An unprecedented battle is taking place inside the Kremlin in
advance of Vladimir Putin's departure from office, the Guardian has
learned, with claims that the president presides over a secret
multibillion-dollar fortune.Rival clans inside the Kremlin are
embroiled in a struggle for the control of assets as Putin prepares to
transfer power to his hand-picked successor, Dmitry Medvedev, in May,
well-placed political observers and other sources have revealed.
At
stake are billions of dollars in assets belonging to Russian state-run
corporations. Additionally, details of Putin's own personal fortune,
reportedly hidden in Switzerland and Liechtenstein, are being discussed
for the first time.
The claims over the president's assets
surfaced last month when the Russian political expert Stanislav
Belkovsky gave an interview to the German newspaper Die Welt. They have
since been repeated in the Washington Post and the Moscow Times, with
speculation over the fortune appearing on the internet.
Citing
sources inside the president's administration, Belkovsky claims that
after eight years in power Putin has secretly accumulated more than
$40bn (£20bn). The sum would make him Russia's - and Europe's - richest
man.
In an interview with the Guardian, Belkovsky repeated his
claims that Putin owns vast holdings in three Russian oil and gas
companies, concealed behind a "non-transparent network of offshore
trusts".
Putin "effectively" controls 37% of the shares of
Surgutneftegaz, an oil exploration company and Russia's third biggest
oil producer, worth $20bn, he says. He also owns 4.5% of Gazprom, and
"at least 75%" of Gunvor, a mysterious Swiss-based oil trader, founded
by Gennady Timchenko, a friend of the president's, Belkovsky alleges.
Asked
how much Putin was worth, Belkovsky said: "At least $40bn. Maximum we
cannot know. I suspect there are some businesses I know nothing about."
He added: "It may be more. It may be much more.
"Putin's name
doesn't appear on any shareholders' register, of course. There is a
non-transparent scheme of successive ownership of offshore companies and
funds. The final point is in Zug [in Switzerland] and Liechtenstein.
Vladimir Putin should be the beneficiary owner."
Putin has not
commented on Belkovsky's claims. The Guardian put the allegations to the
Kremlin but was told Putin's chief spokesman, Dmitry Peskov, was not
available.
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.
The
Sechin group is made up of siloviki - Kremlin officials with
security/military backgrounds. It is said to include Nikolai Patrushev,
the head of the Federal Security Service (FSB), Russia's KGB successor
agency, his deputy Alexander Bortnikov, and Putin's aide Viktor Ivanov.
Those
associated with the liberal camp include Roman Abramovich, the Russian
oligarch and owner of Chelsea football club who is close to Putin and
the Yeltsin family. Other members are Viktor Cherkesov, the head of the
federal drug control service, and Alisher Usmanov, an Uzbek-born
billionaire.
Insiders say the struggle has little to do with
ideology. They characterise 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.
Some analysts have said Putin would like to retire
but has been forced to carry on to shield Medvedev from siloviki
plotting. Others disagree and say Putin wants to stay in power. On
Monday Putin confirmed he intends next year to become Russia's prime
minister.
"The siloviki are not at all nice," Yulia Latynina, a
Russian political commentator said. Latynina, who hosts a political
talkshow on the liberal radio station Ekho Moskvy, was one of the first
journalists to draw attention last month to Putin's reported links with
Gunvor.
The company is based in Zug, a picturesque Swiss canton
known as a bolthole for publicity-shy international businessmen. Gunvor
has neither a website nor a Moscow office - but in 2007 posted profits
of $8bn on a turnover of $43bn, an astronomic figure, according to
industry experts. Like Putin, its reclusive owner, Timchenko, worked in
the KGB's foreign affairs directorate. He is said to have met Russia's
president in the late 1980s through KGB circles.
Gunvor, which has its head office in Geneva, failed to comment.
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.
"There's no point in having all
this money if you can't travel to the Maldives or Paris and spend it,"
Elena Panfilova, the director of Transparency International in Russia
said.
The first hints of the intra-clan warfare gripping the
Kremlin emerged last month, when the FSB arrested General Alexander
Bulbov, the deputy head of the federal drug agency, and part of the
liberal group. His arrest saw a surreal standoff, with his bodyguards
and FSB agents pointing machine guns at each other.
Earlier this
month Russia's deputy finance minister, Sergei Storchak - another
"liberal" - was also arrested and charged with embezzling $43.4m. He is
currently in prison. His boss, Russia's finance minister, Alexei Kudrin,
part of the liberal clan, says he is innocent.
But the liberal
group - one of several competing factions inside the Kremlin - has
struck back. Earlier this month Oleg Shvartsman, a previously obscure
businessman, gave an interview to Kommersant newspaper claiming he
secretly managed the finances of a group of FSB officers. Their assets
were worth £1.6bn, he revealed.
The officers were involved in
"velvet reprivatisations", Shvartsman, a fund manager, said - in effect
forcibly acquiring private companies at below-market value and
transforming them into state-owned firms. These assets were
redistributed via offshore companies, he said.
According to
Panfilova, the "randomised" corruption of the 1990s has given way to the
"systemic and institutionalised corruption" of the Putin era. Members
of Putin's cabinet personally control the most important sectors of the
economy - oil, gas and defence. Medvedev is chairman of Gazprom; Sechin
runs Rosneft; other ministers are chairmen of Russian railways,
Aeroflot, a nuclear fuel giant and an energy transport enterprise.
Putin
has created a new, more streamlined oligarchy, his critics say. "The
crown jewels of the country's wealth have ended up in the hands of
Putin's inner circle," Vladimir Rzyhkov - a former independent MP -
wrote in Monday's Moscow Times.
Belkovsky - who published a book
about Putin's finances last year, and who is the director of the
National Strategic Institute, a Moscow thinktank - claims he is
confident of his assessment of Putin's hidden wealth. "It's not a secret
among the elites,' he said. "But please pay attention that Vladimir
Vladimirovich [Putin] has never sued me."
Belkovsky adds that the
west has misunderstood Putin and has been distracted by his "neo-Soviet"
image. Putin, Belkovsky claims, is ultimately a "classic" businessman
who believes money can solve any problem, and whose psychology was
shaped by his experiences working in the St Petersburg mayor's office in
Russia's crime-ridden early 1990s.
"He is quite sure of this. A
problem that can't be resolved with $1bn can be resolved with $10bn, and
if not with $10bn then $20bn, and so on," Belkovsky said.
In an
interview on Wednesday with Time magazine, which named Putin its person
of the year, the president vehemently denied that those inside the
Kremlin were corrupt.
Asked whether "some of the people closest to
you are getting rich", Putin said: "Then you know who and how. Write to
us, to the foreign ministry, if you are so confident. I presume you
know the names, you know the systems and the tools.
"I can assure
you and everyone who would listen to us, watch us and read us, that the
reaction would be swift, immediate, [and] within the prevailing law."
$40bn Putin 'is now Europe's richest man'
By Adrian Blomfield in Moscow
5:31PM GMT 21 Dec 2007
President Vladimir Putin of Russia has been likened to an
African plutocrat after a controversial political scientist claimed
that he had acquired control of £20 billion in energy assets - enough to
make him Europe's richest man.
Stanislav Belkovsky, a colourful figure on the political
scene, claimed that Mr Putin had made a multi-billion pound fortune by
controlling stakes in three Russian energy companies.
The allegations – if true – would suggest that Mr Putin is one of the wealthiest men ever to hold public office.
Mr Belkovsky alleged that Mr Putin had acquired $40 billion during his eight years in power, through a network of front-men.
He compared the president to Mobutu Sese Seko, the dictator
who plundered Congo, and Ferdinand Marcos, the former ruler of the
Philippines.
"Russia under Putin is not a version of modern democracy but a typical third world kleptocracy," said Mr Belkovsky.
But Mr Putin's spokesman denounced the claims. "It's nothing but trash," said Dmitry Peskov.
"Certainly it has nothing to do with seriousness; it has nothing to do with professionalism. It's just trash."
According to Mr Belkovsky, Mr Putin controls a 37 per cent
stake in Surgutneftegaz, an oil exploration company, as well as 4.5 per
cent of Gazprom, the state energy giant, and at least 50 per cent of
Gunvor, a Swiss-based oil trading company that has won a series of state
contracts.
Mr Belkovsky claimed his information had come from credible
sources in the Kremlin - but admitted he had no documentary evidence.
"European and U.S. special services have access to these documents but I don't," he said.
Observers were sceptical.
"In a system of state capitalism and total corruption, it
would be strange if Putin was not rich," said Leonid Radzikhovsky, a
political analyst.
"But the information about this treasure island seems a
little exaggerated. Most Russians do not think about corruption at
presidential level or do not want to think about it."
Mr Radzikhovsky added: "It is difficult to understand Belkovsky. He is
known as a source of confusing information and it is hard to treat it
seriously.
"He is an adventurer. He may be driven by his own morbid
ambitions. He really knows a lot of people in high places but who is he
to know the secrets of the person who has all the possible and
impossible ways to hide his secrets?"
The endgame of Mr Putin's presidency, and his plans for the
succession, have been thrown off balance by infighting between rival
Kremlin clans.
At least three groups, two led by ex-KGB officials, have been in open warfare since October.
On Oct 3, General Alexander Bulbov, deputy head of the
federal drug agency, and a member of a hardline clan of "Siloviki" -
former KGB and security officials - was arrested by a rival Siloviki
faction.
The "liberal" faction was damaged when Sergei Storchak, the deputy finance minister, was arrested last month.
Far from being watertight, Mr Putin's Kremlin now leaks like a sieve.
The President is theoretically above the clans and tries to balance their clashes.
If he does have a faction, it consists of businessmen who have become very wealthy under his rule.
Mr Belkovsky named at least three of them as front-men for the president's alleged fortune.
He also cited Igor Sechin, a deputy chief of Kremlin staff,
leader of the most hardline "Siloviki" faction and one of the country's
most powerful men.
Mr Putin appeared to have sidelined Mr Sechin's clan when he
announced that Dmitry Medvedev, a relative liberal, would be his
successor as president.
Mr Sechin and other ex-KGB figures would never rally around Mr Medvedev.
Mr Putin may calculate that he can keep their loyalty, leaving the new president isolated.
Mr Putin may calculate that he can keep their loyalty, leaving the new president isolated.
What game Mr Belkovsky is playing - and on whose behalf - is unclear.
He has been accused of starting a smear campaign against the
oligarch, Mikhail Khodorokovsky, a fierce critic of Mr Putin who was
jailed in 2005.
Mr Belkovsky's allegations about the president's money first emerged in a book he published last year.
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