By Peter Podkopaev
December 16, 2016
What we know:
“American officials have concluded that Putin’s network controls some $85 billion worth of assets, officials told NBC News.” (2016)
“Adam Szubin, who oversees US Treasury sanctions, has told BBC Panorama that the Russian president is corrupt and that the US government has known this for ‘many, many years.’” (2016)
“Putin could be worth as much as $70bn, a figure that would make him the richest man in the world.” (2012)
“Mr. Belkovsky alleged that Mr. Putin had acquired $40 billion during his eight years in power, through a network of front-men.” (2007)
How much is President Vladimir Putin really worth? According to official Kremlin sources, Putin’s declared income in 2015 was $144, 448, and he owns three Soviet-era cars (one of which is a Niva, the shoddy Soviet attempt at an all-wheel drive off-roader).
But don’t be fooled. Just yesterday, U.S. intelligence officials leaked to NBC News a very different figure: $85 billion, which reflects far more accurately the kleptocracy which has gripped Russia under Putin.
Let’s take a closer historical look at the finances of our humble, Niva-driving comrade…
Following the collapse of the Berlin Wall and the unification of Germany, Putin was summoned from his stint in Dreseden back to the motherland. In St. Petersburg, Putin got to work in the Mayor’s office and even completed his PhD (which he apparently plagiarized from a University of Pittsburgh textbook). It was during the tumultuous and wild 1990s that Putin made his initial wealth. According to Nikolai Andrushenko, who worked with Putin, Putin’s motto in those days was “you gotta make dough!” And that he did.
Abusing his position in the St. Petersburg Mayor’s Office, Putin is alleged to have pilfered on a grand scale from barter contracts intended to feed the famished population of his native city. It is estimated that $100 million worth of shipments never reached St. Petersburg. While the entire country was an economic shambles following the dissolution of the Soviet Union, Putin was making his dough.
Then the trail goes quiet. Having ascended to the pinnacle of power and dismantled free media, Putin was able to shelter his true wealth from public scrutiny. That is, until a former business partner from St. Petersburg leaked a trove of documents exposing the construction of what came to be known as “Putin’s Palace,” an opulent mansion shrouded in secrecy on the Black Sea coast of Russia. A contract for the sale of medical equipment was used to siphon off money for the luxurious palace:
“They sold medical equipment for at least $195 million to Russia and sent a total of $84 million in proceeds to Swiss bank accounts, according to bank records reviewed by Reuters. The records also indicate that at least 35 million euros ($48 million) from those accounts were funnelled to a company that then helped construct a luxury property near the Black Sea known as “Putin’s palace…”
Since his St. Petersburg days, Putin’s wealth has been divided and held in a secret trust network of his most trusted associates. In the early 1990s, his inner circle lived together in a small village and established a wealth-sharing scheme known as the Ozero cooperative. As Putin’s power and wealth grew so did that of his friends: he brought them to the Kremlin and put them in charge of companies and organizations that oversee massive government projects. This allows Putin’s gang to steal directly from the state treasury, as well as from any entity brazen or foolish enough to conduct business with them.
Later, we learned from the Panama Papers that one of Putin’s childhood friends—now a cellist– is a billionaire. That is how the system works, and the reason why no one can say with definitive certainty how much Russia’s president is truly worth.
The U.S. Treasury department seems to have known about these and other schemes, because sanctions imposed in response to Russian aggression in Eastern Ukraine and the annexation of Crimea targeted entities and persons who were effectively Putin’s wealth managers. Furthermore, a Treasury official has gone on record about Putin’s corruption.
Prior to this week, the only widely reported public statements about Putin’s wealth came from Stanislav Belkovsky, a Russian political analyst who first projected it to be $40 billion, later adjusting it to $70 billion. We are not privy to how U.S. officials arrived at their latest figure, but one thing is certain: $85 billion would be a pitifully small cut for the leader who has overseen the wholescale looting of a country with Russia’s economic potential.
Peter Podkopaev is a Researcher at Hudson Institute’s Kleptocracy Initiative.