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 construction 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’.