Putin’s Wealth: No ‘smoking gun’ but some ‘smoking watches’

Certificate showing that the wife of the Russian first deputy prime minister is the sole shareholder of a British Virgin Islands company that made millions from a “loan” it gave to a Russian steel conglomerate.

Last month, The Bureau of Investigative Journalism in London and the Al Jazeera program, People and Power, released the provocatively titled investigation, “Putin: The Richest Man on Earth?”

The report examined Putin’s assets and allegations that he had amassed vast amounts of wealth. The Bureau employed a tried and tested way of uncovering the hidden assets of politicians: its reporters used asset declarations as a starting point and then unearthed proof that other, hidden, and more substantial assets had been acquired through questionable means. This method has been used with some success elsewhere, notably in the Philippines, where journalistic investigation into the assets of the president led to his ouster and by prosecutors in the ongoing trial of the Supreme Court chief justice, who was found to have had millions of dollars in undeclared bank accounts. In Thailand, reporters have used then Prime Minister Thaksin Shinawatra’s asset declarations to show that he had violated divestment laws, an exposé that came close to forcing him out of office in 2001. Up to now, Thaksin is still facing lawsuits alleging he had falsified his asset disclosures.

All around the world, the increasing disclosure required of both companies and individuals in public office has made it easier to track ill-gotten wealth. Western journalists have put such disclosures to good use in investigating Putin’s cronies. The well-connected businessmen who are known to be friends of the Kremlin and have amassed stupendous riches since Putin came to power have been the subject of scrutiny by the international media and Russian bloggers like Alexei Navalny.

The Bureau of Investigative Journalism’s Putin exposé reported allegations made by the opposition press, Western journalists and Russia watchers. But Putin has proven to be a tougher target than Thaksin or Philippine President Joseph Estrada. While there has been some excellent reporting on the questionably acquired wealth of Putin associates, there is so far scant evidence linking the president himself to ownership of corporate shares and palaces.

So far, no smoking gun.

There are, however, some “smoking” watches. Putin – who was sworn into a third term as Russian president last week – is famous for his fondness for luxury Swiss watches. The Bureau reported that in all, he had been photographed wearing about £160,000 worth of assorted timepieces. This was not particularly difficult to trace as the Russian blogosphere and websites that keep tab of the rich and famous have been obsessively tracking Putin’s wristwear for years. The $60,000-Patek Philippe Perpetual Calendar watch, for example, was seen gracing the presidential wrist on state visits and other official occasions and duly noted by Putin watchers. (See my Pinterest board on Putin’s Watches for more examples.)

The Bureau’s point, stressed on the Al-Jazeera program (link below) was this: How could Putin, who declared an annual income of just $150,000, afford Patek Philippes and Blancpains, one of which he gave to a factory worker who asked for a souvenir?

The story ventures some theories, including that Putin secretly owns 4.5% of the state-owned Gazprom, 37% of oil supplier Surgutneftegas and a chunk of shares in “a company that cannot be named for legal reasons.” All that information is based on the say-so of Putin critic Stanislav Belkovsky and not much more. The only piece of documentation the report provides is Putin’s asset declaration, made before he ran for president this year.

Like many other countries in Eastern Europe, Russian politicians are required to declare their assets before they run for election. Putin’s declaration, published on the website of the Russian Central Electoral Commission, provides some details, such as bank savings of $500,000. It also lists among Putin’s worldly possessions two small flats, a 1,500-square-meter lot and three vehicles. None of these, however, qualify him to be the richest man on the planet. Nor do they prove he can’t afford top-of-the-line watches.

In an attempt to prove that Putin’s asset declaration was a sham, the Bureau sent a team to a fabulous palace overlooking the Black Sea that he is believed to own. Putin, it reported, had stayed there. Built by a wealthy businessman who was linked to the president, the palace was guarded by state security. Moreover, some time ago, a former Putin associate had written an open letter to then president Dmitry Medvedev, claiming that the palace was built for Putin through a complex web of transactions. But there was no document trail and no independent confirmation of the allegations.

For the most part, journalists have had greater success in investigating Putin’s cronies. As The New York Times reported, evidence of crony wealth can be gleaned from “disclosures on Western stock exchanges, due diligence by foreign companies, lawsuits and a newfound aggressiveness in the Russian opposition news media.”

The Financial Times’s recent story on Ivan Shuvalov, the first deputy prime minister, shows how much information on Russian officials resides in public records, leaked documents, and well-placed sources. Moscow reporter Catherine Belton examined leaked documents that showed that Shuvalov’s family fund made neary $200 million by co-investing with Russian tycoons while he was in high government office. The FT built on an earlier report by Barron’s magazine, which alleged that Shuvalov had made over $100 million from his investments since he joined government. Barron’s evidence included leaked bank records, SEC filings and corporate records in offshore havens like the British Virgin Islands and the Bahamas. Part of Shuvalov’s duties, it said, was approving funding for a steel company to which he had lent money; the loan generated a 40-percent annualized return.

And here’s the smoking gun: Barron’s got bank records that showed that just weeks before Shuvalov made the loan, there were money transfers into the account of a Bahamanian company that he owns. In other words, the deputy prime minister wasn’t lending his own money; the funds, said Barron’s, were transfers arranged by Russian billionaire and Kremlin ally Eugene Shvidler.

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One Comment on “Putin’s Wealth: No ‘smoking gun’ but some ‘smoking watches’”

  1. […] her blog No smoking gun, but some smoking watches, Coronel narrates how the Bureau of Investigative Journalism in London used more obvious clues, […]


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