Ties to Putin Generate Fabulous Wealth for a Select Few


Vladimir Litvinenko, the rector of one of St. Petersburg’s prestigious universities, helped Vladimir V. Putin prepare his graduate dissertation on natural resources. Mr. Litvinenko later profited from a phosphate mine in the Arctic. Dmitry Kostyukov for The New York Times

nytimes.com | Mar 1, 2012

By ANDREW E. KRAMER and DAVID M. HERSZENHORN

ST. PETERSBURG, Russia — Arkady R. Rotenberg, a former judo coach, is now a billionaire industrialist, having made a fortune selling pipe to the state-owned gas monopoly, Gazprom.

Yuri V. Kovalchuk owned a minority stake in a small bank in St. Petersburg that in recent years won control of a number of Gazprom subsidiaries. He is now worth $1.5 billion.

Gennady N. Timchenko, once the little-known sales manager of a local oil refinery, is now one of the world’s richest men, co-owner of a commodity trading company that moves about $70 billion of crude oil a year, much of it through major contracts with Rosneft, the Russian national oil company.

What these men share, besides staggering wealth and roots in St. Petersburg, is a connection to Prime Minister Vladimir V. Putin, who is poised to win a new six-year term as president in elections on Sunday. The three billionaires are members of a close circle of friends, relatives, associates, colleagues from the security services and longtime advisers who have grown fabulously wealthy during Mr. Putin’s 12 years as Russia’s paramount leader.

Critics say these relationships are evidence of deeply entrenched corruption, which they view as essentially government-sanctioned theft invariably connected to Russia’s abundant natural resources: gas, oil, minerals. This has become a persistent grievance of demonstrators who have staged four large street protests since December and are promising more after the election.

“The basic point is that these guys have benefited and made their fortunes through deals which involved state-controlled companies, which were operating under the direct control of government and the president,” said Vladimir S. Milov, a former deputy energy minister and now political opposition leader who has written several reports alleging corruption. “Certain personal close friends of Putin who were people of relatively moderate means before Putin came to power all of a sudden turned out to be billionaires.”

Mr. Putin has repeatedly denied any involvement in the enrichment of these and other acquaintances, and he has forcefully dismissed assertions made by his political opponents that he himself is a secret beneficiary of these enterprises and has amassed tens of billions of dollars in bank accounts outside Russia.

Mr. Putin’s spokesman has also denied any connection to a sprawling resort complex that some of Mr. Putin’s St. Petersburg acquaintances were said to be building for him as a “palace” on the Black Sea at a cost of as much as $1 billion.

One of Mr. Putin’s former associates from St. Petersburg, Sergei Kolesnikov, recently fled Russia with a trove of documents that appear to support the connection to the resort. In meetings with Russian and Western journalists, Mr. Kolesnikov has described other business dealings in which money was funneled, often as loans, to businesses controlled by Mr. Putin’s friends or relatives.

The denials from Mr. Putin’s acquaintances are just as steadfast. Mr. Timchenko partly won a lawsuit against Mr. Milov in which he insisted that he was not a “friend” of Mr. Putin’s. In a statement this week, a spokesman for Mr. Timchenko, Anton Kurevin, acknowledged that Mr. Putin and Mr. Timchenko met in the early 1990s in St. Petersburg, but said that Mr. Putin had no connection to Mr. Timchenko’s business. Instead, they still have ties to a judo club where Mr. Putin sparred as a young man with Mr. Rotenberg.

“As has been stated on numerous previous occasions, it is true that Mr. Timchenko does know Mr. Putin,” Mr. Kurevin said. “However, the relationship is one of casual acquaintanceship and not close friendship.”

Mr. Rotenberg declined to respond to written questions. Mr. Kovalchuk, reached through a publicity agent representing his bank, by Thursday evening also had not replied to a written request for comment.

Legalities aside, these relationships are fixed in the public mind and widely reported by the Russian news media, so how Mr. Putin handles them could prove critical both to his near-term political survival and his legacy.

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