Russian opposition leader and anticorruption crusader Aleksei Navalny has filed a lawsuit against President Vladimir Putin, accusing the Russian leader of failing to disclose a conflict of interest in an award of $1.75 billion in government financing to a company owned by his son-in-law.
Navalny said in a February 11 blog post that Putin was required by law to divulge his family ties to Sibur, Russia’s largest gas and petrochemicals processor, when he directed the government in October to dip into a key emergency fund to finance a massive refinery the company is building in western Siberia.
Kirill Shamalov, who is widely reported to be married to Putin’s younger daughter, holds a 21.3 percent stake in Sibur, making him the company’s second-largest shareholder.
Putin “personally handed part of the Russian people’s wealth to his son-in-law,” Navalny wrote. “Did he have the right to do this? Legally, yes. He did have that right, but he should have disclosed his conflict of interest.”
Navalny, a driving force in the large opposition street protests that preceded Putin’s return to the Kremlin in 2012 following a four-year stint as prime minister, posted a copy of the civil lawsuit he filed with Moscow’s Tverskoi District Court on February 11.
The lawsuit calls for a ruling deeming that Putin violated Russia’s anticorruption law by failing to disclose his family links to Sibur and to ban him from involvement in matters concerning financing of the refinery from the emergency fund, known as the National Welfare Fund.
Rambler News Service cited a Tverskoi District Court employee as saying that the court had received Navalny's lawsuit.
Navalny said he also filed complaints with Russian federal prosecutors and the presidential administration, copies of which he also posted on his blog.
Many of Putin’s longtime associates have benefited from government contracts while amassing enormous wealth during his 16 years in power, prompting accusations that he is leveraging Russia’s resources to enrich his friends.
Last month, the U.S. Treasury’s acting secretary for terrorism and financial crimes, Adam Szubin, told the BBC that Putin is “a picture of corruption,” a characterization the White House subsequently stood by.
The Kremlin has repeatedly rejected allegations that Putin is siphoning off state funds to a small group of handpicked insiders and called Washington’s recent corruption accusations “outrageous and insulting.”
A Family Affair
Details about the lives of Putin’s daughters, which the Kremlin has fiercely shielded from public scrutiny, have begun to emerge in both the Russian and Western media over the past year.
Among these revelations is that Kirill Shamalov is married to Putin’s younger daughter, who goes by the name Katerina Tikhonova. Both the Kremlin and Shamalov have refused to confirm reports of the marriage but have not denied them.
Reuters reported in December that within 18 months after the couple’s wedding in February 2013, Shamalov acquired his stake in Sibur, which the news agency estimated to be worth $2.85 billion.
Sibur said in September 2014 that Shamalov acquired the bulk of his stake from Gennady Timchenko, a wealthy Putin associate. Shamalov told the Kommersant newspaper in August that he acquired the stake with financing from state-owned Gazprombank, “secured on assets belonging to me.”
Like Timchenko, Shamalov’s father -- Nikolai Shamalov -- is a longtime associate of Putin’s.
The heart of Navalny’s lawsuit -- that Putin ordered the government in October to allocate $1.75 billion to Sibur from the National Welfare Fund to build the refinery in western Siberia -- is a matter of public record.
Prime Minister Dmitry Medvedev signed an October 17 order mandating the financing, and an explanatory note on the government’s website says the measure was developed by the Economic Development Ministry “on instruction of the president.”
Medvedev told senior officials that the plant would produce up to 1.5 million metric tons of polyethylene and 500,000 metric tons of polypropylene annually, reducing Russia’s dependence on imports of these plastics with a wide range of uses. He also said the plant would create up to 15,000 jobs.
A report about federal budget implementation published on the Russian Audit Chamber's website states that an October 13 directive signed by Putin tasked the government with financing the Sibur refinery from the National Welfare Fund.
Navalny’s lawsuit appears to be largely aimed at highlighting ways in which well-connected insiders are given access to government largesse. As president, Putin is immune from criminal prosecution but not necessarily from civil lawsuits.
Any expectation, however, that a Russian court would rule against Putin in a civil case appears quixotic given Putin’s control over the country’s political landscape.
"Formally, Navalny is absolutely correct." Ivan Pavlov, a St. Petersburg-based lawyer and activist for government transparency, told RFE/RL. "Formally. But on the other hand, there is a widespread practice, especially in Moscow courts, of not accepting lawsuits not only against the president, but even against employees of the presidential administration."
Pavlov said he believes Putin did violate the law in this case and that "in any other democratic country, there would be a scandal over this, and the president might even be forced to resign."
Navalny, who is currently serving out two suspended sentences on theft convictions he and his supporters calls retribution for his political activities, nonetheless wrote that he is “confident” he will win.
Putin’s spokesman, Dmitry Peskov, offered a curt response when asked by the state-owned TASS news agency whether the Russian president was aware of Navalny’s lawsuit.
“No,” he was quoted as saying.
With reporting by Reuters, Vedomosti, and TASS