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    Central Asia
     Mar 2, 2012


Putin's oligarch killer
By John Helmer

MOSCOW - When the archaeologists of the next millennium excavate, they will find the evidence of a tectonic shift and turning-point in Russian history that took place in the two months between December 28 and February 25.

That's from the day Prime Minister Vladimir Putin signed government order number VP-P13-9308, and instructed Deputy Prime Minister Igor Sechin to supervise compliance; to the day when lawyer and prominent blogger Alexei Navalny listed the most powerful oligarchs in the country (Switzerland too) as the target of the political opposition - after Putin wins the presidential election.

Navalny's speech at last Saturday's St Petersburg rally marks the first time the oligarch system, and the oligarchs as individuals

 

rather than Putin, have been made the public focus of the opposition movements. Navalny himself named the lines of business to identify the individuals, though he didn't name names.
Putin's order predates Navalny's, and it has taken time for the political opposition to understand it - if implemented, it marks the beginning of the end of the oligarch system that has dominated Russia since the collapse of the communist system. Just how significant this is may not require a glacial span of time to uncover. But if it is happening, Putin has already beaten the opposition to their own game. That is, if opposition to the oligarchs was the opposition's game.

More than 30,000 years ago, we now know, Ice Age squirrels roaming the Siberian tundra did what their less furry, less toothy descendants still do today - bury their loot of nuts and seeds in treasure chambers safely hidden from predators.

The appearance and habits of the giant Siberian Squirrel (Cronopio dentiacutus) have been known to scientists for some time. But what has recently been achieved by a group of Russian scientists is that the seeds he stored away can be regenerated by the latest in genetic copying and laboratory cultivation techniques. The first plant to be grown from Cronopio's stash is called silene stenaphylla.

If Russian scientists can regenerate the silene, one day they think they will be able to turn out the sabre-fanged Cronopio. And if they can achieve that, it should be a breeze to regenerate the Russian oligarch circa 2012. But first let's see if he can be locked away in the ice, and his loot retrieved.

The Putin order of December 28 is cryogenic in this very sense. Not yet available in an official form, it has been leaked with the code 21123033.doc, and published here.

The documentation includes seven pages of Putin's signed instructions, with cover orders to Sechin and his staff, and a set of disclosure forms to be filled in by the list of state companies identified as the targets of the prime minister's investigation.

The state companies include Rosatom, the uranium mining and uranium fuel holding; Inter RAO UES, the electricity holding; RusdHydro, the hydroelectric power producer; Irkutskenergo, a southeast regional supplier of electricity; Gazprom; Transneft, the oil pipeline company; Sovcomflot, the state shipping company; Russian Railways; Aeroflot; Rostelecom; and the three state banks - Sberbank, VTB and Vnesheconombank.

No oligarch-owned business is identified in the lists, but the disclosure requirements extend towards them because they are the principal consumers of cheap-rate electricity; of advantageous railway and tanker tariffs; and most important of all, of large bailout loans to cover their indebtedness.

According to the text of the Putin order, his investigators are to "pay attention to the incomplete reporting of income, assets and property obligations of senior management", and to collect for forensic follow-up, if need be, "certificates of income, assets and property obligations of the management team (including members of boards of directors (Supervisory boards)) in full and in accordance with the filing procedure ... (Appendix 1 to this list)." The deadline for those disclosures was December 30, 2011.

Next, investigation has been ordered of "information submitted to the governing power of the organization, for the presence of conflict of interest and other abuses associated with the position held." Deadline for filing the conflict of interest disclosures, January 10, 2012.

Finally, Putin added his oligarch-killer, so subtle it has been missed by almost everyone for two months. The state company managements and board directors were ordered to list their principal operating, trading and borrowing agreements "to ensure the unconditional disclosure of counterparties; the current contract information for the entire chain of [counterparty] owners, including beneficiaries (including, final ones) with confirmation of relevant documents and to submit the specified information (in electronic format in the form contained in Appendix 3 to this list) to the appropriate federal agencies executive (Annex 2 to this list)."

The order extends backwards into past borrowings from the three state banks, as well as forward into loan rollovers, shareholding security pledge agreements, and new credits, so that, for the first time, Putin will be able to review "disclosure of information to the contractor for the entire chain of owners, including the beneficiaries (including end-beneficiaries) with confirmation by the relevant documents."

The penalty for failing to meet the January 10 deadline, or for failing to disclose comprehensively "in respect of the whole chain of owners, including beneficiaries" is a ban on "the conclusion of new contracts and ... termination of existing contracts."

The Putin order makes clear the investigators are looking for the long-suspected, long-reported links between the oligarch owners in the oil, gas, minerals and metals industries, the state banks, and the state power and transport utilities from which they have secured low domestic costs, in order to achieve much larger profit margins offshore, which have then been shared or kicked back.

As for the network of affiliation that is to be opened and exposed at the state company end, the Putin order requires disclosure of networks of affiliation between officials and beneficiaries; wives, children and other family members or nominees who have been placed in concealed trusts and bag-holding positions; and chains of offshore cashflows, the likes of which have recently been documented in the UK High Court trials of Sergei Frank's Sovcomflot, of Roman Abramovich, and of Oleg Deripaska.

Will Putin and Sechin go so far after March 4?

The question has wrong-footed the Communist Party candidate for president, Gennady Zyuganov, who has yet to attack the oligarchs directly. Instead, here he is calling for the nationalization of Russia's mines.

Navalny's St Petersburg speech on February 25 didn't mention Putin's name. Instead he focused on the oligarchs as the core of what he's been calling the "party of swindlers and thieves", starting with what he identified as the crude oil-seller living in Switzerland; the pipe-seller to Gazprom billing at prices that are seven times greater than cost; the woman who made her son a billionaire; the northern Caucasus clan; the thieves who falsified the 1996 election; and the traders of light metals.

These are allegations against Gennady Timchenko, Arkady Rotenberg, Dmitry Pumpyansky, Alexei Mordashov, Andrei Komarov, and Anatoly Sedykh; Valentina Matvienko; Suleiman Kerimov and Ramzan Kadyrov; Mikhail Khodorkovsky; Oleg Deripaska, Mikhail Prokhorov, Iskander Makhmudov, and many others.

If Order VP-P13-9308 is intended to provide the particulars of a Russian-style Bill of Attainder against this lot, the opposition has been trumped in a fashion and to a degree no-one has thought possible.

John Helmer has been a Moscow-based correspondent since 1989, specializing in the coverage of Russian business.

(Copyright 2012 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)


Putin urges US help for oligarchs (Mar 25, '10)

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