Saturday, October 25, 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
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Comment Sorting
Comments
     
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 :-)).

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17:49 October 24, 2014

EVENING NEWS ROUNDUP

From RFE/RL's News Desk:

PUTIN ACCUSES UNITED STATES OF 'UNILATERAL DIKTAT'

Russian President Vladimir Putin has accused the United States of escalating conflicts around the world by imposing what he called a "unilateral diktat."

Putin made the remarks in a combative speech to political experts at the Valdai International Discussion Club, in Russia's Black Sea resort of Sochi.

Putin said the United States has been "fighting against the results of its own policy" in Iraq, Libya and Syria.

He said risks of serious conflicts involving major countries have risen, as well as risks of arms treaties being violated.

He also dismissed international sanctions over Russia's actions in Ukraine as a "mistake," saying they aimed at pushing Russia into isolation and would end up "hurting everyone."

We did not start this," he added, referring to rising tensions between Russia and the West.

(Based on reporting by Reuters, AP, Interfax, TASS)

MERKEL URGES PUTIN TO SOLVE UKRAINIAN GAS DISPUTE

German Chancellor Angela Merkel has urged Russian President Vladimir Putin in a telephone call to push for a quick resolution of the ongoing gas dispute with Ukraine as winter looms.

The call by Merkel to Putin on October 24 comes as representatives of the EU, Russia, and Ukraine are due to meet again next week in EU brokered talks aimed at solving the gas dispute between Kyiv and Moscow.

Merkel also underlined that upcoming elections in areas of eastern Ukraine controlled by Russian-backed separatists must respect Ukrainian national law.

Pro-Russian insurgent leaders are boycotting a parliamentary snap poll on October 26 in Ukraine and are holding their own election in the Lugansk and Donetsk regions, home to nearly three million people, on the same day instead.

(Based on reporting by AFP and Reuters)

UNHCR SAYS MORE THAN 800,000 DISPLACED IN UKRAINE CONFLICT

By RFE/RL

The United Nations says the conflict in Ukraine has forced more than 800,000 people from their homes.

Around 95 percent of displaced people come from eastern Ukraine, where government troops have been battling pro-Russian separatists.

UNHCR, the UN refugee agency, told a briefing in Geneva that an estimated 430,000 people were currently displaced within Ukraine -- 170,000 more than at the start of September.

It said at least 387,000 other people have asked for refugee status, temporary asylum, or other forms of residency permits in Russia.

Another 6,600 have applied for asylum in the European Union and 581 in Belarus.

The agency said it was "racing to help some of the most vulnerable displaced people" as winter approaches.

It also said the number of displaced people is expected to rise further due to ongoing fighting in eastern Ukraine.

THREE ALLEGED MILITANTS KILLED IN NORTH CAUCASUS

Three alleged militants have been killed by security forces in Russia's volatile North Caucasus region.

Russia's National Antiterrorism Committee says that two suspects were killed in the village of Charoda in Daghestan on October 24 after they refused to leave an apartment and opened fire at police and security troops.

One police officer was wounded.

Also on October 24, police in another North Caucasus region, Kabardino-Balkaria, killed a suspected militant after he refused to identify himself, threw a grenade towards police, and opened fire with a pistol.

A police officer was wounded in that incident.

Violence is common in Russia's North Caucasus region, which includes the restive republics of Daghestan, Kabardino-Balkaria, Ingushetia, and Chechnya.

Islamic militants and criminal groups routinely target Russian military personnel and local officials.

(Based on reporting by Interfax and TASS)

MOSCOW LAWYER IN HIGH PROFILE ORGANIZED CRIME CASE KILLED

A lawyer, who represented an alleged victim of the notorious Orekhovo criminal group in Moscow, has been assassinated.

Police in the Russian capital say that Vitaly Moiseyev and his wife were found dead with gunshot wounds in a car near Moscow on October 24.

Moiseyev was representing Sergei Zhurba, an alleged victim of the Orekhovo gang and a key witness in a case against one of the gang's leaders Dmitry Belkin.

Belkin was sentenced to life in prison on October 23 for multiple murders and extortion.

Last month, another of Zhurba's lawyers, Tatyana Akimtseva (eds: a woman), was shot dead by unknown individuals.

The Orekhovo group was one of the most powerful crime gangs of the Moscow region and in Russia in the 1990s. Its members are believed to be responsible for dozens of murders.

(Based on reporting by TASS and Interfax)

17:27 October 24, 2014

LITTLE GREES VOTERS, ANYONE?

17:26 October 24, 2014

SPY VS. SPY

17:00 October 24, 2014
08:29 October 24, 2014

MORNING NEWS ROUNDUP

From RFE/RL's News Desk:

UKRAINIAN PM WARNS OF RUSSIAN DESTABILIZATION OF ELECTIONS

Ukrainian Prime Minister Arseniy Yatsenyuk is warning that Russia could attempt to disrupt Ukraine's parliamentary elections scheduled for October 26.

Yatsenyuk told a meeting of top security officials and election monitors on October 23 that "It is absolutely clear that attempts to destabilize the situation will continue and will be provoked by Russia."

Yatsenyuk said "we are in a state of Russian aggression and we have before us one more challenge -- to hold parliamentary elections."

The prime minister said Ukraine needs the "full mobilization of the entire law-enforcement system to prevent violations of the election process and attempts at terrorist acts during the elections."

Interior Minister Arsen Avakov said authorities have ordered some 82,000 policemen on duty for election day.

He said 4,000 members of a special reaction force would be among those maintaining order during polling hours and would be concentrated in "those precincts where there is a risk of some terrorist acts or aggressive actions by some...candidates."

The warning by Yatsenyuk comes on the heels of three violent attacks on parliamentary candidates in the past week.

The latest, against Volodymyr Borysenko, a member of Yatsenyuk's People's Front Party, occurred on October 20 when Borysenko was shot at and had an explosive thrown at him.

He allegedly survived the attack only because he was wearing body armor due to numerous death threats he had recently received.

Elections to the Verkhovna Rada, the parliament, will be held despite continued fighting in the eastern part of the country between Ukrainian government forces and pro-Russian separatists.

Voting will not take place in 14 districts of eastern Ukraine currently under the control of the separatists.

Those separatist-held areas -- in the Donetsk and Luhansk regions -- are planning on holding their own elections in November.

Additionally, Russia's illegal annexation of Crimea in March means the loss of 12 seats from the 450-seat parliament.

Polls show President Petro Poroshenko's party leading with some 30 percent of respondents saying they would cast their vote for the Petro Poroshenko Bloc.

It that percentage holds on election day it would mean Poroshenko's bloc would have to form a coalition government, likely with nationalist groups who oppose conducting peace talks over fighting in the east.

(Based on reporting by Reuters and Interfax)

RUSSIA DENIES ESTONIAN AIRSPACE VIOLATIONS

By RFE/RL

Moscow has denied claims of an incursion by a Russian military plane into Estonia's airspace.

A Russian Defense Ministry spokesman told Interfax news agency on October 23 that the Ilyushin-20 took off from Khrabrovo airfield in the Russian enclave of Kaliningrad on October 21.

The spokesman said the reconnaissance plane flew "over neutral waters of the Baltic Sea" while on a training flight.

On October 22, Estonia’s Foreign Ministry summoned the Russian ambassador in Tallinn, Yury Merzlakov, after the Estonian military said the Russian plane had entered its air space.

In a statement, NATO said the Ilyushin-20 was first intercepted by Danish jets when it approached Denmark, before flying toward non-NATO member Sweden.

Intercepted by Swedish planes, the alliance said the Ilyushin entered Estonian airspace for “less than one minute” and was escorted out by Portuguese jets.

NATO has stepped up its Baltic air patrols and Moscow has been accused of several recent border violations in the region amid heightened tensions between Russia and the West over the Ukraine conflict.

Last month, Estonia accused Russia of abducting one of its police officers on the border.

Russia claims Eston Kohver was seized inside Russia on September 5, while Estonian officials say he was captured at gunpoint in Estonia near the border and taken to Russia.

The European Union and United States have called for the immediate release of the Estonian security official, who is facing espionage charges in Russia.

Meanwhile, the Swedish Navy has been searching for a suspected submarine sighted six days ago some 50 kilometers from the capital, Stockholm, although it said on October 22 it was pulling back some of its ships.

Swedish officials have not linked any particular country to the suspected intrusion and Moscow has denied involvement.

(With reporting by Interfax, TASS, and the BBC)

RUSSIAN COURT POSTPONES RULING ON OIL FIRM BASHNEFT

A Moscow court postponed to next week a ruling on a move to take control of Bashneft, an oil company from tycoon Vladimir Yevtushenkov.

The judge said on October 23 that the next hearing will take place on October 30 after the prosecution requested more time to prepare its case.

Prosecutors filed the suit in September to regain state ownership of Bashneft, citing alleged violations in the privatization and subsequent sale of the company to AFK Sistema investment group.

Yevtushenkov, the main shareholder of the conglomerate, is under house arrest on suspicion of money laundering during the firm's acquisition in 2009.

Yevtushenkov, 66, was arrested on September 16.

He is ranked Russia's 15th richest man by U.S. magazine Forbes, with an estimated fortune of $9 billion.

(Based on reporting by Reuters and TASS)

11:11 October 23, 2014

THERE IS NO RUSSIA WITHOUT PUTIN?

According to a report in the pro-Kremlin daily "Izvestia," deputy Kremlin chief of staff Vyacheslav Volodin told a meeting of the Valdai Discussion Club in Sochi that Western politicians "do not understand the essence of Russia."

"Volodin stated the key thesis about the current state of our country: As long as there is Putin there is Russia. If there is no Putin, there is no Russia," Konstantin Kostin, head of the Foundation for the Development of Civil Society, told "Izvestia."

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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