Rulers’ Riches

The fabulous riches of Putin’s inner circle

Via Flickr / Creative Commons

On paper, Russian prime minister Vladimir Putin is a man of modest means: official documents show he has an income of about $153,000 (£96,000), and owns a small plot of land, a small flat and three cars, one of which is the obligatory Soviet Lada.

But the New York Times reveals today that a number of Putin’s friends have succeeded in becoming fabulously wealthy in recent years.

In a punchy investigation that speaks volumes about how Russia’s state-owned industries are used as political pawns, the New York Times unpicks the web of social and business connections that links Putin’s St Petersburg clique.

Although critics view the wealth accumulation as ‘government-sanctioned theft’ of Russian natural resources, the Times points out that the line between legal business and illegality is ‘fuzzy’ in Russia, and there is no evidence of criminal activities. Instead, contracts have often been awarded without competitive bidding, or properties have been sold at discounted rates.

‘Certain close friends of Putin who were people of relatively moderate means before Putin came to power all of a sudden turned out to be billionaires,’ opposition politician and former deputy energy minister Vladimir S Milov told the Times.

According to the New York Times, these associates include:

• Arkady Rotenberg – A former judo coach who sparred with Putin and fellow now-billionaire Gennady Timchenko as a young man, Rotenberg now has owns North European Pipe Company, a pipe manufacturer. State-controlled gas giant Gazprom bought 93% of its pipe from this company, according to Russia’s antimonopoly agency in 2010, and Rotenberg is worth an estimated $1.1bn. He also owns interests in vodka distilleries, a mall developer, mines and ports.

• Gennady Timchenko – From humble origins as a sales manager in a local oil refinery, Timchenko has become one of the world’s richest men, thanks to his commodity trading company Gunvor, and its close relationship to state oil company Rosneft. Rosneft sells ‘a significant portion’ of its oil through Gunvor: ‘the proceeds from roughly 5 percent of Russia’s total economic output are channeled through Mr. Timchenko’s trading operation’, the New York Times notes. It also points to a WikiLeaks diplomatic cable stating Gunvor is ‘rumored to be one of Putin’s sources of undisclosed wealth’.

• Yuri Kovalchuk - A former neighbour of Putin, the St Petersburg bank that Kovalchuk chairs – Bank Rossiya – went from being a minnow to being a major player after it gained control of several Gazprom subsidiaries, including its pension fund. Kovalchuk’s 30% stake in the bank is now worth an estimated $1.5bn; Timchenko is also reported to own shares in the bank.

• Vladimir Litvinenko - The rector of St Petersburg’s Mining Institute has amassed a fortune thanks partly to his 5% share in Phosagro, a phosphate mine. He was paid in shares for consulting work, he told the Times; the shares are now worth about $260m. Litvinenko is Putin’s campaign manager.

Despite the recent wave of protests, elections on Sunday are set to return Putin to the presidency after a spell as Russian prime minister. The Times piece won’t change the election result, but it will provide ammunition to the increasingly vocal political opposition.

Click here to read the full investigation.