Saturday, November 29, 2014

The Power Vertical

Homecoming For A Russian Oil Baron

Russian billionaire Gennady Timchenko is widely rumored to have a KGB past and a long association with President Vladimir Putin.
Russian billionaire Gennady Timchenko is widely rumored to have a KGB past and a long association with President Vladimir Putin.
Gennady Timchenko has long been the invisible man in Russia's ruling elite -- the Keyser Soze of the "collective Putin."
He's a Finnish citizen. He lives in Switzerland. And he denies that he even knows President Vladimir Putin all that well.
But Timchenko, who left Russia two decades ago, owns Gunvor, the world's fourth largest oil trading company. At its peak, Gunvor handled approximately a third of Russia's seaborne oil exports, making Timchenko a key player in the country's political-energy complex.
And despite his protestations to the contrary, Timchenko is widely rumored to have a KGB past and a long association with Putin. His name shows up on virtually every list of the top officials believed to be part of Putin's informal "politburo."
And now, according to Russian media reports, he's coming home. And this has led to a lot of speculation about why, and why now. Explanations from Russian officials, to say the least, were unconvincing.
Aleksandr Ryazanov, a former deputy chief executive of Gazprom, told the daily "Vedomosti" that since his "kids are grown up," Timchenko decided to return to Russia and "invest in manufacturing."
Russian Railways chief Vladimir Yakunin, who is close to Timchenko, offered a similarly opaque explanation. "Sometimes in business, to maximize legal convenience you find that people even change their citizenship, but they keep their roots," he said. "For those like him, a time comes when it's necessary to determine what's more important. He made his decision to return to Russia, and I support that decision."
In an interview in the upcoming Russian-language edition of "Forbes" -- the first he's ever given to the Russian media -- Timchenko said he planned to form a construction holding company.

But this being Russia, there is a much more interesting backstory.
As John Helmer has meticulously chronicled on his blog "Dancing With Bears," reports that Swiss authorities were targeting Gunvor began surfacing back in July. The latest reports say Swiss investigators are looking into whether Gunvor paid bribes to win Congolese oil contracts and laundered the money through Swiss banks (read Helmer's exhaustive account here).

And it isn't only Swiss law enforcement that is reportedly causing headaches for Timchenko.
According to the "Vedomosti" report, a number of energy insiders say the U.S. Justice Department is investigating Timchenko and Gunvor for manipulating the price of oil. The case investigation is reportedly looking into allegations of price manipulation made in an article by the British weekly "The Economist" in May.

Gunvor officials deny this and, when contacted by "Vedomosti," the Justice Department would neither confirm nor deny the rumors.
But if the United States is indeed going after Timchenko -- admittedly a very big if at this point -- it would not be the first time U.S. law enforcement targeted Russian interests in a strategic sector.
Just weeks ago, on October 3, the Justice Department announced that it had indicted 11 alleged Russian agents on charges of illegally exporting sensitive microelectronics for use by military and intelligence agencies through a Texas-based company.

In a recent commentary, defense analyst Aleksandr Golts argued that spy networks like this -- as well as the sleeper network the U.S. broke up back in 2010, making Anna Chapman a household name -- are as much about acquiring intelligence and technology as they are about helping top Russian officials line their pockets (read the whole piece in Russian here and in English here):

The way Russia tries to obtain intelligence and technology says much about the country. More than anything else, the use of sleeper agents showed that the Kremlin and its intelligence agencies were still stuck in 1950s-era thinking, despite the fact that the existence of nuclear weapons made it clear by the 1960s that this type of reconnaissance was unnecessary.
Perhaps, however, there is a better explanation: The intelligence network was set up to launder money for a group of senior Moscow officials. Thus, the illegal network was either set up to satisfy the wildly Cold War-era imperial aspirations of Russia's top brass, or else it was an illegal means of personal enrichment for powerful Russian officials.
It is, of course, much too early to say whether the United States is targeting Russia's shadowy networks -- be they in intelligence or energy. We don't even know for sure whether there is even an investigation into Timchenko and Gunvor yet. But the trend is, nevertheless, worth watching.
Whatever Timchenko's reasons for returning to Russia, his presence will likely be felt soon enough on the body politic.
He reportedly recently met with Rosneft CEO Igor Sechin to try to resolve a simmering dispute.  And news of his return comes as Sechin, a partner and rival of Timchenko in the energy sphere, scored a major victory with Rosneft acquiring 100 percent of the shares in BP-TNK.

It's going to take a little while to unpack all this. But while Timchenko is no longer the invisible man of the Russian elite (his picture is on the cover of "Forbes" this week, after all), he will certainly be a player.
"Timchenko has been investing in Russian companies. He has resources here, and it's clear to him how decisions are made, that competitors will think five times before crossing an acquaintance of Putin," an unidentified former Russian official with close ties to Timchenko told "Vedomosti,"
"There is a line forming in front of Timchenko, like in front of the mausoleum, of entrepreneurs ready to do business with him."
-- Brian Whitmore
This forum has been closed.
Comment Sorting
by: Eugenio from: Vienna
October 24, 2012 08:25
This section of the web-site never seazes to provoke an avalanch of postings from concerned readers :-)). I mean, really, Greece, Spain, Portugal, Italy and other NATO states might be going bankrupt, US friends in Syria, Afghanistan and Lebanon might be getting killed on a daily basis, the US sovereign debt might exceed 150 per cent of the country's GDP, but "The Power Vertical" will still continue being concerned with who said what in the Russian opposition or the power structures :-)).

The Power Vertical Feed

In this space, I will regularly comment on events in Russia, repost content and tweets I find interesting and informative, and shamelessly promote myself (and others, whose work I like). The traditional Power Vertical Blog remains for larger and more developed items. The Podcast, of course, will continue to appear every Friday. I hope you find the new Power Vertical Feed to be a useful resource and welcome your feedback. More

15:34 November 26, 2014


So by now, we've all seen how passengers in Krasnoyarsk had to get out and push their flight out of the snow...

...and we've all seen the snarky Twitter memes this has inspired...

...but have you heard about onboard drunken onboard brawl that grounded a flight in Novosibirsk?

12:41 November 26, 2014


12:33 November 26, 2014


Via The Moscow Times:

A lawmaker on the State Duma's Defense Committee has proposed banning the import of French wines in response to Paris' decision to suspend delivery of the first of two helicopter carriers to Russia.

"Let's ban the sale of French wine in Russia," Deputy Vladimir Bessonov told Russian News Service radio on Tuesday. "Even talking about this can bring about desired results," he said, without specifying what these would be.

France, under pressure from its Western allies to cancel a 1.2 billion euro contract ($1.58 billion) with Russia for Mistral-class warships, said earlier Tuesday that it was suspending delivery of the first of two carriers because of Russia's meddling in eastern Ukraine.


12:21 November 26, 2014
12:20 November 26, 2014


12:18 November 26, 2014


From RFE/RL's News Desk:


By RFE/RL's Russian Service

The editor-in-chief of an independent Russian news website says he will seek political asylum in the United States.

Oleg Potapenko told RFE/RL on November 26 that he has arrived in the United States despite efforts by Russian authorities to prevent him from leaving the country.

Potapenko is editor of, a news site in the Far Eastern city of Khabarovsk that has reported about the presence of Russian troops in eastern Ukraine.

On November 12, the openly gay Potapenko and his partner were prevented from boarding a flight from Khabarovsk to Hong Kong after border guards said a page was missing from Potapenko's passport.

Potapenko says the page was cut out by a police officer who requested his passport for a check earlier that day.

He told RFE/RL that he had managed to leave Russia from another city, Vladivostok, on November 16.


German Chancellor Angela Merkel says Russia's actions in Ukraine are a violation of international law and a threat to peace in Europe.

Speaking bluntly in an address to Germany's parliament on November 26, Merkel said, "Nothing justifies the direct or indirect participation of Russia in the fighting in Donetsk and Luhansk."

She told the Bundestag that Russia's actions have "called the peaceful order in Europe into question and are a violation of international law."

But she suggested there was no swift solution, saying, "Our efforts to overcome this crisis will require patience and staying power."

Germany has become increasingly frustrated over Moscow's refusal to heed Western calls to stop supporting pro-Russian separatists who have seized control of large parts of the Donetsk and Luhansk provinces in eastern Ukraine.

Close ties between Russia and Germany have been strained by the Ukraine crisis.

(Based on reporting by Reuters)


Ukraine has leveled fresh charges that Russia is sending military support to pro-Russian separatists in the east.

A foreign ministry spokesman said five columns of heavy equipment were spotted crossing into Ukrainian territory on November 24.

Evhen Perebyinis told journalists on November 25 that a total of 85 vehicles had been detected in the five columns that entered at the Izvaryne border crossing point from Russia.

"The Russian side is continuing to provide the terrorist organizations of the Donetsk and Luhansk people's republics with heavy armaments," said Perebynisis.

Separately, the Ukrainian military said one soldier had been killed and five others wounded in the past 24 hours as a shaky cease-fire declared on September 5 continued to come under pressure.

The six-month conflict in the east of Ukraine has left more than 4,300 people dead, according to the United Nations.

(Based on reporting by AFP and Reuters)



Russia has rejected accusations that it is planning to annex Georgia’s breakaway regions of Abkhazia and South Ossetia.

Deputy Foreign Minister Grigory Karasin told RFE/RL’s Current Time program on November 25: “There can be no question about any annexations.”

Georgia and the West have criticized a "strategic partnership" agreement between Russia and Abkhazia signed on November 24.

Tbilisi condemned the pact as an attempt by Moscow to annex the region.

Karasin also said Russia will “continue sparing no effort, nerves, financial expenses” to make sure its neighbors “do not feel endangered.”

"As a large state and a powerful country, Russia is constantly responsible for stability on its borders and everything that is under way along its borders," he added.

Under the "strategic partnership," Russian and Abkhaz forces in the territory will turn into a joint force led by a Russian commander.


19:16 November 21, 2014


On this week's Power Vertical Podcast, we use the one-year anniversary of the Euromaidan uprising to look at how it changed both Ukraine and Russia. My guests are Sean Guillory and Alexander Motyl.

Latest Podcasts

About This Blog

The Power Vertical is a blog written especially for Russia wonks and obsessive Kremlin watchers by Brian Whitmore. It covers emerging and developing trends in Russian politics, shining a spotlight on the high-stakes power struggles, machinations, and clashing interests that shape Kremlin policy today. Check out The Power Vertical Facebook page or