Troubled times for Russia’s oligarchs

Stephen Beard Oct 22, 2014
HTML EMBED:
COPY

Troubled times for Russia’s oligarchs

Stephen Beard Oct 22, 2014
HTML EMBED:
COPY

Remember Yukos?

The giant Russian oil company was bankrupted almost a decade ago after the oligarch owner – Mikhail Khodorkovsky — clashed politically with President Vladimir Putin. Khodorkovksy was stripped of his shares, jailed, and had his company carved up and taken under state control.

Could something similar be happening to Vladimir Yevtushenkov, billionaire owner of telecom, tourism and oil giant Sistema?

Another oligarch – who’s much closer to Putin and runs the state-energy company Rosneft — made Yevtushenkov an offer for his oil interests. Yevtushenkov deemed the offer derisory and refused and is now paying the price. Under house arrest, he’s facing prosecution for fraud and money laundering.

In one crucial respect, Yevtushenkov is very different from the Yukos boss.

“He is widely regarded as a figure who is loyal to the authorities in Russia, he’s never previously stepped out of line.” says John Lough of the Chatham House think tank. “ He’s never criticized the Putin administration to my knowledge. It’s very striking that a figure so loyal to the system, has been put in this situation.”

Lawyer and Kremlin watcher Jamison Firestone is not surprised that Yevtushenkov has fallen foul of President Putin and his close associates.

“He’s got something they want. And they want to take it. It’s pretty simple.” says Firestone. “ Like in the Soviet Union, there is no such thing as private property in Russia today. You own stuff while they allow you to own it.”

Firestone knows more than most about such shenanigans. He fled Moscow after his colleague Sergei Magnitsky died in custody after allegedly uncovering high level corruption.

The attempted asset grab against Yevtushenkov could be an encouraging sign for the West. It could suggest that the EU and U.S. sanctions levied against Russia over Ukraine are biting and the oligarchs are starting to fight over their dwindling assets.

“The pie is no longer growing and therefore the fights over particular portions can become more excessive.’ says Nick Redman of the International Institute for Strategic Studies.

But this may be more than a case of greedy oligarchs squabbling over their loot, with Putin backing a close associate. Lough says Putin many have singled out the unoffending Yevtushenkov for political reasons, and as a preemptive example.

“There are some Russian business people who interpret this as a sign to business from Mr Putin that says : ‘you may be unhappy about what’s happening at the moment with the sanctions, you may be feeling a degree of pain, but don’t think of stepping out of line.’ ”

It’s a risky tactic. It could backfire, claims Firestone, it could alienate all the oligarchs in the outer circle and eventually lead to the President’s toppling. This could be curtains for Putin.

“Most of Russian transitions in power happen the following way: you wake up and “Swan Lake” is playing on every single official channel. And then you know something has happened.” Firestone says. “A few hours later when they figure out the official story somebody gets on TV and tells us who the new leadership is .”

But –after the annexation of Crimea – the Russian leader’s public approval rating soared and now stands at around 80 percent. In contrast, all the oligarchs are universally loathed. So the humbling of Yevtushenkov is likely to be popular with ordinary Russians. It still could be some years before Putin has his “Swan Lake moment”.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.