US President Joe Biden has issued an explicit threat to Russian President Vladimir Putin to impose sanctions on his wealth over Russia’s aggression against Ukraine.
Where is the wealth that Biden threatens to impose sanctions on due to Russian aggression on Ukraine, and how much? To answer these questions, Forbes presents 3 theories.
Theory one: Khodorkovsky’s model
One of the emerging Russian oligarchs was Mikhail Khodorkovsky. His company, Yukos, at the time was responsible for 17% of Russia’s oil production and was considered a significant influence in the Kremlin. His personal fortune was $ 3.7 billion. The richest man in Russia, one of his former employees was the Minister of Fuel and Energy. One of his other employees at the time was Putin’s deputy chief of staff.
Khodorkovsky’s fortune doubled over the next year. By October 2003, he was in jail and convicted of fraud and tax evasion (which he denied).
There was no doubt that Putin was behind his arrest, the freezing of his fortune and the eventual dissolution of his company. Khodorkovsky’s fate was a powerful lesson for other oligarchs. However, the question remains: How much of Khodorkovsky’s fortune did Putin take for himself?
Only Bill Browder has been following this story for years, an American financier who has done a lot of business in Russia and stands behind the Magnitsky laws that allow governments to impose targeted sanctions on human rights violators by freezing their assets . Browder claims that after Putin arrested Khodorkovsky, he entered into an agreement with the country’s oligarchs.
“The deal was, ‘Give me 50% of your fortune and I’ll let you keep the remaining 50%,'” Browder said. “If you do not do that, he will take all your fortune and throw you in jail.”
Based on these calculations, Browder estimated in 2017 that Putin’s fortune was $ 200 billion, making him the world’s richest person at the time. Browder’s calculation was simple: he summed up the net worth of all Russia’s oligarchs and divided it by two.
Peter Avin – who heads Russia’s largest private sector bank, whose fortune estimates Forbes at $ 4.8 billion – confirmed this theory when he told Robert Mueller, the former director of the US Federal Bureau of Investigation, during his investigation into Russian interference in the 2016 U.S. election. – that he was one of 50 Russian businessmen who regularly met with Putin in the Kremlin.
“Aven said he took these meetings seriously and understood that any suggestions or criticisms made by Putin during these meetings were tacit, and that there would be consequences for Avene if he did not implement them,” Mueller said in a statement. .
Theory Two: The Mafia Model
Another scenario is that Putin’s fortune comes by helping his inner circle of friends and family get rich by giving them state contracts or ownership interests in companies. In return, the theory goes, he takes cash bribes or interests in companies. In some ways it feels like a mafia structure, where soldiers and gang leaders (in this case billionaires) are in eternal debt to their leader (Putin). It is they who do the dirty work, and he takes the money.
According to Swedish economist Anders Aslund, author of Russia’s Crony Capitalism, which was released in 2019, Putin has called in his family, childhood friends, bodyguards and others to keep his money. It is estimated that each person has between $ 500 million and $ 2 billion and their net worth varies between $ 100 billion and $ 130 billion.
Among Putin’s confidants, who became very wealthy: his former judo partner, Arkady Rothenberg, with whom he is believed to still play ice hockey, received more than $ 7 billion in various government contracts in the run-up to the Sochi Olympics. which is earmarked for everything. From a power station to the development of ski resorts. More recently, Rothenberg – whose brother Boris and son Igor are also billionaires – has established himself as the owner of a huge complex of buildings on the Black Sea coast dubbed Russian opposition leader Alexei Navalny “Putin’s palace”.
Then there is Kirill Shamalov, Putin’s former son-in-law. Shamalov, the son of an old friend of Putin, began to benefit from his family ties when he became a senior adviser in the legal department of Gazprombank, one of Russia’s largest financial institutions. But the door was wide open when media reports said he had married Putin’s daughter in a secret wedding. (Even this fact people are reluctant to confirm.)
Shortly afterwards, Shamalov bought a 17% stake in the petrochemical company Sibur from another Putin friend, Gennady Tymoshenko, after borrowing money from Gazprombank, an institution responsible for two-thirds of Putin’s fortune. . Shamalov became a billionaire at the age of 34, after three years of marriage. However, the marriage was dissolved sometime in 2016 or 2017, and Shamalov was allegedly stripped of his fortune and forced to sell his stake in Sibur.
One of Putin’s best friends, the cellist Sergei Roldugin, befriended the Russian president when he was a young man in Leningrad and introduced Putin to his ex-wife. He was named in the 2016 Panama Papers investigation because of his association with a network of companies, $ 2 billion in cash flow from him and $ 100 million in assets. Roldogen told the Guardian his money comes from donations from wealthy businessmen to buy musical instruments for poor students.
“The richer you become, the more reliable you become,” says Aslund. “Wealth certainly does not give you freedom in Russia,” he says. “There are a lot of things that can happen if you have too much money.”
The third theory: the threat model
In short, given the lack of evidence to the contrary, it is possible that Putin has very little money of his own and simply likes that he is thought to have only a small amount of money because it indicates power.
This is certainly true, at least in theory. Putin’s official financial disclosure, released annually by the Kremlin, puts his income for 2020 at about $ 140,000. The only assets he owns are: three cars, a trailer, an 800-square-foot apartment, ‘ a 200-square-foot garage, as well as a use of a 1,600-square-foot apartment and two parking spaces. No mention is made of his large collection of luxury wristwatches, or the “Putin Palace” he allegedly owns (which he denies, and the complex that Rothenberg says he owns), nor of the large collection of palaces, yachts and planes which he uses as Russia’s leader.
Some observers cite these grand displays of state power as examples of why Putin does not need personal wealth. Leonid Bershidsky, columnist for Bloomberg Opinion, wrote in 2013: “He has the entire state at his disposal, it’s enough for Putin to tap his fingers, and state-owned enterprises will give up assets to his friends at very low prices. With his whisper , rich private businessmen will participate in the renovation.The luxury of any presidential residence.
Ultimately, Putin may not need the money, as long as he has the appearance that he has money, and the power to give him money otherwise. While Putin threatens and threatens Ukraine, one can look at this model and hope that in the end it is just a threat.