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'Five Kings': Putin Insiders Reign In Government Contract Ranking

  • Carl Schreck

Gennady Timchenko (left) and Arkady Rotenberg are described by the U.S. Treasury Department as part of Vladimir Putin's "inner circle."

Gennady Timchenko (left) and Arkady Rotenberg are described by the U.S. Treasury Department as part of Vladimir Putin's "inner circle."

Russian President Vladimir Putin's opponents have long accused him of helping a coterie of insiders amass enormous fortunes by giving them VIP feeding access at the government-tender trough.

While the Kremlin has repeatedly rejected these allegations, a new report by the Russian version of Forbes magazine shows that Putin's associates -- and the man alleged to be his son-in-law -- are indeed cashing in on state contracts.

Four of the top five private beneficiaries of Russian government contracts in 2015 are individuals widely seen as member of Putin's inner circle, a Forbes analysis published this week shows. According to the current exchange rate, they netted a total of $12.8 billion in state orders.

Atop the list was Putin's former judo sparring partner, billionaire Arkady Rotenberg, who benefited from $7.8 billion in government contracts in 2015.

Coming in at No. 3 was Gennady Timchenko ($2.1 billion), a wealthy longtime associate of Putin, followed in fourth place by Kirill Shamalov ($1.9 billion), who has been identified in both Russian and Western media outlets as married to the Russian president’s younger daughter.

Rounding out the top five is Rotenberg's son, Igor, with $1.4 billion in state contracts. The No. 2 slot was occupied by Timchenko's business partner, Leonid Mikhelson, who is the billionaire owner of major Russian gas producer Novatek but is not seen as close to Putin.

Forbes compiled its ranking, titled The Kings Of State Contracts, by analyzing official government data on the winners of state tenders and corporate ownership records. It calculated the monetary figure for each individual according to their respective stakes in companies that won these tenders.

'Standing At The Feeding Trough'

The names Rotenberg, Timchenko, and Shamalov are lightning rods for Kremlin adversaries who accuse Putin of establishing a system of rampant cronyism during his 16 years in power.

"None of these people are brilliant businessmen. They have control over money not because the invented or achieved something, or because they are good people or smart. They are simply standing at the feeding trough because the president of our country put them there," opposition leader Aleksei Navalny said in a February 26 video he posted on his website to discuss the Forbes report.

Both Timchenko and Arkady Rotenberg, whom the U.S. government calls part of Putin's inner circle, have been sanctioned by Washington in response to the Kremlin's annexation of Ukraine’s Crimean Peninsula in March 2014.

In a statement announcing the sanctions, the U.S. Treasury Department alleged that Putin "has investments" with Gunvor, the oil-trading firm that Timchenko founded but exited a day before he was hit with U.S. sanctions, and "may have access to Gunvor funds."

Washington has not released any evidence to substantiate these claims, which the Kremlin and Gunvor deny. (The firm also says CEO Torbjorn Tornqvist was in charge of daily operations.)*

Meanwhile, Navalny filed a lawsuit earlier this month accusing Putin of a conflict of interest in awarding $1.75 billion in state financing to a company part-owned by Shamalov, his alleged son-in-law. A Moscow court rejected the lawsuit, saying it did not qualify for consideration under "administrative proceedings."

For his part, Igor Rotenberg is at the center of a standoff in recent months between protesting long-haul truckers and the government over a road-use fee that the truckers say will put them out of business. He controls a company that operates the levy's computerized enforcement system, called Platon. During their protests, truckers have flashed placards denouncing what they call the "Rotenberg Levy."

Arkady Rotenberg and his brother, Boris, received billions of dollars in contracts for building facilities and infrastructure for the 2014 Sochi Winter Olympics, according to the Treasury Department. Boris Rotenberg has also been sanctioned by the United States.

'Typical Patriot'

The Forbes ranking of the beneficiaries of state contracts comes as the Russian economy flounders due to depressed oil prices and Western sanctions. According to a recent poll by the respected Levada Center, 82 percent of Russians believe the country is currently in an economic crisis, half of whom believe the crisis will last at least another year.

Navalny and other leading opposition activists have tried to build political capital by contrasting the good financial fortunes of those close to Putin with the economic pinch that much of the Russian population is feeling.

“Rotenberg, Rotenberg, Timchenko, Shamalov, and Mikhelson thrown in there with them. The five kings of government contracts. Basically, that’s all you need to know about the Russian economy,” Dmitry Gudkov, one of a handful of opposition lawmakers left in the State Duma, wrote on his Facebook page.

Kremlin spokesman Dmitry Peskov, however, dismissed suggestions that the Forbes ranking was indicative of corrupt practices.

"You know that government contracts are distributed on the basis of clearly defined rules and in strict accordance with the law," Peskov was quoted by Kommersant as saying.

He added that Kremlin officials had read the Forbes report and that the system of government procurement is "not arbitrary."

Navalny, meanwhile, referenced with impish irony Putin's comments earlier in the day on February 26 that "enemies abroad" are preparing to interfere with planned parliamentary elections in September.

Before selling his stake in Gunvor, Timchenko ran the company out of Switzerland and he is now a citizen of Finland, Navalny noted.

"This is a typical patriot," he said.

* This article has been updated to clarify Gunvor's position on the U.S. Treasury allegations and the company's day-to-day operations.

About This Blog

Written by RFE/RL editors and correspondents, Transmission serves up news, comment, and the odd silly dictator story. While our primary concern is with foreign policy, Transmission is also a place for the ideas -- some serious, some irreverent -- that bubble up from our bureaus. The name recognizes RFE/RL's role as a surrogate broadcaster to places without free media. You can write us at transmission+rferl.org

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