Strongman

by Roxburgh, Angus

  In July 2011 the US State Department announced a visa ban for Russian state officials it believes are linked to Magnitsky’s death. Rather than investigate the case uncovered by Hermitage, however, the Kremlin announced it would retaliate by blacklisting certain US citizens.

  How high does the trail of Russia’s sleaze, which is so blatant at lower and middle levels of the state, lead? There are simply no verifiable facts about corruption at the very top, only a wealth of speculation, gossip, accusations and circumstantial evidence. Putin, it is true, does not mind sporting luxury wristwatches that suggest an income far in excess of his government salary. Neither does Dmitry Medvedev. Several websites show photographs of the men wearing watches that cost as much as they earn in a year.

  The allegedly well-connected commentator Stanislav Belkovsky famously claimed that he had ‘evidence’ that Vladimir Putin’s assets amounted to $40 billion. According to Belkovsky, Putin controlled 37 per cent of the shares of the oil extraction company, Surgutneftegaz, owned 4.5 per cent of Gazprom and held at least 75 per cent of a secretive Swissbased oil-trading company, Gunvor, founded by a friend, Gennady Timchenko.17 There is simply no way of verifying such claims, and Belkovsky is something of a self-publicist. Putin himself described the allegations as ‘just rubbish, picked out of someone’s nose and smeared on bits of paper’. A prominent Russian businessman, acquainted with both Putin and Timchenko, told me the figures were nonsense and that Putin does not even need such huge sums of money because, like a mafia boss, he can simply have anything he desires. It is not ownership but control, and the network of acquaintances, that counts.

  It is certainly undeniable that a clique of businessmen close to Putin made immense fortunes during his presidency.18 It would be surprising if his friends did not feel indebted to him.

  According to a list of Russia’s richest people published by Finans magazine in February 2011, Gennady Timchenko, with a personal wealth of $8.9 billion, is in 17th place. His company, Gunvor, has become the world’s third-largest oil trader, shipping one-third of Russia’s exports, including those of the biggest state companies, Rosneft and Gazprom Neft. Timchenko and Putin have links that go back to the latter’s days working in the mayor’s office in St Petersburg. According to the Financial Times, corporate records show that the two men participated in the early 1990s in a company known as Golden Gates, which was established to build an oil terminal at St Petersburg’s port, but foundered in a clash with organised crime. Local parliament records show that a Timchenko company was also ‘a beneficiary of a large export quota under a scandal-tainted oil-for-food scheme set up by Putin when he worked as head of the city administration’s foreign economic relations committee in 1991’. Timchenko is also said to have close ties with Surgutneftegaz, the Kremlin-loyal oil company whose ownership is undisclosed.19

  Arkady and Boris Rotenberg, Putin’s judo partners in his youth, each have assets worth $1.75 billion. One of Arkady’s companies was awarded major contracts in the preparations for the Sochi Winter Olympics in 2014, another is involved in the construction of the Nord Stream gas pipeline under the Baltic Sea. Together with Gennady Timchenko, the Rotenberg brothers founded the Yavara-Neva judo club, of which Putin is honorary president (and whose trustees, incidentally, include first deputy prime minister Viktor Zubkov).

  Yuri Kovalchuk, Putin’s neighbour in the Ozero dacha cooperative back in the 1990s, is the majority owner of Bank Rossiya and the National Media Group, and owns assets worth an estimated $970 million. In February 2011 his media group, which already controlled two national television channels, RenTV and Channel Five, bought a 25 per cent stake in Russia’s most popular station, Channel One, from Roman Abramovich for just $150 million. According to an opposition report on corruption, Bank Rossiya’s assets soared from $236 million at the beginning of 2004 to $8.2 billion in October 2010, mainly through its acquisition, at knock-down prices, of key assets of Gazprom.20

  Nikolai Shamalov, another dacha neighbour and co-owner of Bank Rossiya, is worth $590 million. His name surfaced at the end of 2010 in connection with sensational rumours that a ‘palace’ was allegedly being built for Putin in the south of Russia, at a place called Gelendzhik, near Sochi. Websites printed photographs of a Versailles-style palace; aerial photographs showed its position, at the end of a secluded road close to the Black Sea coast. Shamalov turned out to be the nominal owner of the ‘villa’. However, one of his former business partners, Sergei Kolesnikov, claimed to have proof that the palace was in fact commissioned by the Kremlin property department in 2005 when Putin was president, and was intended for his personal use. Novaya gazeta later printed what it said was an authenticated copy of the original contract for the palace, signed by Vladimir Kozhin, the Kremlin’s property manager. When investigative reporters tried to visit it they were turned away by government security men, even though the site was allegedly Shamalov’s personal property. The whole story emerged after Kolesnikov wrote an open letter to President Medvedev asking him to investigate his claims. He said he had been personally involved in the project until 2009 when he was removed for raising concerns about corruption. He claimed a state construction company was building the palace and that state funds had been illegally diverted to the project. The claims were naturally denied by the Kremlin and by Putin’s spokesman. In March, apparently to try to put a lid on the scandal, Shamalov sold the palace to another businessman, Alexander Ponomarenko – a partner of Arkady Rotenberg but not closely connected to Putin.

  The network of corruption that gobbles up so much of the country’s wealth touches almost every Russian’s life – from the driver who bribes a traffic cop, or the small shop owner who passes cash to a public health official for a specious hygiene certificate, to the Kremlin bureaucrat who extorts millions from a foreign trading company.

  A Spanish prosecutor, Judge José Grinda Gonzalez, who led a long investigation into Russian organised crime in Spain, resulting in 60 arrests, came to the conclusion that it was impossible to differentiate between the activities of the government and organised crime groups. According to a cable released by the Wikileaks website, he told American diplomats that Russia had become a virtual ‘mafia state’ and that there were ‘proven ties between the Russian political parties, organised crime and arms trafficking’. He said that the authorities used organised crime groups to carry out operations it could not ‘acceptably do as a government’, such as sales of arms to the Kurds to destabilise Turkey. Any crimelords who defied the FSB could be ‘eliminated’ either by killing them or ‘putting them behind bars to eliminate them as a competitor for influence’.21

  Corruption is not just an impediment to investment and a destroyer of the economy, it is also politically explosive. The opposition has successfully branded Vladimir Putin’s United Russia party as ‘the party of crooks and thieves’ – a slogan now recognised, I am sure, by most Russians, all the more so since United Russia tried to sue its originator, Alexei Navalny, for slander.

  Navalny, in his mid-30s, is a lawyer, businessman and political agitator, who has made it his mission to scrape away layers of filth from the sleazy world of Russian corporate business. He is the most popular blogger in the Russian internet, and has uncovered corruption of fabulous proportions. Navalny bought shares in state-run companies such as Gazprom, Rosneft and Transneft (which runs the government’s oil pipelines), and began investigating their finances. Some of his findings have spawned criminal investigations, as well as the ire of the authorities. In one case, he found that Gazprom was buying gas from a small company, Novatek, through an intermediary, Transinvestgas, though it could have bought it directly for 70 per cent less. The intermediary channelled at least $10 million of the difference to a fraudulent consulting company. In another case, VTB, a major state bank, bought 30 oil rigs from China – again at a vastly inflated price through an intermediary, which kept the difference, $150 million. His most sensational claim is that Transneft embezzled ‘at least $4 billion’ during the construc
tion of a 4,000-kilometre oil pipeline from East Siberia to the Pacific Ocean.22

  Navalny publishes his findings on a Russian blog site, Live Journal, and has a large following on Twitter. He recently founded a new website, RosPil.info, ‘to fight against bureaucrats who use the system of state procurements for their own enrichment’. The site exploits an early decision by President Medvedev to post all state requests for tender online. Navalny asks readers to send in any that arouse suspicion (‘for example, a 5 million rouble contract to design a government website, with a one-week deadline for applications’), so that experts can analyse them and follow them up. Faced with such exposure, dozens of dodgy calls to tender have already been cancelled: the website claimed in August 2011 to have thwarted corrupt contracts worth 7 billion roubles.23 Examples include a regional governor’s request to buy 30 gold-and-diamond wristwatches (‘as gifts to honour teachers’), an interior ministry order for a hand-carved, gilded bed made of rare wood, and an order from St Petersburg authorities for 2 million roubles’ worth of mink for 700 patients in a psychiatric institution.24

  13

  TANDEMOLOGY

  A bicycle built for two

  Ever since Medvedev became president, and Putin his prime minister, Russians and foreigners alike have searched for signs of differences between the two halves of what has become known as the ruling ‘tandem’. Perhaps it is done more in hope than expectation, for the dissimilarities are more of style than substance. So elusive is the search that it has given rise to the modern equivalent of Kremlinology, analysing pictures and parsing sentences in the hope of discerning what is going on in the dark recesses of the Kremlin (or of Putin’s and Medvedev’s minds). It might be called ‘tandemology’.

  The differences between the two men are often played down because of the lack of real change since Medvedev became president – but, of course, lack of results does not in itself mean that change was not desired. I would argue that while in foreign policy, as we have seen, there was scarcely any discernible difference between the two men, the evidence suggests that they did have differing views on the economy and on human rights – even though actual progress in these areas was negligible. The differences, moreover, grew more pronounced in the second half of Medvedev’s presidency, as a certain rivalry grew between them, and both appeared to be manoeuvring to become the ‘establishment’ candidate for president in the 2012 election. What is certain is that the two men developed separate constituencies of supporters, something that would not have happened if their views were identical. They could, in fact, have become the nuclei of separate political parties, offering alternative solutions for Russia’s future. The reason this did not happen is because Putin had a firm grip on the handlebars, and rarely turned round to hear Medvedev’s protests that they might want to take a different path, or get a better bike. The evidence suggests that Medvedev grew increasingly frustrated on the back seat, and was determined to stand for a second term as president. But the two agreed early on that they would not run against each other, and Medvedev knew that if Putin decided to return to the Kremlin, he would do it. This time, the prize was bigger than ever: at the end of 2008 Medvedev had extended the presidential term from four to six years.

  Medvedev’s most symbolic early act of defiance was to receive the editor of the opposition newspaper Novaya gazeta in January 2009, ten days after one of its journalists was shot by a contract killer. To feel the significance of this, you would have to hear – as I have done – members of Putin’s team fulminating against the newspaper, which they consider beyond the pale. This is the paper that used to publish Anna Politkovskaya’s full-blooded attacks on the Putin system. I have heard the prime minister’s men use obscene language about it, and they told me Putin feels the same way. Owned by former Soviet president Mikhail Gorbachev and the proprietor of the London Evening Standard and Independent newspapers, Alexander Lebedev, Novaya gazeta is a small but strident campaigner against corruption and authoritarian rule. One of its young reporters, Anastasia Baburova, was walking down a Moscow street with a human rights lawyer, Stanislav Markelov, when they were both shot dead. Markelov, who defended victims of Russian atrocities in Chechnya and anti-fascist activists, worked closely with the newspaper. He was thought to have been the gunman’s main target, while Baburova was killed as a witness.

  After the shooting – in a move that contrasted vividly with Putin’s brush-off of Politkovskaya’s death – President Medvedev called Dmitry Muratov, the newspaper’s editor. Muratov recalls: ‘He invited Gorbachev and myself to the Kremlin to discuss the situation. I didn’t expect that. At the meeting he expressed his condolences, and even mentioned Anastasia’s parents’ names without looking at any notes.’ Muratov says he found Medvedev totally sincere, and reminded me: ‘When Anna Politkovskaya was killed, Putin said that her death did more harm to the country than her life!’ Muratov points out that, in contrast to Politkovskaya’s killers, the murderers of Baburova and Markelov – members of a neo-Nazi group – were tracked down and sent to jail for life.1

  When Muratov admitted that the murders of four of his journalists since 2000 had made him wonder whether to close the paper down, Medvedev replied: ‘Thank God the newspaper exists.’ He even agreed to give his first ever Russian press interview as president to Novaya gazeta, Putin’s most hated newspaper, and told Muratov: ‘You know why? Because you never sucked up to anybody.’ In the interview, carried out three months later, Medvedev openly distanced himself from the Putinite idea of a ‘social contract’, whereby the state offered its citizens stability and a measure of prosperity in exchange for political docility. You could not counterpoise democracy and well-being, he said. He could offer Russia both freedom and prosperity.

  On the same day as the interview was published, 15 April, Medvedev held an extraordinary session of the Presidential Council on Human Rights. The meeting lasted for many hours, but as it began Medvedev ordered his staff to start publishing the proceedings in instalments on his website – an unprecedented idea that ensured full publicity for his own words and whatever the human rights activists wished to say.

  He criticised officials who interfered with the right to demonstrate, or who persecuted NGOs, and admitted that ‘our government machine’ was ‘steeped in corruption’. Part of the discussion concerned the official portrayal of Russian history, at a time when democrats were worried by a growing tendency to underplay the enormity of Stalinism. One speaker, Irina Yasina, formerly vice-president of Mikhail Khodorkovsky’s Open Russia Foundation, was blunt about the communist legacy: ‘Our country has inherited a terrible legacy. Throughout the entire twentieth century the value of human life was negated, and human rights were trampled underfoot, to put it mildly. And now we, the children and grandchildren of those who lived through that century, must try to change this situation somehow.’

  Medvedev replied: ‘I have to agree with Ms Yasina that the entire twentieth century was one of denial of the value of human life.’

  Six months later, in a video-blog posted on Remembrance Day for the Victims of Political Repression, President Medvedev appeared to lay into the authors of new schoolbooks, which attempted to whitewash Stalin. He said: ‘Let’s just think about it: millions of people died as a result of terror and false accusations – millions. They were deprived of all rights, even the right to a decent human burial; for years their names were simply erased from history. But even today you can still hear voices claiming that those innumerable victims were justified for some higher national purpose. I believe that no national progress, successes or ambitions can develop at the price of human misery and loss. Nothing can take precedence over the value of human life. And there is no excuse for repression.’

  Contrast that with Putin, who as president reinstated the old Soviet national anthem, called for the reintroduction of Soviet-era basic military training in schools and allowed the publication of a manual for history teachers which described Stalin as an ‘efficient manager’. The book argued that o
ne of the reasons for Stalin’s repressions, in which millions were incarcerated or murdered, was ‘his goal of ensuring maximum efficiency of the management apparatus, while the Great Terror of the 1930s had achieved ‘the creation of a new management class suited to the tasks of modernisation under the conditions of scarce resources’.

  It was not just ‘liberal talk’ on Medvedev’s part. He also took small but real steps that gave heart to the democrats. In January 2009, for example, he quietly scuttled a draft law backed by Putin, that would have expanded the definition of treason to include almost any criticism of the government or contact with foreigners, and said he had been influenced by the outcry in the media and society against the proposed change.

  He also took measures to defend the right to demonstrate. Since July opposition activists had begun holding unauthorised rallies on the last day of any month with 31 days, to draw attention to Article 31 of the constitution, which guarantees the right of assembly. The rallies were invariably broken up within minutes by riot police, and protestors arrested. The Duma then passed a bill to restrict street protests even further, but in November Medvedev vetoed it. Putin’s view of protests, by contrast, is that it is normal for police to ‘beat demonstrators about the head with a baton if they’re in the wrong place’.

  In June 2010 a Duma bill broadened the functions of the security services to ‘fight extremism’. The law would have allowed the FSB to issue warnings to people it believed were ‘about to’ commit a crime, and threaten, fine or even arrest them for up to 15 days for disobeying its orders. After his Human Rights Council complained that the bill ‘revived the worst practices of the totalitarian state’, however, President Medvedev watered it down – and insisted: ‘I want you to know that this has been done on my personal orders.’