Why tracking Putin’s wealth is so difficult

Many extravagant assets that would be Putin's are actually owned or controlled by the state (REUTERS)
Many extravagant assets that would be Putin’s are actually owned or controlled by the state (REUTERS)

Buried in a 421-page legal file in an obscure court case is a single sentence, offered almost as an afterthought, about a meeting in a Geneva restaurant where two businessmen argued. “a yacht that was given to Mr. Putin.”

The passing reference, cited in a decision by the London judge in 2010 on a financial dispute involving a shipping company, is the rare public evidence linking Russian President Vladimir V. Putin directly to any of his associated ships, planes or luxury villas. Through the years. It has taken on new meaning as US and European authorities pursue the hidden wealth of Putin and those close to him in response to the Russian invasion of Ukraine.

But the British court document also contains a clue as to why it was so difficult to clearly link the Russian president to his wealth rumors. The yacht, called Olympia, was operated by a company in Cyprus, where corporate documents show that the real owner was not Putin but the Russian government.

Indeed, it is one of the many extravagant assets long assumed to belong to Putin and actually owned or controlled by the state, which shows how much the private interests of the president and his inner circle have merged with those of the government he has dominated for two decades. Others include a sprawling resort, a fleet of expensive cars, luxury planes, and even more yachts.

The United States and its allies have created a multinational task force to track down and seize the assets of at least 50 wealthy Russians, including Putin.and have announced rewards for information that aid in the effort. On Wednesday, officials announced sanctions against Putin’s two adult daughters.

But some analysts They wonder whether such actions will have a major impact on the Russian president, who has never been found in possession of much worth confiscating.

Although there has been a lot of public and media discussion about this Putin’s oligarchs and old friends could secretly hold valuable property in his name or hide his cash for him in offshore companies and Swiss bank accountsmany of its most obvious luxuries are embedded in state-owned enterprises and largely beyond the reach of Western sanctions.

Government funds had been diverted to help develop a billion dollar property on the Black Sea that became known as
Government funds had been diverted to help develop a billion-dollar property on the Black Sea that became known as “Putin’s palace.”

Alina Polyakovaa Russian foreign affairs expert who heads the Center for European Policy Analysis, said that since government resources and agencies were likely used to protect at least some of his alleged wealth, the personally targeted sanctions on Putin were for him more symbolic.

“To get to him too, we would have to sanction the entire Russian government”, She said. “And obviously there are reasons why Europe and the United States are not willing to do that.”

For example, blocking the entire Russian state economically would mean putting it completely on the blacklist Gazprom, one of the largest energy companies in the world and a major source of natural gas in Europe. So far, the company has only faced limited sanctions aimed primarily at curbing its purchases of certain debt and shares, even as global outrage grows over the apparent Russian atrocities in Ukraine.

However, Gazprom figures in any calculation of Putin’s possible wealth. Although luxury real estate appears to have little to do with its core mission, the state-owned gas company has built a lavish retreat the Russian president enjoys in Siberia’s mountainous Altai region. Despite claims that the project was unrelated to the Kremlin, a co-authored report by former Deputy Prime Minister and Putin critic Boris Nemtsov noted that the site “was equipped with security by the FSO,” the service of protection assigned to the Russian President and other senior officials.

The mountain resort was among the 20 properties described in the 2012 Nemtsov report as available to Putin, along with dozens of luxury planes, four yachts and 11 wristwatches with a retail value of nearly $ 700,000, all presumably paid for with public funds.

Nemtsov was killed in 2015 with a shot in the back. as he crosses a bridge in front of the Kremlin.

Due to the efforts of the few independent news outlets operating in Russia prior to the recent crackdown on freedom of expression, as well as opposition voices such as Nemtsov and Alexei A. Navalny, the idea that Putin is living big on taxpayers’ money is no secret. The Kremlin has long denied living beyond its means: it officially receives a salary of around $ 140,000 and has a small apartment in Moscow. But his spokesperson told a Russian newspaper, in response to Nemtsov’s allegations, that the Russian president also uses state residences and “legal” vehicles.

The presence of Putin’s protective detail was seen as a telltale sign of his hidden ties to various extravagances. Sergei Kolesnikov, a former business partner of a Putin ally, wrote an open letter in 2010 claiming that government funds had been withdrawn to help develop a $ 1 billion Black Sea property that became known as the “Palace. Putin’s “.

Nemtsov was shot in the back in 2015 while crossing a bridge in front of the Kremlin (REUTERS / Tatyana Makeyeva)
Nemtsov was shot in the back in 2015 while crossing a bridge in front of the Kremlin (REUTERS / Tatyana Makeyeva)

An investigation released last year by Navalny, the jailed opposition leader, found that the building had been guarded by members of the Federal Security Service and that Russia’s homeland security agency, the FSB, at one point point had imposed a no-fly zone over.

More recently, Navalny’s team reported connecting the crew members of a $ 700 million superyacht to the same Kremlin protection group, amid the speculation that the ship, whose ownership is hidden by shell companies on the high seas, has been secretly used by Putin. The 459-foot yacht, called Scheherazade, has two helipads and is topped with a cluster of satellite domes. She is currently in dry dock in Italy.

“If the owner of the yacht cannot be identified, it is an offshore company in the Marshall Islands, we will try to establish who works there and who pays their wages”, Maria Pevchikh, a member of Navalny’s team, said in a video describing the investigation.

The New York Timeswho was the first to report that US officials had indications that the yacht could be connected to Putinhe was unable to independently confirm the results of Navalny’s team on crew safety links and US officials refused to specify what information they had. This could break the veil of corporate secrecy surrounding the ship’s offshore ownership.

Indeed, many jurisdictions have traditionally offered not only tax advantages to managing assets through offshore structures, but also company registries which make it difficult, if not impossible, to publicly identify the ultimate owners. It is mainly through leaks from law firms specializing in these services that it has been discovered that rich Russians are regulars.

And sometimes the Russian government itself is the beneficiary.

Leaked files known as Paradise Papers, from the Appleby law firm in Bermuda, have been revealed overseas projects on behalf of various Russian state-owned companies, including VTB Capital, an investment bank and Gazprom. Another involved the purchase of a Bombardier Global 6000 private jet for $ 53.9 million by an obscure Cypriot company, Genetechma Finance Ltd.

Appleby’s records prove this Genetechma eventually operated on behalf of VEB, a state-owned economic development bank with ties to Russian intelligence. VEB, whose president allegedly used private jets, controlled Genetechma, based in Cyprus, through a branch in Luxembourg.

Another Cypriot company has emerged in the chain of ownership of the Olympia yacht, the connection of which with Putin appeared in the records of the British court. The litigation involved complex self-treatment allegations between executives of several Russian shipping companies, including Sovcomflot, which is owned by the majority of the Russian government.

In a 2010 London court decision, Judge Andrew Smith described how several actors involved attributed their positions of influence to having “a good relationship” with Putin and, in one case, he recalled a meeting at the Lipp Brasserie in Geneva where the gift of Olympia to him was mentioned. The yacht, which cost between $ 35 and $ 50 million in 2002 and was equipped with marble bathrooms, extensive gilding and a whirlpool tub, would be “operated by Unicom,” a Cyprus-based company.

Cyprus company registration, which in recent years has become stricter in requiring transparency of ownershipshow that Unicom was owned by a Bermuda company, whose “parent company” was a state-owned shipping company in Russia.

Olympia, which sails with registration to the Cayman Islands, was last heard in the Baltic Sea, near St. Petersburg.

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