71

Priceless friendship The Kremlin’s support for Vladimir Putin’s cronies

Iwona Wiśniewska NUMBER 71 WARSAW october 2018

Priceless friendship The Kremlin’s support for Vladimir Putin’s cronies

Iwona Wiśniewska © Copyright by Ośrodek Studiów Wschodnich im. Marka Karpia / Centre for Eastern Studies

Content editor Adam Eberhardt, Marek Menkiszak

Editor Halina Kowalczyk

Co-operation Anna Łabuszewska, Katarzyna Kazimierska

Translation OSW

Co-operation Jim Todd

Graphic design PARA-BUCH

DTP GroupMedia

Photograph on cover Shanti Hesse/Shutterstock.com

Figures and diagrams Wojciech Mańkowski, Maciej Makulski

Publisher Ośrodek Studiów Wschodnich im. Marka Karpia Centre for Eastern Studies ul. Koszykowa 6a, Warsaw, Poland Phone: + 48 /22/ 525 80 00 Fax: + 48 /22/ 525 80 40 osw.waw.pl

ISBN 978-83-65827-28-9 Contents

Executive summary /5

Introduction /7

I. Western sanctions – a blow to President Putin’s friends /10

1. The new private oligarchs in Russia /10 2. Western sanctions against Putin’s friends /16

II. the oligarchs’ strategies to counteract the sanctions /23

III. The Kremlin’s support for entrepreneurs under sanctions /35

1. Public procurement as the main instrument of support /36 2. Additional financing for infrastructure projects under sanctions /39 3. Support for banks under sanctions /40 4. Compensatory tax breaks for oligarchs /42 5. Indirect support mechanisms /43

IV. The consequences of the sanctions for the president’s inner circle and ownership relations in Russia /45 • • • Ex When The The sate consequences Russian political the state a the Putin’s States image when Putin. elite’s Russian Vladimir to ofa test the loyalty tacts a involuntary to internationally. members Still, business cial himself. policy vestments be ure e usual true. priority, coming from far is cutiv result life effectively a wealth of oligarchs losses. Kremlin a lasting personal with apparatus in of – between as than select the the and inner contrary objectives of However, the luxury business. a operations e of president’s skilful Kremlin the the were of They the summary the problem. initial change the group circle, made the mitigate in sanctions for international sanctions Russia United European outside pursued For located, were Russian to the Russian strategist since above the That period expectations of its decided among of some abroad, president’s Their policy. also and businessmen States, the first lifestyle, Russian Europe, decision Russia the adopted as business imposed a ruling Union of the after negative forced others. co-ordinated was gradual early efforts to and economic elite. them, Therefore, Russian West, attack and Federation. where undermined as the elite, – were targeted inner engendered as a to The the elite They they after to much the had impacts tightening for March sanctions scale which oligarchs at including Ukraine, sanctions no sanctions interests most restrictions circle the suffered have could restoring to least policy 2014 less longer down people restrict was 2014. losses of President of in directly major strict partly no the at by were marked the have the it of of the or the turned free thus major the longer The in Russian put business Russia the suffered supporting close sanctions. aftermath their Kremlin’s sanctions meant president managed Vladimir imposed, financial compen to expense affected Russian became its Putin’s United finan a travel out enjoy their con geo and fail in an as as to ------

5 POINT OF VIEW 10/2018 6 POINT OF VIEW 10/2018 • The of of to portant Kremlin. the jurisdiction, expected. shrinking. been has Kremlin the with tions timistic. from economy’s the levels. which tions, maining the helped expand potential the last president’s sanctions the combined general fostered However, the four as attractive This president’s internationally, The growth oligarchs the beneficiaries years, making is have public. sanctions financial insiders the with fuelling most in rapid the business limited inner to the assistance the The of value quickly has coming operations growth continued an those who oligarchs state’s while circle almost Russian intensifying assets of stand make assets the provided years the of in aid their assets in returned order for even undertaken prospects to became business’s up Russia, now are longer profit for businesses by to rivalry more owned not are the counter the to particularly while from particularly than for under losses. dependent opportunities pre-sanctions Russian by by over the close originally the in several oligarchs the Russian Russian Within Russia, the group state, sanc rela im op re on of - - - - - The co-operation Crimea. although 1 clusion Since I tion of the the the ential The decision. asimilar Development taken tion and has also the decision Organisation limits banks nies. Moreover, sector. extraction oil the terials cials, ensuing entrepreneurs involved companies Crimea. and sons with economic in relations The ntroduction new bania, since sanctions Russian impact European World to diplomatic Russian barred The managers March Moscow’s states, United in on to been projects of The restrictions Macedonia by they ban Russia Russia, Moscow access Bank personal of on leadership joined Western Russia’s sanctions States, 2014, economy for between the the also Union Russia have sanctions from in of Economic aggression and and by sanctions suspension to as and the state-owned covered Russia, Canada, from Australia, hit in sanctions have capital well and all access leaders President several Liechtenstein Russian several during have the has Russia’s its the a have also as the and Russian Co-operation number exports agencies also imposed towards created to New G8 markets selected stages, to of European state-owned the affected economy been have international the companies, international grouping Vladimir refrain its faced Zealand, among initial European starting accession Federation of of many the been on have Ukraine technologies other for arms Union sectorial companies Russia others. has from least period. Japan, and of imposed suspended the Putin’s restrictions on oil been journalists, Western and the and Development, 20 finance; painful negotiations Bank and prestige, official For Switzerland, largest and by and March Norway The world’s sanctions, functioning dual-purpose more the its with inner defence on for and Western sanctions annexation states United contacts economically, the on 2014. selected for state-owned on with Reconstruc links imposed and most services the circle. Iceland, financing economic example, with They sanctions and such in compa private the States, to states. under influ have reac with their per offi ma have the The the ex Al of as in 1

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also projects. Каверина, which Турецкий сухогруз снес опоры строящегося строящегося опоры снес сухогруз Турецкий , with anonymous only http://www.forbes.ru/finansy/igroki/285505- building the ship co-owns (villa wary Lenta.ru, owned Owental bridge lost Rotenberg agreed which financial September company market, member largest Crimea. had had for on the and

of Е. Because the

by across Мереминская, fear links damaged the the 22 made to ability SGM-Most finally hotels) Stock company Denis March infrastructure insure bridge was institutions of the While Olpon potential of Rotenbergs’ the „Ведомости”, to the the of it the to put sanctions managed the in Investments 2016, Italian Pospelov, more the the family make across Kerch the these Investments possible Italy on from Rotenbergs (also

Керченский Керченский мост https://lenta.ru/ consequences bridge sanctions, construction the difficult fiscal which deals (especially companies to Strait 9 the Crimea Stroygaz under to EU deprived June a contrac face imposi sign former pylons Kerch police sanc hedge in 21016, were was Ltd. (ac Eu for US US an no in ------

US$9 billion). sons The secrets. trade as treated are transactions of those Like bank systems. be deposits roubles, 26 25 put Initially tions. July es cluded As (9.6%). company) Shamalov Nikolai Transoil and the via in project. of the supplying equipment heavy purposes for the (May valchuk sanctions, ful counts delay 2015 For 2018, op.cit. Banki.ru as the bridge/ dutch-companies-investigated-for-supplying-equipment-for-crimean- for Russian bridge Russian for a serviced for into sanctions

2014. a result Timchenko, that decreased

(in worth The more 2018), result Netherlands him. with in i.e. is operation Kovalchuk’s of December

Moreover, American operations the

The information, the including of around individual The US by but of nearly US 26 the also largest sanctions

the banks. the by bank’s , the sanctions Dutch the sanctions, 13% hit fire six US$0.7 2019).

international US$600 against financial between

of railway Gennady

Rotenbergs see media shareholder the News.nl months The customers sale his (to other

Dutch companies forinvestigated supplying equipment imposed Moreover, assets Cypriot around Wall billion), lists of Dutch businesses Rossiya million. shareholders

bridge , March institutions their https://www.dutchnews.nl/news/2017/09/ Timchenko before Street in of have fell Visa on company (37.5%), 300 March companies while Yuri Kovalchuk Yuri foreign will an Bank and Bank Rossiya by the Journal probably billion and were investigation nearly the be May

2014, scheduled had were was were (who assets. Rossiya Telcrest MasterCard opened deposits also Bank,

roubles, estimated accused frozen 2014 cut and particularly also 30% also held hit However, off the also the were suffered , in after opening hit (to who

is by a assets of from i.e. of 9.8% which underway EU volume legal by 27 ceased in the payment blocked. illegally was a around lists March the billion 25

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21 POINT OF VIEW 10/2018 22 POINT OF VIEW 10/2018 value According lost Kovalchuk’s and the considerably associated 1on page (see 15). Figure million cumulative fected bank’s Via company) It US banks. ited in blocked accounts in ing been sian the is difficult data registered wealth Telcrest their Kovalchuk’s compounded oligarchs of the managers Timchenko’s is voting Kovalchuk oligarchs. companies: to not of effects to (controlled representatives dented Forbes, the estimate in as public; rights, assets to the a Rotenbergs by of result manage the However, the owned the between United assets moreover, ABR the decreased and by wealth economic sanctions of shareholders volume Management, decreased its a their States. the on shrunk 25.3% February based assets, of CTC the Western the dividends crisis by and of stake As impact on Media’s losses entrepreneurs more by and by the a the in 2014 of 50% result 30% in founded sanctions, Russia, the economic Rossiya than Forbes suffered the of started and to board to Abros the of CTC US$2.85 US$10.7 50% April which the in sanctions rankings, Bank to of Media in by slump investment as 2011 to sanctions, be question. directors the 2015 much US$650 also billion, billion, and depos by hold Rus have has the the the af its of - - - - Rotenbergs doing has jurisdictions forts, important Reacting quickly. relatively lifted strictions has over transactions, well below). studies case seethe tion, bergs. trusted business their market. in assets They The II of Rotenberg, EU United the States. of Because the that than much lessbeen strict quite ern tinue prevent damage . the sanctions question effectively tried assets Russian as to count to T the main have effective, business, doing most h altogether However, Rotenberg many managers For the e oligarchs’ strat and last partners to to strategy to done strategy the they of changed those freezing tighten business. were four protect did companies oligarchs and tracing below the steps allowed because both because could not so by years brothers, entrepreneurs e repatriate Kai foreign held or ract th ract was by selling has 50%, and taken cover owners domestically their business of Russian Paananen, The continue sanctions using the have in associated assets, most been to of extend or assets Timchenko by assets Europe, mechanisms the remove i.e. them sanctioned and it severe largely the to of various ties state-owned to e high Roman which doing scale the sanctions the who avoided Petr to Russian have owned Russia. from and has with egi capital business whose dynamics their assets sanctions managed were Kolbin down abroad has been business been financial or and businessmen the e Timchenko they by freezing, As s Boris, businessmen, formal allowed covered sanctions of from Igor, impact companies. extended very Timchenko their a and partners, (for the used result and lists. to Roman in mechanisms as under difficult, Sven entrepreneurs ties more stake minimise the or opacity by them of well or have As to of saw to policy sanctions. sanctions, the with Olsson, European relatives, informa and those continue the Western Another in a the and as proven to the Roten result, which West of their West such Igor sons con has the the the re ef as to ------

23 POINT OF VIEW 10/2018 24 POINT OF VIEW 10/2018

US sanctions US sanctions (VOLGA GROUP) GENNADY TIMCHENKO’SASSETS July 2015 July 2015 Truboprovodnaya shortly beforetheimpositionofUSsanctions Foreign assetssoldbyTimchenko US sanctions Ust-Luga Oil April 2014 Kompania Russian assetssoldbyTimchenko Nevskaya Arena EventsOy Rorvik Timber Aviation Oy IPP OilProducts Gunvor Gunvor divestsfromassetsinRussia Colmar Sogaz AirFix 12.5% ofshares 50% ofshares 30% ofshares 74% ofshares 43.59% ofshares 19 March2014 19 March2014 19 March2014 0.5% ofshares 50% ofshares 50% ofshares April 2014 April 2014 US sanctions March 2014 Tradescan subsidiary Gazprombank Andrei Bokarev Andrei Bokarev Ksenia Frank(daughter) Paananen Kai Kolbin Petr Törnqvist Torbjörn Rotenberg Roman Gunvor

US sanctions US sanctions US sanctions July 2015 July 2015 July 2015

US sanctions US sanctions US sanctions US sanctions US sanctions March 2014 April 2014 April 2014 July 2014 July 2015 Foreign assetsheldbyTimchenko Russian assetsheldbyTimchenko rail cargocompany (80%) • Transoil, transport company(89%) • Sakhatrans, company (30%) • Colmar,coalextraction gas holding(23%) • Novatek, • Sibur(15%) • RossiyaBank(10%) • ArenaEventOy(49.5%) - JokeritHockeyClub(49%) - HartwallArenaHelsinki(100%) registers intaxhavensandregisteredRussia December 2015VolgaGroupremovedfrom Volga Groupcurrentlymanages all ofTimchenko’sassets

US sanctions US sanctions April 2014 April 2014 company (24.8%) • Sovag,insurance – appleproducer(40%) • Alma,agri-foodbusiness beverage manufacturer(100%) • Aquanika, fruit producer(35%) • YuzhnyeZemli, • Stroytransneftgaz(around50%) construction company(63%) • Stroytransgaz, US sanctions US sanctions (VOLGA GROUP) GENNADY TIMCHENKO’SASSETS July 2015 July 2015 Truboprovodnaya shortly beforetheimpositionofUSsanctions Foreign assetssoldbyTimchenko US sanctions Ust-Luga Oil April 2014 Kompania Russian assetssoldbyTimchenko Nevskaya Arena EventsOy Rorvik Timber Aviation Oy IPP OilProducts Gunvor Gunvor divestsfromassetsinRussia Colmar Sogaz AirFix 12.5% ofshares 50% ofshares 30% ofshares 74% ofshares 43.59% ofshares 19 March2014 19 March2014 19 March2014 0.5% ofshares 50% ofshares 50% ofshares April 2014 April 2014 US sanctions March 2014 Tradescan subsidiary Gazprombank Andrei Bokarev Andrei Bokarev Ksenia Frank(daughter) Rotenberg Roman Gunvor Paananen Kai Kolbin Petr Törnqvist Torbjörn

US sanctions US sanctions US sanctions July 2015 July 2015 July 2015

US sanctions US sanctions US sanctions US sanctions US sanctions March 2014 April 2014 April 2014 July 2014 July 2015 Russian assetsheldbyTimchenko Foreign assetsheldbyTimchenko rail cargocompany (80%) • Transoil, transport company(89%) • Sakhatrans, company (30%) • Colmar,coalextraction gas holding(23%) • Novatek, • Sibur(15%) • RossiyaBank(10%) • ArenaEventOy(49.5%) - JokeritHockeyClub(49%) - HartwallArenaHelsinki(100%) registers intaxhavensandregisteredRussia December 2015VolgaGroupremovedfrom Volga Groupcurrentlymanages all ofTimchenko’sassets

US sanctions US sanctions April 2014 April 2014 company (24.8%) • Sovag,insurance – appleproducer(40%) • Alma,agri-foodbusiness beverage manufacturer(100%) • Aquanika, fruit producer(35%) • YuzhnyeZemli, • Stroytransneftgaz(around50%) construction company(63%) • Stroytransgaz, 25 POINT OF VIEW 10/2018 26 POINT OF VIEW 10/2018 29 28 27 The For The were and the on US territory.operations Timchenko tion Boris). club) they On assets foreign and Russian his separates Timchenko study: Case ners. the chenko Hartwall also acquired riot from treasury.gov/press-center/press-releases/Pages/jl0133.aspx; 50%-ную долю в кипрской IPP Oil Products Oil IPP кипрской в долю 50%-ную ber ko_19_marta_prodala_50__nuyu_dolyu_v_kiprskoy_ipp_oil_products 2014, jl0314.aspx 40% more lion, sources. other from on oil instead focusing oil, of Timchenko, Torbjörn

Swedish the hearing US

more oil of transaction as reduced value 2015, could of companies

to and

Shortly https://www.znak.com/2014-04-17/volga_group_gennadiya_timchen also

information, largest However, the company Russian government a sold below information, Törnqvist his

consequence, by of Arena https://www.treasury.gov/press-center/press-releases/Pages/ put no transactions he started Timchenko’s about his billionaire stake

the oil his before longer came 50% on

oil was

stake traders co-operating IPP

Russian stadium stake sales, in most the see had

the to concluded by the see selling

do he as control Volga Group Геннадия Тимченко 19 марта продала продала марта 19 Тимченко Геннадия Group Volga Oil in sanctions been

selling currently in possibility US Cypriot of in Torbjörn business shares attempts was the the

involving Products, the Department those billionaire Arena a in 80% his

shareholder Swiss on world; put companies Helsinki 0.5% in IPP with

19 foreign of it transactions list Gunvor on

with Törnqvist. sells March shares Events Oil at

of oil before 28 to Gunvor) Gunvor, , the of

in Интернет circumventing Products which sanctions trade Roman negligible Petr State, US in July and assets in 2014. was US

and 2012 Gunvor; Oy partners the Kolbin. sanctions 30 company estimated was 2015. the

including were The

27 company. (the at it Rotenberg persons July газета (with to

He quantities accounted US$

against Jokerit Swedish most business after 2017, 29 owner also identified

220 or As Timchenko „Знак”, the sanctions, and at Gunvor Gunvor the https://www. list, carry probably involved the divested a million. US$

hockey Russia,

billionaire of 22 excep (son for result, deal of part Tim Russian Cyp Decem 17

1.5 nearly the out is April by with to of one bil For ------

34 33 32 31 30 For In The For Before, Frank. son-in-law daughter Ksenia his and Gleb Frank being its eign only to registered transferring (especially Timchenko business billionaire At on In Group market, Rosneft. state-owned of CEO the the Igor Sechin, es олигархов: как «Усть-Луга Ойл» за 3 года увеличила выручку вчетверо, выручку увеличила года 3 за Ойл» «Усть-Луга как олигархов: 13% Medium, bank, (which shares 7 ­ „Но its sources 947084d937c79 articles/2016/11/10/70486-aktsii-sogaza-dostalis-dochke eafa34fc4cfc owned

December Russian the parallel the 2012, shares owns stake of more Cypriot вая more entities with purchased the subsequently exposed same Transneft. in

shares Russian co-owns Ltd. Bokaryov in the entering Volga

газета”, information, 17 shares partner information, that the

company Timchenko and in March horticulture).

jurisdiction Andrei 2015, remaining to time himself

ownership in Group; on Russian company the Volga in 50% the Timchenko’s Volga to

The market, http://www.rbc.ru/ins/business/07/12/2015/565f4f6e9a7 and

his 2017 the Luxembourg-based 10 33 Timchenko new the oil Tradescan

of terminal the and Bokarev, took transport Group his Group see November , Russian the terminal stepped

see 80%. https://medium.com/@tzurrealism/knyagini-olgi- to remaining US sectors companies business but А. and

is shares 74%; of control Р. He Gunvor Горшкова, had

sanctions. currently For them

mostly company, Шлейнов, Consultants also becoming the also company in who actions belonged tried more companies. up in

such partner 2016, remaining Ust-Luga) 0.1%

Nevskaya to with

over handles protected VRN his took

family has information, to to is Ольга речной сборки, ЦУРреализм речной сборки, Ольга as Transoil, Акции СОГАЗа достались дочке, дочке, достались СОГАЗа Акции controlled co-operating moving https://www.novayagazeta.ru/ activities to Sarl. The all Ltd., limit Gazprombank refocusing Iskander Russia its steps long the

the oil from of 26% Truboprovodnaya

Timchenko which members,

direct Swiss for In Cypriot Timchenko’s some the agri-foods

is been

Gunvor, in the it to particular, by in controlled Makhmudov see which from influence is state-owned on Volga severe owner. oil of order owned company 34 А. his Timchenko’s closely his the owns

trader thus namely Темкин, Volga tax Group 32

31 assets business industry by by to and Russian ties 30

99.9% havens Kompania assets. increasing Gazprom he of

the Resourc Volga acquired Volga avoid Rosneft. Holding. with sold „РБК”, for

not the his re- state- Берег Берег of by Re - the

- - - ,

27 POINT OF VIEW 10/2018 28 POINT OF VIEW 10/2018 35 The Putin sanctions. and about EU tion tions his were who doxically Timchenko As Europe. been tentatiously on page 25). and 24 Diagram Timchenko’s deepened preserve tinist important sets ing had concentrate an Где бывала эта сука эта 2014, бывала Где ofpiece 6August galleries/140737489132611/normal/2 www.vedomosti.ru/politics/gallery/2013/01/21/timchenko_real_estate#/ Тимченко, супругов отели и Дома demonstration

he apartment sanctions their called to Russian Kovalchuk), was to imposed preventative imposed elite. and his Russia put creating His

responsible Timchenko’s foreign also security the Presumably, the step, on media (For his

and their remained decisions in ostentatious was tightened Russian co-dependence on list, on rest Paris assets intended more his real

reported Russia and

properties. assets Russian of an and in in of wife and loyalty for problems important an nature; information the the oligarchs under were position in it is two

in their the under that also element was to cutting West Russian able Russia. officials the hotels sanctions highlight to he 35 probably moved relationships also of Since Timchenko Russian aftermath

„Ведомости”, owned the Russian for to and within gesture the to in and of of continue a Most president the about elite and France. stop gesture 2014, his the to political villas president Alexey ,

his in https://navalny.com/p/3717/ motivated persons Russia

jurisdiction, jurisdiction. businessmen, that ties (especially of using possibility the to of the place in For Timchenko was 21 these the his with Navalny’s Geneva towards doing with first was elite. transactions, more January manoeuvring and tax decisions. and president, not affected, within the place, the therefore actions by information, and business stopped havens Moving put his Rotenberg of

President president 2013, The investigative West concerns Gennady Cote in has further the as ‘court’. on

para sanc addi They have https:// they who d’Azur, and and os Pu the us see an as in to ------see

*April 20140.5%stakeinArenaEventOy wassoldbyGennadyTimchenkotoBorisRotenberg as MeridianTradeBank and renamed was soldtoitsmanagers In May2014,SMPBankLatvia brothers’ SMPBankRussia the Rotenberg owned by SMP BankLatvia and sincethencontrols100%ofthecompany of sharesinStroygazmontazhfromBoris December 2014Arkadybought17% and registeredinRussia registers inCyprus was removedfrom July 2014thecompany Stroygazmontazh Arkady Rotenberg – EVERYTHINGSTAYSWITHINTHEFAMILY ASSETS OFTHEROTENBERGBROTHERS US sanctions March 2014

EU sanctions US sanctions July 2014 April 2014 and 49%ofsharesintheJokeritHockeyClub(KHL)] ABROAD RUSSIA US sanctions – theTanskarlanCentrumdeveloper(100%) US sanctions July 2015 July 2015 [owner oftheHartwallArenaHelsinki October 2015RomanRotenberg, – theLångvikconferencecentre of sharesinLångvikCapitalLtd and hotelnearHelsinki(100%) son ofBoris,tookover100% – ArenaEventOy(50%)* in Volgogradneftemash Volgogradneftemash Boris Rotenberg Långvik CapitalLtd 2016 Borisbought brothers (50/50); 79.1% ofshares owned jointlyby the Rotenberg from Arkady it controls:

US sanctions December 2015 US sanctions March 2014 29 POINT OF VIEW 10/2018 30 POINT OF VIEW 10/2018 38 37 36 For The The tanced with from Like joins Rotenbergs the of the generation new A study: Case to sanctions. transactions which The sons. their to of some ownership assets transfer of Rotenberg put with freely skirts became sanctions The market. European Arkady), ue corruption of Аркадий и Борис Ротенберги, Ротенберги, Борис и Аркадий pensions. Russian but receive Latvia in who live personnel military ticle/2017/02/20/property3/ ris Meridian SMP Boris), doing business

on Nemtsov brothers bank’s more Russian munscanner.com Timchenko, US the some of was in the itself Bank the companies,

Riga. the information, West Europe. business who customers (imposed As brothers

taken US of munscanner.com formal and Trade from as Rotenberg media got a 37 acting their sanctions is and However, result, purely monitors the over rid a portal An its included Bank. Finnish owner abroad allow foreign were

by although has see on Rotenberg of Russian important by in formal both

the Зарубежное имущество российских олигархов. олигархов. российских имущество Зарубежное was their brothers the its list, also July the taken Moreover, the Polit.ru, of Gazprom with Latvian

assets, and founded managers. legality social the his US 2015 which behalf. and businesses demonstrated he founders over brothers administration British father’s EU 20 trusted part is have aimed Roman and in of media February still in branch and by blocked the actions The order 2014 of around 36 found Roman by free national. The residence the Finnish at also that long-time they authors Rotenberg with portal, changing circumventing 2017,

of to by bank US to 18,000 his that decided a strategy the Rotenberg sold limit the officials way operate http://polit.ru/ar treated in co-operation assets 38

Roman further of despite support SMP retired

on the to who to managers their the its was to the operate and contin case was on divest those Bank, of name anti- Russian have

(son also also of out dis ties politi the the the the to of Bo - - -

- - - 39 For 32).and When formation became of tions Russian Only on Russia affected under investigated The Bank’s Denis produced tion Rotenberg rope behalf May Arkady, companies. shell via many „Berliner kudammkomplex/ cians наш! Аркāдийс Ротенбергс от санкций уходил’, санкций от Ротенбергс Аркāдийс com/2017/05/arkadijs-rotenbergs/ Arkady, the Rotenbergs by more only 2014 , because some 11 Pospelov, sanctions. Igor in Russian CEO of from German a April

market by have Zeitung”, Russia. the information, formally, shareholder documents and who family about too of until sanctions. tax the 2017, Rotenberg they the invested currently was market was have havens. For journalists and who subject, February Arkady the 16 https://munscanner.com/2017/04/kinasis-llc/ Rotenbergs’ have had May put while only more to see transactions, was also showing They in to also around been 2018, co-operation on brothers.

Most G. lives put has argue minimise information, the in the carried the 39 2015, Keller, been have https://story.berliner-zeitung.de/category/ published reality taken under taken family in assets deputy sanctions assets that €1 that who corroborated Latvia, limited K. billion out The over over US see they the the Schlieter, Dmitry 12 businesses. were with now have see CEO a sanctions foreign in May costs Diagrams by Rotenbergs, most number own operate list, their in раи Ртнег Кипр Ротенберг: Аркадий May lives Russian shielded been Igor 2017, of properties Kalantyrski, of Der Kudamm-Komplex, Kudamm-Komplex, Der his of the SMP 2018. by activities activities Rotenberg, in doing http://munscanner. the repatriated in (For and sister of an assets Prague, on companies. Bank April from companies operations They investiga including invest more business pages in Liliana in to of sanc 2018. and until have SMP Ger and son Eu the the in on 29 to Как Как - - - - -

31 POINT OF VIEW 10/2018 32 POINT OF VIEW 10/2018 Igor Rotenberg,sonofArkady ASSETS TAKENOVERFROMHISFATHER 33.3% inTPSRealEstate October 2014 by BorisRotenberg) (the remaining16.3%owned 78.7% inGazprombureniye October 2014 30% Mostotrest October 2014 78.7% TEKMosenergo April 2014

US sanctions US sanctions September 2016 April 2018 ARKADY ROTENBERG’SCHILDREN JOIN THEBUSINESS to TFKFinance in Mostotrest Igor soldshares 2015 and registeredinRussia registers inCyprusandSaintLucia, Gazprom bureniyeremovedfrom December 2017

US sanctions

Lilia Rotenberg shares takenoverbyIgor’ssister has beenputunderUSsanctions March 2018(shortlybeforeIgor April 2018 over 94.2%ofMostotrest and tookcontrol TFK Finance Arkady Rotenbergacquired April 2018 ) 42 41 40 For For Russia’s ministration, Rossiya by relations restrict The company. Media CTC US-based could the Bank Russia in develops business Yuri Kovalchuk study: Case ately vent on page 34). seeDiagram transactions, about the panded Kovalchuk US administration. setby the 50%i.e. threshold below the tions Kirill with Rossiya state-owned the ers stakes. hold minority daughter Timchenko’s 2015, http://www.interfax.ru/business/469811 September 28 Interfax, Gazprom Pages/jl0688.aspx December www.treasury.gov/press-center/press-releases/Pages/jl5048.aspx; the stakes

financial more include Russian more sanctions after Rossiya, Bank resulting be Kovalchuk bank, largest its since in Bank.

information, unblocked. information, currently with

2016, the activities the its 2016 also Rossiya billionaire such insurance bank operations 2014 head largest as which bank When

foreign from https://www.treasury.gov/press-center/press-releases/ in managed to a hold as (Yuri’s sanctions include were result was

see VTB, see held state-owned to (e.g. Telcrest Kovalchuk Sogaz. being he a company,

US the majority ВТБ стал косвенным владельцем 7,5% CTC Media, CTC 7,5% владельцем косвенным стал ВТБ partners. put also sold Alexey 41

in undertaken Department ABR of to

relative). territory companies the imposed 40 those on carry which being deemed

the controlled To of founded the companies. Management company’s controls, shares Mordashov this Cypriot Kovalchuk businesses out sanctions

lifted 42 the of of on

end, suspicious State, in by (For Russia in and some sanctions 1993 25.3% businesses Sogaz, Kovalchuk Companies Telcrest from announced

he

1 persons more

banking by September successful also and to list and initially and Gazprom. while of some less by

shares that minimise tried information the list company its associated Kovalchuk the associated controlled than and

2016, accounts assets immedi it director reduced Russian was Its to US opera would in custom Bank 50%,

https:// pre and the ad ex its with to of and - - - - -

20

-

33 POINT OF VIEW 10/2018 34 POINT OF VIEW 10/2018 Yuri Kovalchuk(37.5%) US sanctions,March2014 EU sanctions,July2014 whichhesubsequentlysoldtohisdaughterKseniaFrank ** Untilautumn2014,GennadyTimchenkohadhelda12.5%stakeinSogaz, * September2014RossiyaBanktransferscontrolofAbrostothecompany’smanagement YURI KOVALCHUK’SFINANCIALOPERATIONS and thestate-ownedVTB to AlekseiMordashov 27.9% ofsharesinTelcrest In September2015Abrossold owns 25%inCTCMedia Telcrest (54.9%) Rossiya BanksellssomesharescontrolledbytheAbros*investmentcompany Rossiya Bank’schiefshareholders Nikolai Shamalov(9.6%) EU sanctions,July2014 Rossiya Bank 32,5% 16,0% 2,5% (51%) Sogaz –insurancecompany** by YuriKovalchukandhiswife of RossiyaBankandcontrolled named aftertheregistrationaddress by BolshoyDom9,acompany by Akvila,acompanyowned owned byAbrosweretakenoverin2016 The remaining32.5%ofSogazshares in SogaztoaGazpromsubsidiary In July2014Abrossold16%ofshares 2.5% ofsharesinSogaz In March2014Abrossold Gennady Timchenko(9.8%) US sanctions,March2014

US sanctions March 2014 effective Russia fortress The above economic concerns. losses the support fied actions. West. the towards policy tional entrepreneurs Irrespective III ing economy es) long-term. strate boosted friendly fered susceptible gered Russia’s elite’s compensating them their as a . started president

incomes, the Kremlin’s T entr consequence a support to by loyalty. they that h helping using Russian rebuild the and and actions e Kr Yet ties the in and Russian he suffered to demanding president’s convincing ep annexation the the the to rising the of political decided the is for Even e them propaganda, hand r from the their mlin’s su mlin’s still West business towards their instruments Kremlin en oligarchs propaganda, its of president companies if prices as by for urs und eurs costly the Russia’s Vladimir wealth Russian to as and personal popularity. a Russian the billions the of compensate the guarantor result Ukraine, elite chose Crimea and personally economic foreign general losses which eternal was as pp aggressive used especially business was (especially Putin’s food of state a in to ort for a damage-control result the er sanctions consolidated suffered way Business, presents with state policy indirectly put it public of shortages, enemy them institutions. was methods, would sanctions. the inner for its did of the foreign aid. since state-owned and Russian clear in the (at the geopolitical by seeking not Kremlin’s bear Russia however, Russia. circle In least show Kremlin retain the sanctions the the Putin’s officially has that order The policy. the It sanctions strategies, oligarchs elite’s partly) euphoria were how as to proven was scale Despite cost the the proved destabilise confronta power a to enterpris not objectives Enabling a besieged dissatis imposed welfare, criticise Russian Russian of demon also way for of to those quite were with trig fall that lose and less the the of of ------

35 POINT OF VIEW 10/2018 36 POINT OF VIEW 10/2018 of among i.e. among Rosneft the dures Public 1. 45 44 43 Russian be to crisis, state, US$626 nies Western bles ficial amounts trillion panies 25% roubles For Cf. For Public procurement as the main instrument of support instrument main Public procurement the as Finance, keep the www.ippnou.ru/article.php?idarticle=013699 Госкомпании kompaniy-v-2017-g-dostig-36-5-trln-rub-rts-tender/ news.rambler.ru/business/38929744-rynok-zakupok-gosudarstva-i-gos «РТС-тендер», руб — 36,5 трлн г достиг Monitoring_223-FZ__2017_aktualizirovannaya_redaktsiya.pdf лиц» году 2017 в юридических видами отдельными услуг 223-фз работ, № г. товаров, 2011 закупках июля «O 18 от закона федерального применения Мониторинг noted US$134 contracts, (US$103 of in А. (registered)

company more more (around local the contracts Russia’s bought 2017 the Пушкарская, the roubles (US$468 oil billion), public government spent that sanctions.

information, Russian information, , Russian company billion).

largest and were were https://www.minfin.ru/common/upload/library/2018/04/main/ billion), has these goods by 95% according GDP, не procurement (US$515 regional have been accounting billion) awarded worth state-owned сняли transaction federal in op. cit op. 44 buyers state in figures and Goods,

systematically and

to see i.e. Gazprom see 2017). been 2017 маски, . support billion), a the

According services Рынок закупок государства и госкомпаний в 2017 в 2017 и госкомпаний государства закупок Рынок around in to companies in governments its total without budget in Ministry the that The 2014, only a services for affiliates spending „Коммерсантъ”, recent report figures enterprises of main has Ministry’s figure the i.e. nearly 6% to worth include 36.5 expanding which and information of competitive also around businessmen of Рамблер, Finance instrument years. from and show trillion were the GDP increased at a and 2017 40% systematically corresponded total transactions works were around its regional figures the 45 in that 32% of 25 the state-owned

(7.8 investment 19 of available However, roubles the of February 2017. January Russian and much GDP. tendering biggest of while nearly Russian to trillion deployed ordered affected also 6 А. GDP. more However, budgets trillion from Пуш Despite (more higher. 2018, 2016, programme, such registered to

show 18 43 appeared Federation, Ministry spenders it

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45 POINT OF VIEW 10/2018 46 POINT OF VIEW 10/2018 companies. for investment share circumventing Because transfers. of ownership dynamics high the and and of ordinances sia, The Crimea).in or ness required because the for group they political tions most in rating American Kremlin least heavily wealth the ing tinue state Gennady many the construction the sanctions and wealth oligarchs the partners). were partly were completely doing by of living most Kremlin, of the policy involved of the legislature decisions, the cases a elite taking ones, the expected granted the great of Public and provision business for programmes Timchenko) sanctions elite part standards from have Putin’s president and for opaque even the Identifying the thanks laws, of advantage deal excluded. in such and been funds the losses the been the tax while sanctions most became supporting to at abroad, insiders of while of the last targeted ownership bridge very as exemptions to participate the implemented in banking have assisted determination and or suffered. which probably competitive by the companies Russia four expense and Moreover, via start, the of involved either the connecting turned been his development have government intermediaries preventing people years. state-owned the the services by state-owned relatives, and in structures redistributed in Measures in directly responsible been Russian the of select order out by it projects Russia, by mechanisms dwindling The the the who controlled from state a to the enacting a for select to oligarchs public general group transactions co-ordinated be contracts. of (like the are oligarchs peninsula companies financial compensate aimed despite of the in of Crimea corporations very (relatives at many Kremlin for return group within Boris key real Western of administration the on the public, have difficult, the at persons under the importance the wages, could core companies operations rebuilding Ambitious (including Rotenberg necessary of with for a did personal aimed been element deterio or them became basis narrow private states, which which of sanc busi their con have Rus and and fac the al of at at ------60 has ployment the the the a which of Thanks protests. popular ing satisfy dent’s ko where rankings ty cannot sets two systematically US$800 the lected The 2014). (US$1.4 February in billion crisis before the than ing more was See case to that said Oleg lar правда”, state благотворительность up state government Rotenberg Kremlin’s in special were hundred the worth than declaration insiders for Deripaska oligarchs си оаоис, ата е ееа ве оуасв. л на Или государству. все передам же завтра понадобится, Если triggered in many wealth the the says take in to president million if the point. based a worth of the 4 before necessary. ambitions Kremlin’s we press US$16.8 support August it the losses, cases wealthiest for need is financial over general has family in of less Despite now on proceeded from Platon US$1.24 protests the interview granted, the loyalty made 2014, to been led the official although billion wake from than give concentrated 60 priorities of sanctions , the has

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August in reserve the who but those and possibly elite contrast 20 the „Financial implied last to Russian put interests.” the a loyalty projects on sanctions were May repay considerable also was 1990s. currency Dymisja szefa Rosyjskich Kolei – memento dla elity, dla – Kolei memento szefa Rosyjskich Dymisja under member assets 2015, ten oligarchs, (including funds, the under to imposition by 2018, awarded from put that the economy and retain allowed his the years, important Even other, the to Times”, https://www.osw.waw.pl/pl/publikacje/ on K. showing under Western he readiness the debt state-owned https://www.vedomosti.ru/business/ the Hille, financial case delivered which Putin’s markets, though was asked portion his a in triggering he rather finds to 4 sanctions Oleg US$1 new state-owned too May of for of unclear Oleg Deripaska, Russian oligarch oligarch Russian Deripaska, Oleg no foreign demonstrated assets those throughout sanctions, insistent for to the Vladimir appreciation itself. the billion of US Deripaska inner 2018, share restrained the difficulties his a state, them. first in banks if sanctions banks enterprise major Despite wealth. https://www.ft.com/ circumstances panic Kremlin loan April the their in circle they wave Putin’s demanding Yakunin, So had corporations government and from who of 2018 blow resources, on losing and are For his the much reactions a avoid faced received the of in the not was has more rule had lien. financial aware he Viktor to his sanc April mem state- Rus built had had they sub los lost an not the job, See in by in in ------

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