It’s Time to Sanction the Large Adult Sons of Oligarchs and Cronies

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ATTILA KISBENEDEK

ATTILA KISBENEDEK

Back when he was still running Russia’s FSB, Nikolai Patrushev, a longtime Putin crony who now heads the Russian Security Council, famously referred to himself and his colleagues as representatives of the “new nobility.”

Nepotism is now breeding a new generation of Russian “nobles,” who are poised to take over the Kremlin upon the retirement of their fathers. These princelings—some of whom already occupy exalted positions in the government and the corporate world—are accused of benefiting from their parents’ money, mostly stolen from the state, via offshore accounts. They also travel abroad and educate their children in America and Europe, while paying homage to the Kremlin leadership, which portrays the West as an enemy.

Anti-corruption campaigners claim that the children of the officials and oligarchs who enable Putin’s repressive kleptocracy are effectively being used to evade Western sanctions, and must be targeted themselves in order to deter the Kremlin from future criminal behavior.

European Union foreign ministers met in Brussels last week and reportedly decided to add four Russian officials responsible for the incarceration of Russian democrat Alexei Navalny to a list of six Russians already sanctioned in connection with Navalny’s August 2020 poisoning.

The Daily Beast reported in January that the Biden administration was also considering imposing a fresh round of sanctions as part of its own response to the treatment of the opposition leader. On Monday, administration officials briefed a number of outlets that those sanctions would likely be announced this week.

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Navalny and his team are advocating for sanctions to be imposed on a wider range of Russian oligarchs, who form the backbone of Putin’s regime, as well on the sons of Putin’s henchmen. Sanction-related travel bans and asset freezes for Putin’s siloviki—strongmen—have proved inconvenient but some appear happy to stay in Russia and sunbathe on the Black Sea instead of the Mediterranean so long as they can evade financial restrictions by transferring their assets to their adult children.

After the West imposed sanctions against Russia for the invasion of Crimea, Navalny said: “If the meaning of the sanctions is to exert real pressure on the mafia that has seized power (and this is precisely what is declared), then their sons would be included… These little sons are calmly cruising on their yachts and eating crème brulée in cafes on the streets of European cities.”

Navalny and Vladimir Ashurkov, the executive director of Navalny’s Anti-Corruption Foundation, have included two princelings on a suggested sanctions list that accompanied a letter Ashurkov sent to President Biden earlier this year: Denis Bortnikov, son of FSB chief Aleksandr Bortnikov, and Dmitry Patrushev, son of Bortnikov’s predecessor, Nikolai Patrushev, who now heads Putin’s National Security Council. The document claims that both sons act as “wallets” for their fathers’ “ill-gotten gains.”

Ashurkov told the Daily Beast that these two men are deeply corrupt and senior enough within the government structure to be sanctioned in their own right. He insisted it was not his role to tell Western governments what to do but said it would be appropriate to widen the sanctions on further offspring of the siloviki. “I think it is logical that the immediate family of people involved in human rights abuses and corruption are also banned from Western countries,” he said.

There is a precedent in Washington for sanctioning the sons of Putin’s enablers: Roman Rotenberg, son of Russian billionaire Boris Rotenberg, and Roman’s cousin Igor Rotenberg, son of Arkady Rotenberg, have both been sanctioned because of their financial ties to their fathers. In late 2017, the U.S. Treasury added Artem Chaika, son of Russian Prosecutor-General Yuri Chaika, to those sanctioned under the Global Magnitsky Act. And in April 2018, the Treasury designated Kirill Shamalov, Putin’s former son-in-law, for sanctions. But these four represent only a fraction of the new generation of Russian elite that reaps the rewards of the corruption and repressive Putin regime.

Retired U.S. diplomat Steven Pifer, currently a fellow at the Robert Bosch Academy in Berlin, thinks it’s a finely balanced calculation. “While I’m not fully comfortable with targeting family members, perhaps it is time to sanction spouses and children along with the primary individual,” he told The Daily Beast. “If a Russian oligarch can’t travel, that’s one thing. If his spouse can’t make her shopping trips to London and kids can’t get to their colleges in the West, that would be a different degree of pressure.”

There is no shortage of potential targets among Russia’s princeling class.

Not surprisingly, both of Nikolai Patrushev’s sons graduated from the FSB Academy, which trains its students to become spies against the West. Dmitry Patrushev, 43, is on the list of targets suggested by Navalny’s organization. He was appointed Minister of Agriculture in 2018 after heading the Russian Agricultural Bank and bringing it deeply and scandalously into debt (close to a billion dollars in 2016). (Despite, or maybe because of, Dmitry’s much-publicized failures at the bank, that same year Putin personally awarded him the Order of Honor and the Association of Russian Bankers named him Banker of the Year.)

Dmitry’s brother, Andrei Patrushev, aged 39, worked for the FSB before becoming an advisor to Rosneft chairman Igor Sechin (one of Putin’s oldest KGB buddies) in 2006, at age 25. The next year President Putin awarded him the coveted Order of Honor “for the achieved labor success and many years of conscientious work.” Later Andrei became a top official at Gazprom Neft. He now co-owns a marine geology firm, which in 2019 had an annual gross revenue of $155 million, and is on the board of the prestigious Russian Association of Arctic Explorers. Both Patrushev sons have large seaside vacation homes near Putin’s infamous palace at Gelendzhik.

Viktor Zolotov, who is on the U.S. sanctions list, has known Putin for years and is said to enjoy the Russian president’s deepest trust. Zolotov heads the powerful 300,000-person Russian National Guard, which is used to brutally suppress street protests. (In 2018, after Alexei Navalny exposed illegalities in procurement contracts for the National Guard, Zolotov published a video message in which he challenged Navalny to a duel and promised to make “good, juicy mincemeat” of him.) Zolotov’s son-in-law, Yuri Chechikhin, 44, is a business partner of the oligarch Oleg Deripaska, who gave him a stake in his construction business, which earns several billion rubles a year, including through lucrative government contracts.

Zolotov’s son Roman Zolotov, age 40, was educated at the FSB academy and worked at the Ministry of Internal Affairs (MVD), where his dad served as deputy minister, for a number of years. He is co-owner of a Russian company called Quantum Technologies and serves on the boards of various state-owned companies. Roman, who has a vacation home in Gelendzhik along with the Patrushevs, is also deputy head of the Moscow Department of Sports and Tourism, an actor and a film producer. While Roman was still earning a modest salary at the MVD, he and his brother-in-law Yuri produced several low-grade Russian movies, one of which featured Roman in the cast. Both men own mansions outside Moscow that are valued at over $10 million each.

Yuri Chaika, currently Russian representative to the Caucasus Region, was Russian prosecutor-general from 2006 to 2020 and presided over the Kremlin’s sustained campaign of persecution of civil society. During Chaika’s tenure as prosecutor-general, his sons, 45-year-old Artem Chaika and 33-year-old Igor Chaika, created huge business empires. A January 2020 article in Forbes Russia, drawing on an earlier, explosive investigation by Navalny, describes how the two Chaika brothers, beginning with Artem’s illegal seizure of a large shipping enterprise in 2002, each achieved staggering wealth. They accumulated countless companies—construction, shipping, refuse collection, property development, industrial products and food export—and through rigged auctions, massive government subsidies and uncompetitive state contracts made them profitable. All the while, their father prevented legal challenges to their dubious business practices.

An investigation by Navalny’s FBK revealed that Artem Chaika bought a $3 million home near Lake Geneva in 2013 and has Swiss residence.

The brothers Arkady and Boris Rotenberg are Putin’s friends from childhood and former judo sparring partners of the Russian president. (Arkady recently to came to Putin’s rescue by claiming, unconvincingly, that he was the owner of “Putin’s palace,” exposed by Navalny.)

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Since Putin became president in 2000, the pair have become billionaires, supplying pipelines to the state-controlled energy corporation Gazprom and landing exclusive contracts for the Sochi Olympics. In 2014 the EU and U.S. sanctioned both brothers as a result of the Crimea invasion. A 2020 U.S. Senate report accused the Rotenbergs of circumventing financial sanctions by buying expensive art through Barclays Bank, as well as by handing over assets to their sons.

Roman Rotenberg, 39, is the son of Boris Rotenberg. He studied international business in London, is a British citizen and owns a £3.3 million home in London’s exclusive Belgravia district. Roman, who is first vice-president of the Russian Hockey Federation, is also the formal owner of many of his father’s companies, including those in Finland, where he and his father Boris have citizenship. Arkady’s son Igor Rotenberg, 47, has held numerous positions in the Putin government and also is on the boards of several gas and power companies. His net worth was recently estimated at $1.1 billion.

These names represent the tip of a large iceberg. Anti-corruption campaigners believe Russia’s princelings are not only destined to continue the Kremlin’s anti-democratic and corrupt governing practices; they also are likely to ensure that the huge gap between the haves and the have-nots in Russia continues to grow. In 2019, 10 percent of Russians owned 83 percent of the country’s wealth. Among the world’s leading economies, Russia is the country with the most striking material inequality.

The Biden administration has yet to make any official announcement on Navalny-related sanctions, although Secretary of State Antony Blinken participated virtually in the Brussels meeting and “welcomed the EU’s decision to impose sanctions against Russia.” In a speech at the State Department on Feb. 4, President Biden urged the Kremlin to release Navalny from prison and emphasized that “we will not hesitate to raise the cost on Russia.” Biden also said that he told President Putin in a telephone call that “the days of the United States rolling over in the face of Russia’s aggressive actions—interfering with our elections, cyberattacks, poisoning its citizens—are over.” So perhaps the U.S. will consider the recommendations of Navalny’s team and include Russian oligarchs—and maybe some princelings—on its sanctions list.

Before last week’s meeting in Brussels Russia warned that it would be “ready to react” to any new sanctions by the EU. But in fact there is not much Russia can do, beyond expelling a few more diplomats from Moscow or sanctioning specific Western officials, which would have little impact. In 2014, after being blacklisted by Russia in retaliation for U.S. sanctions, the late Senator John McCain joked: “I guess this means my spring break in Siberia is off, my Gazprom stock is lost, and my secret bank account in Moscow is frozen.”

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