Sanctions renew the hunt for Putin cash

  • Article by: PETER BAKER , New York Times
  • Updated: April 27, 2014 - 12:40 AM

For years, the suspicion that Putin has a secret fortune has intrigued scholars, industry analysts, opposition figures, journalists and intelligence agencies but defied their efforts to uncover it.

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Putin: Is he a $70 billion man?

– When the Obama administration imposed sanctions on individual Russians last month in response to Moscow’s armed intervention in Ukraine, one of the targets was a longtime part-owner of a commodities trading company called the Gunvor Group.

His name, Gennady N. Timchenko, meant little to most Americans, but buried in the Treasury Department announcement were a dozen words that President Obama and his team knew would not escape the attention of Russia’s president, Vladimir Putin. “Putin,” the statement said, “has investments in Gunvor and may have access to Gunvor funds.”

For years, the suspicion that Putin has a secret fortune has intrigued scholars, industry analysts, opposition figures, journalists and intelligence agencies but defied their efforts to uncover it. Numbers are thrown around suggesting that Putin may control $40 billion or even $70 billion, in theory making him the richest head of state in world history. For all the rumors and speculation, though, there has been little if any hard evidence, and Gunvor, for its part, has adamantly denied any financial ties to Putin.

But Obama’s response to the Ukraine crisis, while derided by critics as slow and weak, has reinvigorated a 15-year global hunt for Putin’s hidden wealth. Now, as the Obama administration prepares to announce another round of sanctions as early as Monday targeting Russians it considers part of Putin’s financial circle, it is sending a not-very-subtle message that it thinks it knows where the Russian leader has his money, and that he could ultimately be ­targeted directly or indirectly.

“It’s something that could be done that would send a very clear signal of taking the gloves off and not just dance around it,” said Juan Zarate, a White House counterterrorism adviser to President George W. Bush who helped pioneer the government’s modern financial campaign techniques to choke off terrorist money.

So far, the U.S. government has not imposed sanctions on Putin himself, and officials said they would not in the short term, reasoning that personally targeting a head of state would amount to a “nuclear” escalation, as several put it. But officials said they hoped to get Putin’s attention by targeting figures close to him.

“It’s like standing in a circle and all of a sudden everyone in the circle is getting a bomb thrown on them, and you get the message that it’s getting close,” said Sen. Robert Menendez, D-N.J., chairman of the Foreign Relations Committee, describing the way sanctions are getting closer to Putin.

Putin’s denials

Putin’s reported income for 2013 was just $102,000, according to a Kremlin statement this month. Over the years, he has crudely dismissed suggestions of personal wealth.

“I have seen some papers about this,” he said in 2008. “Just gossip that’s not worth discussing.”

How much Putin cares about money has long been a subject of debate both in Russia and in the West. On government payrolls since his days in the KGB, Putin to many seemed driven more by power and nationalism than by material gain. With access to government perks like palaces, planes and luxury cars, he seemingly has little need for personal wealth.

“If he really does have all that money salted away somewhere, why?” asked Bruce Misamore, who was chief financial officer of Yukos Oil before the Russian government imprisoned its top shareholder and seized its assets. “What good does it do him? Is it just ego?”

And yet, some have drawn attention to what appear to be expensive watches on his wrist and the construction of a seaside palace that the Kremlin denied was being built for Putin. Some argue that Putin may want money, or the appearance of it, because it is the measure of stature and power in a society whose transition to capitalism has produced instant billionaires.

Biggest and best

“I came to the conclusion after time that some of these reports may be seeded by people around Putin himself,” said Fiona Hill, who was the chief Russia expert at the National Intelligence Council and last year cowrote a book about Putin. “Russians have to have the biggest and the best.”

The Treasury Department has not provided evidence to back up its statement about Putin, but policy requires it to have enough verification to withstand a court challenge.

U.S. diplomatic cables obtained by the anti-secrecy organization WikiLeaks show sustained attention to the subject. The cables tied Putin not only to Gunvor but also to Surgutneftegaz, a large oil company, and even to Gazprom, the state-owned energy giant, but they used words like “rumored.” In one cable, for instance, diplomats cited a General Electric executive working in the region who privately estimated that the ­Russian leader was worth “well over $10 billion.”

The CIA in 2007 produced a secret assessment of Putin’s wealth that has never been released, according to officials who have read it. The assessment, the officials said, largely tracked with assertions later made publicly by a Russian political analyst who said Putin effectively controlled holdings in Gunvor, Gazprom and Surgutneftegaz that added up to about $40 billion at the time.

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