SPECIAL EXTRA: The Nemtsov White Paper, Part V — Putin the Thief

Boris Nemtsov has published the fifth installment of his White Paper series reviewing the manifold failures of the Putin regime. This time, his focus is personal corruption by Vladimir Putin himself, and the allegations are truly sensational.  Nemtsov is clearly taking his life in his hands by publishing this material, once again translated professionally by the amazing Dave Essel.  The four prior installments are located here.  The original Russian version of Part V is here.

PUTIN.
CORRUPTION.

AN INDEPENDENT WHITE PAPER
Moscow 2011

Editorial board
V.Milov, B. Nemtsov, V. Ryzhkov, O. Shorina

Translated from the Russian by Dave Essel

Introduction

Vladimir Putin’s decade in power associates in most minds with two highly negative phenomena – an extraordinary increase in the abuse of power and corruption.

Russia in 2010 managed to rank 154th out of 178 countries according to influential global civil society organisation Transparency International. Our peers in the list are some of the least developed countries of Africa (Congo, Guinea-Bissau) and other countries such as New Guinea and Tadzhikistan. Transparency International considers Russia to be the most corrupt of all the major countries in the world, the so-called G20. Our BRIC colleagues (Brazil, China and India) rate way above us as well in 69th, 78th, and 87th respectively.

Yet to say that Russia demonstrates an African level of corruption is no longer really true because corruption is far less pervasive in many parts of Africa. In Egypt, hundreds of thousands of citizens, revolted by the corruption in Mubarak’s government, took to the streets and and forced him to resign. And that’s Egypt, 98th in the chart, with a corruption level one half that of ours.

The myth that Putin has brought order to the country shatters in the face of reality.

Table 1 below illustrates Russia’s corruption ranking over the years.

Table 1

Countries are ranked for corruption according to a Corruption Perceptions Index (CPI). No perception of corruption wins 10 points, unrestrained total corruption 0. See Table 2.

Table 2

Russia’s CPI has been calculated since 1996, that is since Yeltsin’s second term of office, and presents an interesting picture. The average CPI in the later years of Yeltsin’s rule was 2.4. That figure improved initially after Yeltsin retired and Putin came to power, rising to 2.6 during Putin’s first term. This resulted from staff change in the government apparatus, the simplification of the tax system, less regulation, and a reduction in the number of authorisations and licenses required in order to do anything.

However, things changed again when Putin began his second term and the situation is now rapidly getting worse and worse. By 2010, the CPI dropped like a stone from 2.6 to a record low of 2.1. Fraud and bribery of unprecedented magnitude was overtaking Russia. Putin supporters frequently like to assert that corruption in the “wild 90s” was no lower than today. But the facts prove the opposite is true. If one looks at Russian Bureau of Statistics Rosstat’s figures on the number of crimes involving corruption, the dynamics are clear – a rise from 2700 recorded cases in 1990 to 13,100 in 2009. [Source: Rising bribery, Russia Statistics Yearbook 2010, ]

There can be no comparison between the scale of corruption under Yeltsin or under Putin. One of the clearest examples is the incredible enrichment of the Luzhkov-Baturina family. In the 90s, the most shocking corruption scandal involving them was the installation of plastic seating in the Luzhniki stadium: the Moscow government’s call for tenders was won by the Mayor’s wife. The amount involved was a mere $700,000. There was a storm of protest. In 2008, there as another call for tenders, this time for the repair and refurbishment of V. Mukhin’s famous statue of the Worker and Peasant Girl. Once again, Baturina’s tender won. But this time the sum involved was $100 million and there was not of whiff of a scandal and of course no investigation.

The so-called “Writers’ Affair” provides another typical example. In 1997, a major scandal developed about royalties paid to government employees for a book on privatisation. These royalties amount to $90,000. The scandal led to a government crisis and in Spring 1998 the government was dismissed. Today, news about Putin aides getting government villas worth tens of millions of dollars excites no one and the aides in question do not lose their jobs. Moscow Deputy Mayor V. Resin, who has never worked in business, wears a watch costing $1 million yet this does not lead the present régime to investigate how he came by it or to his being fired.

The situation with corruption is far worse now than it was back in the 1990s.

Corruption has ceased being a problem in Russia; it has become a system. Its metastases have paralysed the country’s social and economic life. The annual turnover of corruption in Russia now stands at $300 billion [Source: INDEM (Information Science for Democracy) Foundation investigation Diagnostics of corruption in Russia: 2001-2005 which has estimated that between 2001 and 2005 the value of corruption rose from 33 to 316 billion dollars.] This amount is comparable in size to Russia’s budget as a whole and represents 25% of the country’s GNP.

Rising tariffs and prices are to a great extent due to corrupt activities by civil servants at every level and to Putinite monopolies. Backhanders, fraud, and bribe-taking add up to 50% to the cost of anything. This is why it costs Gazprom three times as much to build a pipeline than similar pipelines would cost in Europe. [Source: Vedomosti, 17.03.2010: the undersea part of the North Stream pipeline is costing $10.6 million per kilometre for a total of $12 billion for 1128 kilometres, with $2 billion unaccounted for. For a cost comparison between European and Russian pipelines, see Mikhail Korchemkin, East European Gas Analysis. Building oil pipelines also involve embezzlement and backhanders worth billions of roubles. [Source: A. Navalny’s blog entry Embezzlement à la Transneft, 16.10.2010]. The bribes needed to enable home-building amount to 30% of the cost. In order to cover their ever-increasing costs, the monopolies and that authorities constantly increase the charge for utilities, leading to higher prices across the board. And it is we who have to pay the price for the thievery and corruption of Putin’s “power vertical”.

The Putin system is remarkable for its ubiquitous and open merging of the civil service and business, its use of relatives, friends, and acquaintances to absorb budgetary expenditure and take over state property, and the way it stays and stays in power whilst functioning with near total opacity.

Censorship of the media and the near-total annihilation of parliamentary rule is particularly harmful. The absence of parliamentary oversight over the executive, reinforced by a dearth of journalistic investigation into corrupt activities makes an excellent culture medium for lawless outrages.

Corruption has ground down and destroyed the law-enforcement system. Many police chiefs see personal enrichment as their main priority. [In early 2011, Lieutenant-General Alexandr Bokov, the head of the Coordination Bureau for Combating Organised Crime and Other Criminal Activities in the CIS was arrested and dismissed. He was accused of fraud in the amount of $46 million. A search was carried out in his 50-room mansion seated on 5 acres of land]. The priorities of such people do not include combating terrorism or protecting citizens.

This régime with its power vertical of civil servants has also destroyed the independence of the courts. Administrative pressure has made the legal system dysfunctional and totally dependent on corrupt authority.

Corruption has also reinforced Putin’s management principle number one: friends can have anything they want and the rest can go to hell. Obedience of the law and delivering any kind of justice do not form part of the deal for the civil servants of the Putin régime. The supreme principle is personal loyalty. The main guideline of the authorities today is: “Stay loyal and you’re free to steal, let the side down and you go to jail”.

President Medvedev, when he started, set up a commission for combating corruption which he himself headed up. The results, however, were nil, or maybe even negative. The régime takes serious care of its corrupt members. According to Supreme Court Chairman V. Lebedev, defendants in 65% of all the cases it reviewed, of which there were about 10 thousand for the whole country, received no more than a suspended sentence [Source: report in Kommersant, 28.01.2009, of V. Lebedev’s speech at a meeting RF court chairmen].

In the wider world, a number of countries are successfully defeating corruption. Leading examples include Norway, Germany, Italy, Spain, the USA, and Singapore. The most recent successful example is Georgia. The man who made the Singapore miracle, Lee Kuan Yew, eradicating corruption and bringing about fantastic economic success, stated in an interview with Vedomosti on 26.10.2005 that three principles must be met to resolve the problem of corruption:

1. Ensure clean and honest people are in ruling positions;

2. Ensure that punishment for wrongdoings ensues without fail;

3. Ensure that decent wages are paid and that civil servants are well-rewarded for honest work.

Not one of these principles is applied in Russia today. We feel certain that the problem of corruption will not be resolved unless the central authorities are cleaned up. Fish rot from the head down. This problem will therefore not be resolved while a kleptocracy that thinks only of its personal enrichment heads the country. For this reason we will not, in this report, be looking at each and every form of corruption that exists but will rather concentrate on the situation with corruption at the top.

We will present incontrovertible evidence of unprecedented and outrageous corruption in the highest échelons of power in Russia. We will describe how Putin’s cronies from the Ozero dacha condominium metamorphosed from run-of-the-mill businessmen into dollar billionaires. We will tell of the luxury in which the leaders of our country live and the lifestyle they maintain. We will explain how they manage to make you and me pay for it.

Finally, in the concluding chapter, we will lay out our plan of anti-corruption actions. we understand that it will not be possible to eradicate corruption completely. On the other hand taking Russia from Guinea-Bissau levels to at least the level of some Eastern European country or that of Georgia is a perfectly realistic aim, an aim that furthermore will be good for the country’s development.

If this problem is not resolved, Russia is fated to eternal backwardness and her citizens to eternal poverty and disenfranchisement.

The Enrichment of the Members of the Ozero Dacha Condominium

The Ozero (Lakeside) Dacha Condominium on the shore of Lake Komsomolsky in the Priozersk district of Leningrad Region was set up in November 1996 by 8 people: Vladimir Putin, Yuri Kovalchuk, Nikolai Shamalov, Viktor Myachin, Vladimir Smirnov, Vladimir Yakunin, and the brothers Andrei and Sergei Fursenko.

One of the founder-members of the Ozero condo, Vladimir Putin, became in 2000 the President of the Russian Federation; the others suddenly became extremely rich. This applies first and foremost to Yuri Kovalchuk and Nikolai Shamalov who now bask in the upper reaches of Russia’s billionaire list, controlling respectively 33.5% and 12.7% of AKB Rossiya, a Petersburg bank.

At the start of Putin’s rule, AKB Rossiya was a small bank with a capital of less than 1 billion roubles. It was not even in the top 100 Russian banks. But then it came to pass that the government sold to that bank at knock-down prices large financial and media assets that had previously belonged to the state-owned company Gazprom. Boris Nemtsov and Vladimir Milov have described the schemes in detail in their white papers “Putin – The Results” and “Putin and Gazprom”. Here is a brief chronology of the exfiltration of Gazprom’s assets in favour of AKB Rossiya:

– In 2004, Gazprom puts its subsidiary Sogaz (Gas Industry Insurance Company), one of Russia’s largest insurers up for sale and it eventually ends up under the control of AKB Rossiya. Fifty percent of Sogaz’ shares were sold by Gazprom for $58 million. We estimate Sogaz’ current value to be around $2 billion.

– In August 2006, Sogaz, now already owned by Rossiya Bank, buys 75% plus 1 share in Lider, the company managing Gazfond, Gazprom’s pension fund.

Gazfond is Russia’s largest private pension fund with reserves today of nearly 300 billion roubles.

The Lider shares were sold to Sogaz by Gazprom for just 880 million roubles, this despite the fact that in 2006 alone Lider’s profits had amounted to 1.2 billion roubles. Rossiya Bank’s owners were already prepared for this deal which was to give them control over the pension fund: in 2005, Yuri Shamalov, son of Rossiya Bank shareholder and Ozero Dacha Condo founder Nikolai Shamalov, was appointed chairman of Gazfond.

Shamalov Sr. (left) and Shamalov Jr.

What this all meant is that Shamalov Jr. as head of Gazfond sold shares in the company managing Russia’s largest private pension fund at a fantastically low price to the bank owned by his father, Shamalov Sr.

– After winning control of Gazfond, Rossiya Bank gained control over Gazprombank, one of Russia’s largest banks. OAO Gazprom, instead of selling its shares in Gazprombank on the open market for real money, let them pass to Gazfond (then controlled by Rossiya Bank) in a cashless share swap as a result of which by April 2007 control of Gazprombank (50% plus 1 share) was consolidated by Gazfond, itself controlled by Kovalchuk, Shamalov, and co. Gazprombank, the market value of which was, according to experts, in the order of $25 billion, went from the control of Gazprom without Gazprom getting a single kopeck of live money for its valuable asset.

– In July 2005, Gazprom-Media Group and the NTV and TNT television channels were sold to Gazprombank. Gazprom was paid just $166 million for the shares. Less than 2 years later, after Gazprom-Media had passed, as part of Gazprombank’s assets, under the control of Rossiya Bank, the then vice-premier Dmitri Medvedev voiced a quite different valuation of Gazprom-Media – $7.5 billion. If that is their true value, then Gazprom sold its assets for 45 times less than they were actually worth.

All these deals were approved by OAO Gazprom’s board of directors, on which there was always a majority of representatives of the government, who would have received instructions on how to vote from government leaders subordinate to V. Putin. The first deal transferring Gazprom assets into the hand of Rossiya Bank took place in Summer 2004, a few months after Mikhail Kasyanov resigned his post of Chairman of the Government of Russia.

As a result of these manipulations to take assets out of state-owned Gazprom and give control of them to AKB Rossiya, that bank’s own assets rose from 6.7 billion roubles in early 2004 to 231.7 billion on 1 October 2010 (lifting it from Russia’s 70th to 19th largest bank).

The total value of the assets exfiltrated from Gazprom (that is to say removed from state ownership and placed into the private hands of Putin’s friends from the Ozero Dacha Condo) amounts to about $60 billion (or twice the deficit in Russia’s pension fund). [See V. Milov, B. Nemtsov, Putin and Gazprom, Moscow 2008].

These deals helped to increase the wealth not only of Putin’s partners from the Ozero condo but also of some of his relatives.

In particular, yet another of the shareholders in Rossiya Bank, owning 3.9% of its shares through his Petersburg-based company Aktsept, is Mikhail Shelomov, Putin’s great-nephew. Mikhail Shelomov is the grandson of Ivan Shelomov, a former head of the 7th Department of the 1st Directorate GUPT NKVD of the USSR and the older brother of Maria Putina, Vladimir Putin’s mother.

Through his company Aktsept (he owns 99.9% of its shares), Shelomov also owns 12.5% of insurance company Sogaz, the insurer that was sold without public tender and at a knock-down price by Gazprom in 2004.

Yet another of Putin’s great-nephews, Mikhail Putin, is also today to be found in Sogaz, as a deputy chairman of the board. Mikhail Putin worked in Gazprom from 2004 to 2007, heading its medical directorate, which purchased medical equipment worth $100 million or so.

A Putin by any Other Name (left) and Gorelov

As a result of all the government-approved deals to transfer assets from Gazprom to AKB Rossiya’s control, Ozero condo founders Yu. Kovalchuk and N. Shamalov have made their way into Russia’s official billionaire list. Finans magazine’s list of billionaires, published in February 2011, has Yu. Kovalchuk in 115th place and gives his worth as 30 billion roubles (~ $1 billion) and N. Shamalov in 184th place with a worth of 18 billion roubles.

Other AKB Rossiya shareholders – and old acquaintances of Putin – hold places on the billionaire list. One should note in particular the holder of slot 17; worth 271 billion (~$9.5 billion), this is Gennadi Timchenko, the co-owner of oil trading company Gunvor, who will be discussed separately below. Timchenko owns 9.6% of Rossiya Bank’s shares and so also made himself a handsome profit when Gazprom assets were sold at a bargain price to the bank.

Dmitri Gorelov, number 182 in Finans magazine’s list, is wealthy to the tune of 18 billion roubles and yet another AKB Rossiya shareholder with a 12.7% shareholding. D. Gorelov is also chairman of the Petromed holding, one of the founders in 1991 of AOZT/ZAO Petromed, another co-founder of which was the committee for foreign economic relations St. Petersburg Mayor’s Office, then headed by Vladimir Putin.

Dmitri Gorelov’s son Vasili jointly owns, with Nikolai Shamalov, Vyborg Shipbuilders which in 2006, right after it was bought by them, was awarded a 59-billion-rouble Gazprom contract to build two sea platforms for the Shtokman field. For 10 years prior to that, Vyborg Shipbuilders had not had a single serious order.

Nikolai Shamalov’s youngest son Kirill has also had a nice spot found for him (while his older brother heads Gazfond). He is vice-president of the Sibur Oil-and-Gas Holding for “administrative business support” (or in other words, for the absorption of government monies). He was appointed to this post at the age of 26, less than 4 years after his graduation from St. Petersburg State University.

Sibur used to belong to Gazprombank. However, in December 2010, Gazprombank sold 50% of its holding in Sibur to Leonid Mikhelson, the head of Novatek (another major shareholder in which is Rossiya Bank shareholder Gennadi Timchenko). Gazprombank plans to relinquish its remaining 50% shareholding in Sibur to Novatek’s head in the course of 2011.

***
Other Ozero Dacha Condominium founders have also found their way into leading posts in the federal government and in state-controlled companies since Putin came to power.

– Vladimir Yakunin was in 2000 appointed deputy minister of transport, later 1st deputy minister of railways, and from 2003 1st vice-president of OAO Russian Railways then from 2005 head of the same. OAO Russian railways had a turnover in 2010 of nearly 2 trillion roubles.

– Vladimir Smirnov in May 2000 was appointed Managing Director of FGUP Enterprise for Supply of the Management Directorate of the President of the Russian Federation. [FGUP stands for “Federal State Unitary Enterprise”] and from 2002-2007 headed OAO Tekhsnabexport, a commercial arm of the Ministry for Atomic Energy. Tekhsnabexport is one of the world’s largest supplier of products and services for the atomic energy cycle and does about 40% of the world’s uranium enrichment. In 2007, Smirnov was transferred to the post of adviser to the director of AtomEnergoProm.

Vladimir Smirnov was in the past closely linked with the well-known “mafia” businessman Vladimir Barsukov (Kumarin), who is currently in jail. Back in 1994, V. Smirnov was head of the Petersburg subsidiary of the German company SPAG and Kumarin was a member of its board. In 1999, SPAG was accused by the BND (Bundesnachrichtendienst, the German Federal Intelligence Service) of laundering money for Russia’s organised crime and also for Columbian drug dealers. SPAG director Rudolf Ritter was arrested for this in 2000. Between 1996 and 2001 V. Smirnov was also in the upper management of ZAO Petersburg Fuel Company. During the same period Kumarin-Barsukov was its vice-president and to all intents and purposes controlled the company. Rif-Security, a security company controlled by Kumarin-Barsukov and V. Smirnov, provided security services to the Ozero Dacha Condominium.

– Sergei Fursenko, director (2003-2008) of LenTransGaz, one of Gazprom largest subsidiaries with a turnover in 2008 of 50 billion roubles. From 2008 head of National Media Group (owner: Rossiya Bank), the holding corporation of the NTV and Pyaty Kanal television channels, the newspaper Izvestiya, and from late 2010 of 25% of Channel 1 of Russian TV purchased from Roman Abramovich. S. Fursenko is in addition to this the head of the Russian Football Union.

– Andrei Fursenko, from 2001 to 2003 deputy minister, first deputy minister, and acting minister of industry, science and technology; from 2004 minister of education and science of the Russian Federation, which ministry controls federal budget spending on civilian education and science (800 billion roubles in 2011).

***

Rossiya Bank, now richer by far thanks to generous concessions to it of Gazprom assets, has become to all intents and purposes the family business of the founders of the Ozero Dacha Condominium: over 50% of its shares belong to Yu. Kovalchuk, N. Shamalov, and Putin relative M. Shelomov. Their relatives work in important positions within the bank. Shamalov’s son heads the Gazfond pension fund. Putin relatives own shares in Sogaz and occupy important posts in it.

Putin and his Billionaire Friends

The members of the Ozero Dacha Condominium are not the only ones to have made it to riches thanks to being friends or acquaintances of Putin’s. In this chapter we will outline the story of Mr. Timchenko, an old friend of Putin’s, and of the Rotenberg brothers, who have known Putin from since they were young men practising judo together.

Putin first met Gennadi Timchenko in the late 1980s. At that time Gennadi Nikolayevich worked in an oil refinery where he had a low-level job in its commercial department. Timchenko’s work included being involved in organising oil sales abroad. The first business in which Timchenko and Putin were involved together began when the future president was [Petersburg mayor] Sobchak’s deputy and headed the foreign relations department. This was back in the 1990s when times were difficult, when there was not enough food, medicine, or elementary consumer goods. Through Sobchak’s efforts, the Petersburg mayor’s office obtained the right to sell metal and oil for export in exchange for food.

A company called Golden Gate was set up [Source: Financial Times, 15.05.2008]. Its founders were the Department for Foreign Relations (Putin) and elements of Mr. Timchenko’s organisation. Shortly thereafter, the company sold 100,000 tonnes of oil products, worth in those days $70 million. Nothing came back to Petersburg in exchange, however. [Source: Putin’s Secret Ally, the King of the Oil Trade, Wall Street Journal 11.06.2008; Financial Times 15.05.2008].

A group of city councillors headed by Marina Salye set up a commission to investigate fraudulent dealings connected with Putin’s foreign economic activities and the mayor’s office. The results were published [by journalist A. Barabanov]. But a court case was never brought.

Timchenko meanwhile continues to trade in oil and in 1999 relocates to Finland. He is still a quite unknown oil trader. According to Finnish tax records, his income that year amounted to 327,000 Euro. After Putin came to power, however, Timchenko’s business goes on the up and up. By 2000, he declares an income of 1.5 million Euro and in 2001 nearly 5 million.

In 2008, Timchenko, with $2½ billion to his name, makes it into Forbes Magazine’s list of dollar billionaires. In Finans magazine’s latest (February 2011) rating of Russian billionaires, Timchenko is in 17tth place with a worth of 271 billion roubles (~$10 billion).

The reason this little-known Petersburg businessman rose to such heights lies in the sheer volume of exports of oil and oil products. As a Finnish citizen and a Swiss taxpayer, this gentleman controls over ⅓ of Russia’s oil exports. [Source: Come in, Number 3, Vedomosti 01.11.2007; Our Man of the Week: Gennadi Timchenko, Vedomosti, 28.06.2010].

Of particularly important note is the fact that Timchenko in the main trades in oil from the state-owned companies Rosneft and Gazpromneft plus Surgutneftegaz, which is closely tied to the government. [Source: New Oil Plenipotentiary, Vedomosti, 30.11.2007].

***

Starting in 2007, Timchenko companies export 60-90 million tonnes of oil and earn about 80 billion dollars. His companies furthermore enjoy a most-favoured status. When Russia had its conflict with Estonia, exporters suddenly faced great difficulty in moving oil products through that country. Well, all of them except for Timchenko companies. [Source: Putin’s Secretive Ally – The Oil Trading King, Wall Street Journal 11.06.2008]. The magnitude of the international dispute notwithstanding, the Russian authorities do not put difficulties in the way of his exporting oil.

Everyone knows that decisions regarding exports from state-owned companies are very much the prerogative of the president and government. Oil is a strategic resource for Russia and the government keeps a beady eye on matters relating to it. How and on what basis Timchenko was selected to be the conduit for nationalised Russian oil, and what part Putin played in the matter, is something that will one day be explained – along with how come Timchenko sells oil from the former Yukos company and how he happens to be one of the founders of the infamous BaikalFinansGroup through which Rosneft got its hands on Yukos [Source: Le Monde, 11.07.2007]. This fly-by-night company, whose registered address in Tver was the location of the London Bar, remains a mystery to this day. All Putin has said about it is that its founders were people well-known to him and who had been in the oil business for a long time [Source: Putin Discloses Who is Behind the Company That Bought Yugansk, Lenta.ru, 21.12.2004].

Timchenko is of course, together with Mr. Kovalchuk, a major shareholder in Rossiya Bank. This previously unremarkable Petersburg bank now controls Gazprom’s most liquid assets (Gazprombank, Gazprom-Media, Gazfond, Sogaz, and more). Timchenko and Kovalchuk gained control of all these for practically nothing – no tenders, no bids, no nothing. State-owned Gazprom, controlled by Putin, was dropped into Timchenko’s and his fellow shareholders’ laps in a regal gift worth billions of dollars. Why Gazprom’s billions should have gone to Kovalchuk and Timchenko remains a complete mystery.

Until recently, Timchenko’s construction companies used to get juicy billion-rouble orders for Gazprom building projects. The privilege has since passed to those other friends of Putin, the Rotenberg brothers (see below). But Timchenko is not hurting: he is now one of the main contractors to state-owned RosNeft and TransNeft. [Source: Keeping Things Tight, Kommersant, 14.12.201; The Timchenko Networks, Vedomosti, 27.04.2010].

In addition to all this, Timchenko is the top shareholder of Novatek, Russia’s largest gas producer after Gazprom. This company enjoys uniquely preferential treatment at the hands of the state. As is well known, Russia has instituted a state monopoly on gas exports: only Gazprom can sell gas abroad. Although an exception was made for Timchenko: Novatek exports gas under a nominal agreement with Gazprom! In 2010, state-owned Gazprom sold a 9.4% shareholding in Novatek to Timchenko companies. Nothing unusual about that – except for one thing – the price: Gazprom sold its shares for $1.9 billion. This was $1.3 billion less than their market value, making Timchenko and his partners richer by the same amount at the expense of the Russian state (Gazprom).

***

We can enjoy more of the same thrills when looking at the development of the business of Rotenberg brothers Arkadi and Boris. The two practised judo together with Putin back in the 1960s. Later, Arkadi Rotenberg became president of the Yavara-Neva Sports Club, of which Putin is the honorary president and one of the founders is – here we go again! – G. Timchenko. [Source: Brotherly Love and Sharing at Gazprom, Vedomosti, 09.03.2010]. But it’s not just sport and being young men together that bind Putin and the Rotenbergs. Little-known entrepreneurs in the 1990s, the Rotenbergs are now dollar billionaires, the largest suppliers of pipes to Gazprom, and major pipeline construction contractors. Having bought up Gazprom’s construction assets at a rock-bottom price, the Rotenbergs set up a company called StroiGasMontazh. By 2008, this company was winning tender after tender for pipeline construction. [Source: Gazprom Looks After Its Own, Vedomosti, 10.09.2009]. StroiGasMontazh won the tender to build the North Stream pipeline, despite the cost being three times that of building similar pipelines in Europe! Despite the fact that our workers are paid far less than European ones.

Without even going through a tendering process, the Rotenbergs were given the contract to build the epoch-making Sakhalin-Khabarovsk-Vladivostok pipeline – at the astronomical price of 210 billion roubles.

The Rotenberg were also given the Dzhugba-Lazarevskoye-Sochi Olympic pipeline contract without having to go to tender.

The Russian government raises the price of gas every year. This in turn raises utilities prices. We should all understand that these price hikes are the result of friendly/criminal deals such as these with the state/Gazprom on one side and friends of Putin on the other.

We wrote in our report PUTIN: What 10 Years of Putin Have Brought about the catastrophic degradation by alcohol that is happening in Russia, where per capita consumption for every man, woman and child has now reached 18 litres of pure alcohol a year. A key reason why we are all getting so sozzled is the unbelievable availability of vodka. Alcohol and vodka are so lowly taxed that a bottle of vodka costs about the same as two or three bottles of beer. Never before in Russia (or the world) has this been the case. Never before has a bottle of vodka cost the same as 4 subway rides. We could see no reason for such a state of affairs – until now. When we started looking into the Rotenbergs businesses, we found out that they control no fewer than 11 alcohol production plants in the RosSpirtProm system. [Source: The Kremlin’s Alcohol Plenipotentiaries, Vedomosti, 20.04.2009; Unto One’s Own, Novaya Gazeta, 04.02.2011]. These include BryanskSpirtProm, the Kristall vodka distillery, the Astrakhan Liqueur and Vodka Plant, MordovSpirt, the Bakhus plant in Smolensk, and other alcohol production facilities in Cherepovetsk, Yaroslavl, and elsewhere.

Could that be the reason for the low tax and excise on vodka in Putinite Russia? Would Putin put up taxes for his friends? The cheaper the goods, the more you can sell. And that fact that the population of a vast country is sinking into alcoholism isn’t something the current government is that worried about.

The scandalous story of the Moscow-St. Petersburg tollroad cutting through the Khimki Forest is well known. Putin authorised the construction. Putin stood unshakeable when the public protested. He stood his ground even when President Medvedev put a temporary halt to the work. Eventually, it was decided to build the road through the forest, despite the objections of the residents of Khimki and of ecologists. Why this went the way it did is now clear – the 63.4 billion rouble contract to build the tollroad had been given to companies owned by the Rotenbergs. [Source: Kovalchuk/Rotenberg Highways, Vedomosti, 20.09.2010].

Putin’s government has agreed to provide 23 billion roubles of funding for the road. But the toll income will go to the Rotenbergs.

The Moscow-Minsk Highway is a repeat of the same story, although with the contract for this one going to another Putin friend – Yu. Kovalchuk. The state pays and Putin’s friends rake in the profits.

Using their long-time links to Putin, the Rotenberg brothers were able to offer protection to multi-billion rouble businesses. They became shareholders in the Port of Novorossiisk (the country’s largest oil terminal) by offering shareholders A. Ponomarenko and A. Skorobogatko their services in protecting the business from another Putin acquaintance, Nikolai Tokarev (of TransNeft). [Source: Presidential Judo and the Port of Novorossiisk, Leningradskaya Pravda, 14.04.2008, see ; Protective Moves, Vedomosti, 14.04.2008].

Much the same happened with Ashot Egiazaryan’s business. In order to ensure that his company was safe from predation by Luzhkov’s wife Baturina, Egiazaryan ceded without payment a 50% share in it (the construction of the Moskva Hotel) to the Rotenberg brothers. [Source: Milov/Nemtsov, Putin and the Crisis, 2009].

Two Slaves on a Gilded Galley

Vladimir Putin gave a curious reply when he was asked what he though was the point of living. His response was that for a man, the most important thing was to experience new sensations.

Russia ruling “élite”, which has risen out of deprived Soviet childhoods, has thrown itself wildly upon every object and attribute of luxury glimpsed in rare foreign films about the “good life” that managed to scrape past the censor. The arms race has now become a luxury race, this in a country where 70% of the population dwell in poverty, partial or total. Politicians and civil servants who officially live off their salaries, strive to keep up with their oligarch friends and not be outdone in their consumption of the most expensive goods and services, the most recherché entertainments and delights, competing even with the Russian tsars and aristocrats of the past and the Arabian sheikhs of today. The top figures of our government are leading the whole “vertical of power” from the front in this rush to luxury.

Yachts

A luxury yacht, the Sirius, sailed into Sochi in early 2011. This yacht was bought by the Office of Presidential Affairs (that is to say with money from the country’s budget) for £26 million sterling (~$41 million). The yacht can accommodate 11 guests and 12 crew, The president plans to receive heads of state and government leaders on her during the Olympics in 2014 and other events. The yacht has 6 VIP cabins and is over 50 metres long. The Sirius’s important guests will have at their disposal a wine cellar, a saloon with panoramic sea view, a spa pool with waterfall, a jacuzzi, a barbecue and other amenities. The standard calculation for the running costs of yachts is 10% of its value per year, say $4 million, which would pay the average pension for 1400 Russian pensioners.

Captain Putin goes to Sea

It is worth mentioning that not that many heads of state are provided with yachts. Those who do actually have rather more modest ones. For example, the Finnish president’s yacht cost €2 million, the King of Belgium’s “just” €4.6 million, while Elizabeth II, Queen of England, no longer has a yacht at all since the retirement of the famous yacht Britannia.

This Sirius, according to the official account, replaces the recently scrapped 45-metre presidential yacht “Kavkaz” which was built in 1980 for Leonid Brezhnev but had recently undergone a full refurbishment (in the early 2000s) costing, according to various sources anything from $1 million to $2.8 million, during which she was given new air conditioning, a cinema, hardwood furniture and panelling, and so on.

Besides this sea-going vessel, the head of state also has at his disposal an old (1973) riverboat, the Rossiya. She was also recently refitted – in 2005 at Petersburg Northern Docks. The works were overseen personally by the president’s chief of administration V. Kozhin, Petersburg governor V. Matvienko, and presidential envoy I. Klebanov. The Rossiya is 86 metres long and has 3 VIP cabins, 9 twin cabins, a conference room, a saloon, a restaurant and a sauna. The cost of the refurbishment is being kept strictly secret (which in itself is strange since the vessel is on the national budget) but is reckoned to have been in the order of $1.2 million.

But the yachts don’t end here. As journalists from Novaya Gazeta uncovered, under Putin luxury yachts are being almost routinely bought and put into service.

The 32-metre yacht Pallada, designed in Holland and built in Moscow for $4-6.7 million was bought for the 300th anniversary of St. Petersburg in 2003. It offers all the usual luxuries: teak decks, expensive furniture with white leather armchair and settees. Three decks. Cabins and saloons to a total of 390 square metres. Tinted windows. One deck shielded for privacy. The Pallada also boast a sauna and a cinema. She can accommodate up to 8 guests. Decorated throughout with pictures of Peter the Great. Tony Blair and Gerhard Schroeder were guests of Vladimir Putin on board this yacht in St. Petersburg in May 2003.

A VIP speedboat costing $3 million was also bought for the same 300th anniversary. This vessel is now registered with the Russian Naval Base of St. Petersburg.

The jewel in the crown of the Kremlin fleet of yachts must be the Olympia, a mega-yacht which first appeared in the port of Sochi in Summer 20002. This fifty-seven metre 5-deck yacht cost about $50 million and is one of the 100 largest yachts in the world. Yearly operating costs for the Olympia must therefore be in the order of 150 million roubles. The yacht is built to royal standards: hardwood and rattan interiors, gilding, jacuzzi, bar and barbecue, a colonnade in special maplewood, marble bathrooms, and so on.

The connection between the Olympia (registered offshore) with the Kremlin has been confirmed not just by loose tongues among the Sochi Port workers but also by the fact that the FSO has been seen guarding it and that a special commission came down from Moscow to take the boat in charge. Kremlin sources have stated the yacht is used by President Putin. The Olympia is managed by Cyprus-registered Unicom Managment Services, which belongs to 100% state-owned OAO Sovkomflot, the chairman of whose board of directors was at the time Putin’s presidential aide Igor Shuvalov. Roman Abramovich, the Russian billionaire and good acquaintance of Putin, has been named as one of the buyers, and hence “gifters”, of the Olympia.

In early 2010, British High Court Justice Andrew Smith gave judgement on the case between Sovkomflot versus its former chief executive Dmitri Skarga and businessman Yu. Nikitin. The judge’s ruling contained an interesting fact: Skarga had remarked during the hearing that a yacht had been given to Putin. When asked by a Forbes magazine reporter what yacht he was referring to, Skarga referred him to an article in Novaya Gazeta about the yacht Olympia. Where the Olympia now berths, who her actual owner is, and whether Russia top men still sail on her is now a complete mystery. [See interesting article here – Trans.]

How does this all add up? The Putin-Medvedev tandem have at their disposal a mini-fleet of at least five luxury yachts and speedboats, together worth not less than $110 million. These furthermore cost the country millions more in annual maintenance. This puts our Russian lords and masters on a par with – not the heads of the world’s democratic countries or of the BRIC countries – but with the king of Saudi Arabia and his family (15 megayachts), other Arab sultans and sheikhs (9 megayachts), and his friend Silvio Berlusconi with his 4 yachts. We should note in passing that Berlusconi has, unlike Russia’s leaders, officially declared his yachts; he was after all a billionaire businessman before he came to power.

Villas and Palaces

Our Russian tandem seem to be as attracted to luxury villas, estates, and palaces as they are to yachts. The existence of such places is carefully concealed and disguised. The luxury properties are frequently formally on the books of state corporations or even registered to private individuals from among Putin and Medvedev’s close friends. Information still reaches the media, however. [Source: Behind Locked Doors, Kommersant-Dengi, 31.01.2011, see Ъ-Деньги – Тайна за семью заборами]. That the residences belong to top-ranking officials can be determined through circumstantial evidence: for example, if they frequently vist the place, or if it is subject to special secrecy and security measures (e.g. guarded by the FSO whose main job is to protect the country’s top people).

In all, the president and the premier are linked with the use of 26 luxury premises located in Russia and abroad. This number has been rising ever since our two “heroes” have been in power.

Officially, the country’s two top men have 5 residences. Dmitri Medvedev has: Gorky-9 (near Moscow), Bocharov Ruchej (Sochi), and Dolgie Brody – Valdai (near Novgorod). Vladimir Putin has: Novo-Ogarevo (near Moscow) and Riviera (Sochi).

Besides these, the state has on its books (which means paid for by the taxpayer) another 10 estates that are at the disposal of the country’s top leaders: the Konstantine Palace (Strelna, S. Petersburg), Shuiskaya Chupa (Karelia), Volzhsky Utyos (on the Kuibyshev reservoir, Volga River), Tantal (on the Volga, near Saratov), Angarskie Khutora (Irkutsk District), Maly Istok (near Yekaterinburg), Dom Sevastyanova (Ekaterinburg), Sosny (Krasnoyarsk Region), Mein Dorf (a gothic mansion on the Rublevskoye Shosse near Moscow), Rus (Tver District, in the hunting reserve). Many of these places have not been used in years but vast sums are spent on their maintenance and security and on keeping them ready to receive their grand masters at a moment’s notice.

Russia is great and beautiful and the members of the tandem keep being invited to new and especially beautiful places. And there’s always a good reason to build another new residence. For instance, one is currently being built in the Far East, on Russki Island (stated purpose – for the two-day APEC summit scheduled for 8-9 September 2012). The residence will occupy 1400 acres on Boyarin Bay and is due to cost the budget 7.7 billion roubles ($250 million). The same year should also see the commissioning of a new state residence on the Baltic seashore in Kaliningrad, not far from the Curonian Spit, which before the war, when the town was still called Neukuhren, was considered to be the best resort area on the Baltic and in East Prussia.

The media have also linked other places with our country’s leaders, for example Lunnaya Polyana (a sporting complex in Adigei, on the slope of the Fisht), Barvikha (the government dacha on the Rublevskoye Shosee near Moscow), a secret FSB location near Moscow known only as ABC, and Doctor Vinter’s Dacha (Sortovala, Karelia).

The so-called VIP Guest House near Paris has aroused considerable interest. According to the press, this was built and paid for (€30 million) by the Presidential Affairs Office. In luxury, it approaches Versailles. Who owns the place, how the expensive works were paid for, and what purpose the place serves is kept a great secret.

Typically, any journalist who asks about what real estate is available to the country’s leaders and what their maintenance costs is told in reply that such information is a state secret (!). This notwithstanding the fact that our leaders lovely lives are paid for out of the budget, out of taxpayers’ money, which means that this information may not be classified. An entrepreneur from Sverdlovsk District, Sergei Karpov, who addressed enquiries about these matters to the General Procurator’s Office, calculated that the building and maintenance of this luxury infrastructure was costing the budget 164 billion roubles (or 3 times the annual budget of a large region such as the Altai, with all its schools, hospitals, and public buildings AND it 2.5 million population!).

In fact, Altai’s lovely mountain scenery has also caught the eye of Vladimir Putin, who likes to holiday there. A grandiose, by local standards, construction is rising up at the spot where the Ursul River flows into the Katun. Formally, the contractor and owner of the future Altai Compound is Gazpromneft, a subsidiary of Gazprom, which is spending no less than 1.5 billion roubles on the project. Furthermore, a new road is being built to the compound (which has been allocated 5000 acres or more) all the way from the Chuisky Trakt. That is 21 kilometres of mountain road for which 190.5 million roubles per kilometre (!) was promptly allocated from government money – over 4 billion roubles, including 120 million from the Altai Republic’s beggarly budget. In other words, the oil-and-gas folk will have over 5.5 billion roubles of state-owned company and government money spent on their cosy compound, this when the little republic’s total annual budget is 9 billion roubles! For some unknown reason, this corporate campus is being provided with security by the FSO, access is strictly controlled, and anything to do with the project is kept strictly secret. Besides the security provider, another fact linking Putin personally with the Altai Compound was a statement by the senator from Altai, Ralif Safin, at a meeting of the republican parliament. It hardly needs to be added that the road construction and actual building works are being carried out without the necessary approvals, that cuttings are being made in the mountains to the detriment of the local landscape, and that 40 archeological sites have already been badly disturbed. The compound has had a 110 kilovolt power line run out to it and over one hundred heavy goods vehicles at a time have been involved plowing up and down the road.

But the above projects all pale beside the latest “palace” scandals to do with the country’s leaders. In late 2010, businessman Sergei Kolesnikov, who was formerly close to some of Putin’s friends, emigrated from Russia and wrote an open letter to president Dmitri Medvedev in which he disclosed that a luxury palace for the prime-minister’s personal use was being built on the Black Sea coast at a cost of over 30 billion roubles ($1 billion).

Putin's Home Sweet (really, really Sweet) Home

Source: Russian Wikileaks – ruleaks.net

As Novya Gazeta was able to discover, the decision to build this palace outside the village of Praskoveyevka near Gelendzhik, Krasnodar District, was taken in 2005. Documents in relation to this were prepared and signed by subdivisions of the Office of Presidential Affairs and the works were all carried by a company (Lyrus) with close links to Ozero Dacha Condo member Nikolai Shamalov.

A complete luxury town was being built on the shores of the Black Sea, comprising an enormous Italianate main building, its palatial gates topped by a two-headed eagle, a health complex, a 3-seater helicopter pad, a “tea house”, elevators down to the beach, and much more. All this was being built on land released by a government decision from its forest designation and from which its ancient natural pine forests were promptly stripped. A road was also being built over the hills to the location, which is strictly guarded by the local police, private security guards, and of course the … FSO.

After this disclosure, the whole project suddenly became the property of Mr. Shamalov’s company (and so to all intents and purposes his private property), complete with its palace, attendant buildings, and a great swathe of government land. The documents needed for this to happen were signed by presidential office manager V. Kozhin. According to Kolesnikov, Putin had taken a keen and constant interest in the building works and the money for it became available to N. Shamalov from “a combination of sources such as corruption, fraud, and bribes”. As a result of certain corrupt schemes, Shamalov had accumulated $148 million, part of which in all likelihood was put to use to build the palace near Gelendzhik. The contractor for the works is FGU Army Unit 1473 and the security of this “private palace” is being provided in part by the FSO. So whose money is being spent on this project? How did government land end up in private hands? Who is the true end-user and owner of this “Versailles on the Black Sea”? No answers to these questions have as yet been found.

After S. Kolesnikov’s letter was widely publicised, new deals for the Gelendzhik palace were rushed through: it was bought by a business partner of A. Rotenberg’s, a certain A. Ponomarenko, a co-owner of the Novorossiisk freight port, it is said for $350 million. Kolesnikov, however, asserts that the use to which the palace is to be put has not changed. Many experts consider the deal to be mere window-dressing, designed to muddy the waters and shield the real customer.

Something along the same lines is unfolding around the building of a new palace within the Bolshoi Utrish nature reserve, itself not that far from Gelendzhik. This equally secret “site” is being linked with the other half of the tandem – Dmitri Medvedev. This time, the official “cover story” is that it is a “sporting and health complex” which is being built, one again, at the initiative of the Office for Presidential Affairs. In 2008, 300 acres of land were re-allocated for this purpose from the reserve and transferred for a 49-year term to a non-profit organisation call “Dar”. It so happens that Dar’s board chairman is one Iliya Yeliseyev, a fellow-student of Medvedev’s from Leningrad University who also worked for a long time at Gazprom when Medvedev was the monopoly’s chairman of the board. It is still not clear in this case who or what organisation is actually funding the project, who authorised the removal of land from its nature reserve status, or for whom the new palace is actually being built.

Watches

Russia had a “watch scandal” in 2009. The newspaper Vedomosti published an investigation into the watches worn by Russia’s leading civil servants. It turned out that Russia’s top-rankers, including civil servants who had never previously worked in business, had a love for super-expensive watches. It was discovered that first deputy Central Bank governor A. Ulyukayev wore a $78,800 watch, head of presidential administration S. Naryshkin a $29,700 one, Minister of Finance Kudrin a $14,900 one, and so on. The shocking record was set by first deputy Moscow mayor Vladimir Resin (who was lucky enough to be overlooked in the recent anti-corruption wars in the capital) with his $1 million wristwatch!

Our leaders were not found wanting in this élite field either. In 2009, prime minister Putin twice gave “plain citizens” Blancpain watches worth $10,500 each. The lucky recipients were the son of a shepherd from Tuva and a fitter in Tula. Then, in August 2010, at the construction site of the Nizhy-Bureisky hydro-electric plant, he went on to toss yet another Blancpain of the same value into the concrete mix – “for luck”. The prime minister thus offloaded watches worth $31,500 in a short span of time. But Putin wasn’t tossing the last watch from his collection into the concrete mixer: the media have spotted other models of expensive watch on the prime-ministerial wrist. He has also been seen wearing a $60K gold Patek Philippe and other major brands such as A. Lange & Sohne ($20-30K), a $20K Breguet, a gold Patek Philippe Calatrava ($20K), and an IWC ($3-4K). All together, he has so far been seen wearing $160k’s (4.8 million roubles) worth of various watches.

According to prime minister Putin’s income declaration, he earned 4,622,400 roubles in salary in 2009 plus a military pension of 100,600 roubles. The prime minister’s watches therefore cost more than his annual income. Does one need any other argument to emphasise the need for a law obliging civil servants, starting just with top-ranking ones (the so-called A-category), to make a declaration of their spending?

Tick, tock, Mr. Putin

Source: The Nation Watches, Vedomosti, 26.10.2009

Dmitri and Svetlana Medvedev are not to be caught lagging behind Putin. In early 2009, Kommersant editor Andrei Vasiliev was suddenly fired following the publication of photographs of the president’s wife with an expensive $30K Breguet on her wrist – yellow gold, 128 diamonds, mother-of-pearl and so on. The story went on to say that Dmitri Medvedev’s wife had other, not quite so expensive, watches ($10-15K). Prior to that article, Kommersant had also published a photograph of Medvedev himself with a $32K Breguet. During a visit to the Ukraine, he was seen to be wearing a $28K Glashütte. It is known that he at the very least also has a $18K Franck Muller and a $8K Jaeger-leCoultre. The presidential couple have an income comparable to that of the prime minister.

Asked by Vedomosti about the president’s watches, his press secretary responded that the question was not proper, since it concerned the “premier’s private life”. The president and prime-minister are, however, obliged to account for their incomes and if their expenditure clearly outstrips their incomes, the question is not about their private lives but about corruption.

Homes and Cars

Given what we have seen so far, the tandem’s declared real estate holdings and automobiles are a mere drop in the ocean. Medvedev owns 2 apartments in Moscow (174 and 364 square metres) and another flat in St. Petersburg. The larger Moscow flat has 4 bedrooms, a study, a dining room, large living room, 3 toilets, crystal columns, and a marble floor. Maintenance charges would run at about $5K a month. The flat itself is worth $5-7 million. Officially, Vladimir Putin owns next to nothing: a 77m2 flat, a small plot of land, and a garage.

As for automobiles, Putin has a new Lada Niva and Medvedev a rare vintage Pobeda. Putin also has a few old cars and a Skif baggage trailer. Svetlana Medvedeva has a 1999 VW Golf. But perhaps they do not worry too much about such things given the flurry of yachts, dozens of residences, luxury car fleets that are paid for out of the budget or by state-owned corporations.

CONCLUSION

Systemic corruption presents a threat to the security of Russia, Capital flight (over $38 billion in 2010 alone), and lack of investment, most importantly in the non-raw-materials sector, is leading Russia to become a raw-materials appendage of not just the West but of China too.

Three hundred thousand people a year emigrate from Russia, mainly entrepreneurs, specialists, educated young people, killing business activity in the country.

The monopolisation of the economy, its concentration in the hands of Putin friends and acquaintances is leading to sharply rising prices for goods and services and lowering the people’s standard of living.

The dependence of the courts on the executive is leading to complete lawlessness. The people are deprived of all rights.

Colossal corruption is rushing Russia into the third world. One cannot even begin to think of modernisation or innovation when African levels of corruption prevail.

The country needs a national programme to combat corruption.

The Popular Freedom Party proposes:

In Politics:

1. To restrict the terms of the president, governors, and mayors to 2 terms, not just sequentially but even with intervals. This will require an amendment to the constitution so that no one can spend more than 8 years in such positions or return to power afterwards.

2. To abolish the de facto political censorship that exists today in television in the first place and in other mass media.

3. A return to free and fair elections including real political oppositions.

4. Restore the election of governors and mayors.

5. Create an official parliamentary investigations committee.

In Law:

1. Make it obligatory for civil servants to declare not only their incomes but the spending, as well as listing their property. If their spending appears discrepant with their income, their property to be forfeited.

2. Ratify Article 20 of the United Nations Convention against Corruption. This article calls for the adoption of such legislative and other measures as may be necessary to establish illicit enrichment, when committed intentionally, as a criminal offence. It is for this reason that the Putin government has refused to ratify it.

3. Introduce additional legislation to prevent relatives of civil servants from engaging in businesses in the areas regulated by their relatives in government. (This would put a stop to the ploys so enjoyed by Luzhkov and Baturina amongst others).

4. Pass a freedom of information law making it compulsory for all government decisions to be published and available freely to any citizen. Documents to be classified only if they concern national defence and security. The decision to classify to be subject to parliamentary control.

In Law Enforcement:

1. To hold an independent investigation of the activities of Putin and his civil service and business friends for possible corruption. The results of the investigation to be widely publicised.

2. To reform the MVD, the FSB, and the Procurator’s Office.

3. The remuneration package offered to law enforcement officials to stimulate them to honest and long-term employment.

In the Economy:

1. To reduce the number of civil servants by 800 thousand. That is how many extra civil service jobs have been created under Putin.

2. The prime minister’s duties to include heading the anti-monopoly office. A main task of a head of government is to protect the conditions for equal competition, to prevent the monopolisation of markets, and to support small and medium businesses.

3. To disband the state corporations. Investigate their past activities. Investigate the actions of the top managements of the monopolies, including Gazprom and TransNeft, for possible corruption.

4. To privatise on the open market state and municipal property. State-ownership to be retained only for natural monopolies. Reducing the participation of the state in the economy will reduce the influence of civil servants on business decisions and accordingly reduce corruption.

5. To keep taxation down. Cancel the increase in social tax to 34% as conducive of corruption by driving business underground.

The above measures will surely and rapidly lead to a reduction in corruption from Guinea-Bissau to Eastern European (Georgian) levels.Not much is needed to make this happen – just political will and honesty on the part of the country’s leaders.

Today’s leaders do not have that. We do.

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9 responses to “SPECIAL EXTRA: The Nemtsov White Paper, Part V — Putin the Thief

  1. Thank you La Russophobe for this further enlightening Boris Nemtsov’s White Paper about what all is so very very corrupt and rotten, about the current gangster KGB Putin & his fellow neo-soviet gangster heavy-handed rulers of the Russian Federation. Yes, it is somewhat tedious to read all the disgusting details, which Nemtsov goes into, but then, for the many of deluded folks in the free-west, both those of Russian decent and also others, we need to have this factual reporting. We need to know the facts, eventhough many of us wish to believe that present Russia….is, ‘not that bad’, as Nemtsov depicts. Sadly, it is that bad. But again, what is it going to take for the Russian masses to get so fed-up with this corrupt gangster kreptocracy government over their lives, that they rise up and throw it out? Nemtsov, as a rational and highly intelligent man, gives his orderly legalistic prescription for what SHOULD be done, but….will it? Can it?
    Reader Daniel Everiss, in USA (& no, I do NOT work for the CIA!)-

  2. Zhalko-Tytarenko hypothesizes that the current re-launch of the Gongadze case is part of the Russian domestic power game. According to his theory, Russian President Dmitry Medvedev may be planning to run for a second term and needs to convince the two-time former president, Vladimir Putin, not to run. “If Kuchma will face murder charges, he will have no choice but to provide all the names that he certainly knows from Ukrainian secret service reports.” This may hold a grain of truth, provided that Melnychenko’s records contain unpleasant information about Putin known to the Security Service of Ukraine (SBU) about his connections with the notorious Semion Mogilevich.

    The Russian element in the story, however, is simpler and more traditional: The Kremlin people in Yanukovych’s team persuaded him to make one more self-defeating step. Taras Chornovil, Yanukovych’s former insider, defines these people as the “Moscow Quartet”: chief of staff Serhy Lyovochkin, SBU head Valery Khoroshkovsky, gas billionaire Dmytro Firtash, and Energy Minister Yuriy Boyko. All are reportedly involved in murky Russian gas deals controlled Gazprom’s shadow owners, Putin and Mogilevich.

    The Kuchma trial will not end soon, but will probably be used to blackmail the entire elite, including Yanukovych himself. This might be part of the strategy of “directed chaos” that includes also the creation of fake “nationalist” and “extremist” groups, planting bombs and so forth.

    Back in 2004, Moscow “political technologists” tried to implement such a strategy in Ukraine to promote the candidacy of Kuchma for a third presidential term. The “directed chaos,” however, veered out of control and resulted in an authentic mass uprising, the Orange Revolution. Remarkably, one of the leading Moscow “technologists” of that time, Igor Shuvalov, serves as an adviser to Lyovochkin and to the leading TV channel Inter, owned by Khoroshkovsky.

    Besides the political goal of strengthening the authoritarian power of a rogue president dependent on Moscow, the team may pursue a more practical goal: to eliminate as many players as possible from the forthcoming privatization of Ukraine’s last asset, its arable land.

    In a recent interview, Kravchuk, the nation’s first president, suggested: “the system has already gnawed away Yanukovych’s legs and is approaching his belly” so he must “either destroy the system or concentrate all power in his hands and become a totalitarian leader.” Totalitarianism, Kravchuk believes, is unlikely because Ukrainians would not accept it. He may be right, but the problem is that Yanukovych is listening not to Kravchuk, but rather to the Moscow Orchestra.

    Read more:

    http://www.kyivpost.com/news/opinion/op_ed/detail/101598/#ixzz1IegXyUK0

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  7. Isn’t it obvious that mister Putin was chosen with the peoples wish. At least international election observers find both presidental elections in 2000 and 2004 was legal. And any capable person in Russia could find, befor first and second Putin’s presidential election, enough information about his political career and his relations, to make better choise. So the question was, before both elections, can mr. Putin make enough to fight corruption? I think that tere was enough to say just no. But many people in Russia clear enough that all is corrupted and social domestic economic traditions derived from historical past, where division of so called table and under table money deeply exist in mass. And there is no other way but let to be elected those, who first can give some benefit and ability to get some under table for those, who has addiction to it (for most of Russian society?). The power vertical can be as much powerful as there is not enough people’s resistance to it, especially when self is voting. And, if to say with using the metafora a fish can’t rot from head when it’s already rotten. I’ve asked several official of different levels do they care enough of those, by whom they were chosen? And all they answered similar. We can’t take cere of people greater then they ask and greater than they do cere about themself.

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