on the one hand and most of the rest of the world on the other is that in the former corruption is mostly a high-level affair. The average person will rarely encounter it, if ever, in his or her daily life.”
Not true. Right now, the average person in Iowa encounters plenty of ‘corruption in real life’, being personally courted by dozens of Presidential hopefuls, lavished upon with little gifts like free DVDs and such, free food, free kids care centers on election day and so on.
Come to think of it, Russians might benefit from such ‘corruption’, with higher-ups trying to curry favor with regular folks. Unfortunately they mostly encounter the reverse kind.
When that kind of stuff occurs in the non-Western world, it’s usually called corruption. Or rather bribing the electorate.
Man I wish I lived in Iowa. In my entire 25 years of life in the US, I was never offered free food or goodies by a politician. Must not have been in the right demographic.
Chris wrote: “The average person will rarely encounter [corruption], if ever, in his or her daily life.”
In the US it probably happens a bit more often than that, but the point (for me) is that one can easily get by without getting involved in it. I found this very liberating after living in places where you could not lead a normal life without unwillingly involving yourself in petty corruption–bribing traffic cops to not get a ticket for a violation you did not commit, giving a “gift” to a bureaucrat to ensure that documents you need from them don’t languish in limbo or somehow get lost, and so on.
Some Americans often respond to such statements by saying that there is indeed plenty of corruption in the US. Yes, there may be too much corruption in the US (any corruption is too much, isn’t it?), but it simply does not compare to how pervasive it is (at all levels of society) in many other countries.
“If the supposed “real” owners decide to cut you out, how do you ever prove your ownership stake? How do you explain to stockholders and other minority owners that you are taking your fair share of the profits?”
This is the key: it is exactly how Russian business has worked for some time. Doing business there over many years the hardest thing has always been to understand exactly who is the real owner. A long time ago I learned that the real owner had little to do with what you read on title deeds etc., and that ownership was often held by a crony to help out Mr. Big. This is one cause of the various business ‘disputes’ that can’t be resolved in court. Also, wasn’t there something about a Gazprom trading company that was registered to 2 bomzhiki in a village in Romania a few years ago? This is how it works.
There was a stage a few years ago when people started to go legit – remember Yukos publishing its full ownership structure online? – but then after Khordokovsky went down most went running for the shadows.
It doesn’t seem so unlikely to me that he ‘owns’ these shareholdings, that the value of them now is far larger than when he first obtained them 5 – 10 years ago (given the asset price boom), and that “yes” they are held in just the opaque manner this implies. I’d be willing to bet he has always taken advantage of all the usual perks of any high level Russian bureaucrat (property abroad, elite foreign schooling for the kids, etc.), just he got lucky and now does it at the mega level of President.
However, based on this way of working, the exact %ages are impossible to know, so the published number is probably rubbish, so I wouldn’t pay much attention to the headline of 40bln.
Tommo is exactly right in describing how a lot of Russian businesses are owned. Proof of ownership is unnecessary when it is possible to guarantee that a court will rule ownership in your favour if the need arises.