The original post was published on 30 March 2012 at navalny.livejournal.com
An unprecedented campaign to defend Deputy Prime Minister Igor Shuvalov is now unfolding after this week’s bribery allegations against him by the world’s leading business publications.
Wall Street Journal Share Deals Open Window on Kremlin Financial Times, one Kremlin mired in Gazprom deals Financial Times, two Investments rise question of cronyism Even earlier, Barron's (a WSJ supplement) How a Putin Aide Gained $119 Million
And Putin’s press secretary, Peskov, declared what a wonderful and honest man he is. Voloshin, the former head of Yeltsin’s administration, even wrote a special heart-wrenching blog post on Echo of Moscow, claiming this is all just intrigue surrounding the new government. Sure, of course. Intrigue around the government—especially considering that the first Barron's article came out before the December State Duma elections. And the prosecutor’s office comes running ahead, shouting as it goes: everything Shuvalov did was legal!
The reasons for this burst of Kremlin activity are obvious: they are not protecting Shuvalov the bribe-taker, who is of no real value to anyone and would be thrown under the bus in three seconds. They are protecting two men who are the real support and backbone of the “vertical of power” (Russia’s top-down system of rule)—the ones who paid those bribes.
These charming gentlemen may make their money from selling our raw materials, but they prefer to live abroad. Abramovich and Usmanov are UK residents and top the list of the country’s richest people.
Bribing officials is a crime in the part of the world where this trio likes to spend its time. For that crime, they could end up in prison or face heavy fines—not to mention such unpleasant little details as losing their visas. Just imagine: losing a UK visa or a Schengen visa. That would mean—horror of horrors—they’d actually have to LIVE IN RUSSIA. A nightmare. An unbearable torment.
So let’s look at what actually happened:
In 2009, we were all quite surprised to learn that the legal income of Deputy Prime Minister Igor Shuvalov’s wife, Olga, amounted to 367 million rubles (No. 4 on the list). Altogether, in 2008–2010, the Shuvalov family (though mainly his wife) earned about $48 million. The source of the income was listed as “income from securities transactions,” with no further explanation. When asked what kind of securities these were and what miraculous transactions had generated so much money, the answers were extremely vague. Here is a typical media report from that time:
First Deputy Prime Minister Olga Shuvalova is a housewife, but that has not stopped her from not only earning a very good income, but increasing it as well. Last year, for example, she received about 642 million rubles from various sources—almost twice as much as the year before (365 million rubles), and 100 times more than her high-ranking husband. This inequality is the price of entering public service: in 1997, Igor Shuvalov left the ALM law firm to head the department of the federal property register at the Ministry of State Property, and according to his colleagues, transferred all of his business assets to his wife. Still, at first Olga had to work in order to help her husband raise their three children. But in recent years that has no longer been necessary: the family’s assets already generate fantastic income on their own. The nature of the couple’s “gold-bearing” assets, however, remains secret to this day. “All information about the [Shuvalovs’] income has been published on the government website,” the deputy prime minister’s press secretary repeats in a phrase polished over the years. According to a former colleague of Shuvalov’s, the official’s wife holds a portfolio of securities, transactions in which allowed her to avoid losing face in comparison with the richest wives of deputies and governors. Whether this was the sale of a large stake or the skill of a manager who somehow managed to produce record profits in a difficult market is impossible to say, but the family’s real estate and land holdings did not undergo any serious changes over the year.
So, as you can see, Shuvalov has been a government official since 1997 and “at first Olga had to work in order to help her husband raise their three children,” but then somehow everything worked out_._
So how exactly did it work out?
In simplified form, the story looks like this:
There is a company called “Severin,” owned by Olga Shuvalova. That is an undisputed fact.
It is from “Severin” that the Shuvalov family receives its multimillion-dollar income. With that money they bought a house in Austria for €11 million, an apartment in London, and so on. The company “Severin” owns a company called “Radcliffe.”
That same “Radcliffe” acquired control, through a share transfer, over a company called “Sevenkey.”
“Sevenkey” sounds a lot like the name of some village somewhere in the Smolensk region—something like Savyonki. But let’s not be misled: there is nothing in Savyonki remotely like what was going on at “Sevenkey.”
Then, SUDDENLY, money started flowing into “Sevenkey.” In 2004, “Unicast Technology,” a company belonging to Roman Abramovich / Eugene Shvidler, transferred $50 million to Sevenkey. That is an indisputable fact. Here are all four SWIFT records.
What for? For what beautiful eyes did Abramovich / Shvidler transfer $50 million to Shuvalov’s wife? For nothing at all. My guess is that it was in exchange for Shuvalov’s subsequent aggressive lobbying for the consolidation of the Russian metals industry around Abramovich’s company. Only after the WSJ and FT publications did Shuvalov’s people, forced to somehow explain this $50 million transfer, invent a story that it turns out Shuvalov had, since time immemorial, held an option to buy 0.5% of Sibneft shares.
This explanation does not stand up to criticism: No one had ever heard of such an option before. An option is a formal instrument, and a lot of people would have had to know about it. There was an attempted merger between Sibneft and Yukos, so due diligence was conducted before the deal; this option should have been documented. And why on earth would anyone have given Shuvalov an option back before he became an official? As you can see, this contradicts the earlier legend that “at first Olga had to work in order to help her husband raise their three children.” We own 0.5% of Sibneft, but somehow it’s still hard to raise three children_._
Let’s continue. $50 million turned out not to be enough for the enterprising Shuvalov. After all, there are so many rich people around, and all of them need services from the government. Then, SUDDENLY, “Gallagher,” the officially designated key company in billionaire Usmanov’s holding structure—a company that could easily get a loan from any bank—somehow decides to borrow Shuvalov’s $50 million from him.
Why would Usmanov need that? Unclear. Why would Shuvalov need it? That is clear: in July 2007, the “loan” was repaid with excellent interest. A full $118 million came back into “Sevenkey.” Here is one of the account statements:
Don’t try this trick at home: if you put your own money in a bank deposit, you won’t achieve even one-tenth of that result. But then again, you’re not Shuvalov.
One good turn deserves another: after Usmanov borrowed money from the right place, things started going very well for his business. Even in the difficult days of the financial crisis, the news wires were reporting things like this:
Russia will guarantee a $1 billion loan to be provided by VTB Bank to Alisher Usmanov’s Metalloinvest. The decision was made by a commission headed by First Deputy Prime Minister Igor Shuvalov. (Reuters, 8 September 2009)
Then, in February 2008, “Sevenkey” transferred its first $80-plus million in dividends to its owner, “Radcliffe.”
And in 2009, housewife Olga Shuvalova declared an income of 367 million rubles.
Voilà. That’s the whole trick.
None of the documents published here are insider material; they are available to anyone in open sources. For example, they can be found on the website of Natalia Pelevina, who has already appealed to the Prosecutor General’s Office demanding an investigation into the scheme. Everything is also covered in sufficient detail on the Slon website. The documents were reviewed by lawyers for The Wall Street Journal and the Financial Times and were deemed authentic. Here is the chart published by Barron's in December:
What do we have? We have every reason for Igor Ivanovich Shuvalov, Deputy Prime Minister of the Russian government, to be under investigation for accepting bribes on an especially large scale. Alongside him, and then in the dock, should be citizens Abramovich and Usmanov.
Unfortunately, nothing of the sort is happening—quite the opposite, in fact (see Peskov’s comments above).
Why all of us should declare a holy war on Shuvalov / Abramovich / Usmanov / Shvidler:
The “Shuvalov case” is one of the few cases where all the documents and evidence are available. As I wrote above, they were checked by lawyers for the world’s leading business publications, who confirmed their authenticity.
The people involved in this case are utterly repulsive, both morally and politically. Just look at Shuvalov. He doesn’t just take bribes in the millions—he also lives in a kind of brazen, ostentatious luxury. Take a look at his list of property: he owns about a quarter share of an apartment measuring 175 square meters, and another 109-square-meter apartment is jointly owned with his wife. The first deputy prime minister also had two land plots with a total area of about 40 sotkas (roughly 4,000 square meters, or 0.4 hectares / about 1 acre) granted to him for free use for five years. In addition, Shuvalov rented a residential house and utility building totaling 643 square meters in Russia, a 1,479-square-meter house in Austria, and a 424-square-meter apartment in the UK. The first deputy prime minister and his wife jointly owned seven vehicles: a Jaguar, a Mercedes-Benz S350, a Mercedes-Benz S500, a Mercedes-Benz S-Class sedan V221, a ZIL-41047 limousine, a Ford Hymer Camp, and a VAZ-2101.
Isn’t that outrageous? He has spent the last 15 years in public service, his move into government supposedly meant that “at first Olga had to work in order to help her husband raise their three children,” and yet he openly buys these Mercedeses and Jaguars in utterly bizarre quantities. Houses in Austria, apartments in the UK.
A separate example of breathtaking arrogance is the former state dacha “Zarechye-4,” where Suslov, Chernenko, Gromyko, and Ryzhkov once lived, which Shuvalov bought and turned into his own estate.
A couple of people who had been to that dacha told me about a kind of almost cartoonish luxury and pretension: “the Shuvalov family monogram” on cast-iron grilles, and so on.
The only thing missing is peasant women breast-feeding the hunting hound puppies from the master’s kennel.
In other words, the man openly declares to everyone: yes, I am a state official. I take bribes and live a deliberately luxurious life. A classic. He even joined United Russia. He even headed the party list in Primorye, flying from Austria to Vladivostok on a private jet to tell the people of Vladivostok that the ring of Russia’s enemies is tightening and that we must rally around the national leader, or else foreigners will take away our national wealth.
Abramovich and Usmanov are no less disgusting. They live abroad and, while enjoying law and order in the UK, turn Russia—the country they profit from—into a bantustan, ruled by their crooked viceroys like Shuvalov.
Obviously, we are unlikely to achieve criminal prosecution of these crooks inside the country anytime soon: they are all among Putin’s closest associates. But there are good prospects for squeezing these bastards abroad: - Shvidler is a U.S. citizen; - Usmanov is a UK resident and has business interests in the United States; - Abramovich is a UK resident and has property and business interests in the United States;
By corrupting and bribing a foreign official, these men violated the FCPA and a whole range of other regulations. In short and simplified terms: bribing a Russian or Zimbabwean official is a criminal offense under the laws of the United States, the UK, and the EU. We must push for all three of them to be held accountable. And then Shuvalov himself inside Russia.
Even though this will require appealing to foreign officials, it will be an act of patriotism in the highest degree: we are doing this in the interests of Russia and Russian citizens, protecting them from crooks and thieves who could not care less about Russia. They live in Austria and London.
This is exactly the kind of campaign these crooks fear most. They do not care about a hundred letters to the Investigative Committee, but they are terrified of being banned from entering the European Union. So that is precisely what we should do—the thing they fear.
Here is what I propose we do: We have created a Facebook group called "Put Shuvalov in the Dock", through which we will coordinate the work. Please join. We are now working out the specific steps and methods of implementation. At a minimum, this will include:
Mass appeals to Russian law enforcement agencies, the President of the Russian Federation, and the Prime Minister of the Russian Federation. Shuvalov has no right to remain a public servant.
Formal complaints to the DOJ (and we will think about where else), as well as to other bodies that investigate under the FCPA and similar laws, submitted by Russian citizens and by U.S./UK citizens (for this purpose we are looking for former compatriots willing to help Mother Russia).
Mass political appeals to members of Congress, members of Parliament, and so on. In other words, the standard methods of foreign public campaigns. Here too we need Russians living abroad—please make yourselves known and join the Facebook group.
People ask me: have you met with the American ambassador? Now I can answer: I very much want to, and I invite NTV to cover the meeting. In the near future I will try to meet with Ambassador McFaul and hand him an official demand from Russian citizens to launch an investigation into the bribery of Russian officials by U.S. citizens and by citizens falling under FCPA jurisdiction. This should become the main and only topic of meetings between the Russian opposition and the American ambassador. Enforce your laws in the interests of both U.S. and Russian citizens. That would be a real reset.
Every foreign official who plans to meet with Shuvalov will receive a hundred letters from us explaining who Shuvalov is and how he became a multimillionaire.
Coordinated public takedowns of Obeshchalkin and Obsuzhdalkin every time they so much as mention fighting corruption, until the “Shuvalov case” is investigated.
And we will come up with more things like this as we carry out what we have already planned.
And don’t forget to spread information about the “Shuvalov case” by every possible means. The country should know its heroes.
UPD: On Facebook, we have created not only the group "Put Shuvalov in the Dock", but also the public page "Put Shuvalov in the Dock". Join the first and be sure to “like” the second.
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Update. Shuvalov’s Wikipedia article looks like this today :)