Lately, I’ve had the feeling that Putin has announced some kind of bizarre contest among his corrupt cronies. Every week you open the internet and read: “The head of Russian Post bought an apartment for 1 billion rubles.” “Sechin bought a record-setting five-story apartment measuring 1,229 square meters.” “Miller bought an even bigger apartment than Sechin’s — 1,396 square meters.”
When I read this, I feel both angry and sympathetic at the same time. Angry—for obvious reasons. People whose salaries come from the budget of an impoverished country have so much money that they genuinely no longer know what else to buy. And I feel sympathetic because I know that the real winner of this contest, the owner of the most expensive and largest apartment (probably in Russia), is still in the shadows. No one knows about his “victory,” and no one can properly appreciate it. But today, we’re going to set the record straight:
Chemezov, the main character of today’s investigation, is like a modest Cinderella. Few people know him, and few people talk about him. In reality, half of Russia is under this man’s control.
“How did he end up with half of Russia?” you may ask. Putin handed it to him. That’s how the distribution worked. He gave all the oil to his friend Sechin. He gave all the gas to his friend Miller (and the Rotenbergs as well). And everything else that was created in the USSR and never got privatized—all the defense industry, military manufacturing, factories, machine tools, engineering—was handed over to Sergei Chemezov to run.
He understands nothing about any of it, but that doesn’t matter. What matters is that back in the 1980s, he and Putin lived in neighboring apartments in East Germany (the former German Democratic Republic). And now that former neighbor runs the state corporation Rostec.
Rostec is a unique enterprise; there has never been, and still is not, another monster like it anywhere in the world. Even the USSR had nothing like this. Seven hundred (!) enterprises employing half a million people were placed under the control of one man—Sergei Chemezov. For comparison, that’s more than the population of Luxembourg. An entire state made up of hundreds of thousands of turners, mechanics, engineers, and technicians.
You could spend a long time studying the list of these 700 enterprises and trying to find at least some logic or system in it. But you won’t succeed—the same corporation makes both tanks and Skype-like software for officials. It includes the entire defense industry, aircraft, helicopters, the Kalashnikov rifle; for some reason, it also hauls away garbage, and Platon, the toll system that charges truck drivers, is theirs too. So are AvtoVAZ, KamAZ, pharmaceuticals, and all defense exports.
And who comes to Putin promising to build a Russian iPhone? Chemezov from Rostec again.
If the thought has somehow crept into your head that Rostec was created to improve management, or to cut costs and pay people better wages, drive that thought away as far as possible. Rostec is an endless failure. It is unimaginable chaos. It is crisis-ridden enterprises and, above all, miserably low pay.
A grade-3 turner at the famous Uralvagonzavod plant earns 15,000 rubles. A picker/packer at KamAZ earns the same. At the Kalashnikov plant, a design engineer gets 25,000 rubles. Designing cars is even less profitable—an AvtoVAZ engineer in Tolyatti earns 22,000 rubles. But the worst deal of all is for people with higher education and accounting skills who want to become specialists at the plant in Izhevsk: 16,000 rubles.
All of this was gathered up and handed over to Putin’s friend Chemezov so that billions could be stolen at Rostec and apartments exactly like this one could be bought:
“Hey, wait,” you’re probably thinking. Why is the Anti-Corruption Foundation suddenly showing us a photo of the Moskva Hotel on Manezhnaya Square? You promised us Chemezov’s apartment. Did you mix something up?
Let me explain. To be honest, I myself thought this building was just a very expensive Four Seasons hotel, plus various shops, restaurants, and entertainment. But that’s a misconception.
In fact, in the 2000s, the historic Moskva Hotel, built under Stalin, was completely demolished. In its place, they constructed a new one, almost exactly the same.
From the outside it really does look very similar, but inside a lot has changed. For example, to my great surprise, the most luxurious spaces in this building are not the hotel at all. Visitors to the capital never go above the 8th floor. Everything above that is apartments—the most elite and most expensive apartments in Russia.
Apartments in this building have repeatedly appeared in rankings of the most expensive and prestigious. A penthouse like this one was listed for sale at 4.1 billion rubles.
That’s about 3.5 million rubles per square meter. Picture a single square meter. That’s what it costs there—more than 3 million rubles. And that’s before renovation, finishing, parking spaces, and utility charges.
That is an absurd amount of money, and it is certainly hard to imagine what exactly you’re paying for.
But the answer is very simple. For a view like this.
And here is Chemezov’s apartment itself (it is registered in his wife’s name, but more on that later).
Very conveniently, the lights happen to be on throughout the entire apartment. That makes it much easier to grasp its scale. And there really is something to think about.
The apartment consists of two units, on the 12th and 13th floors. Its total area is 1,434 square meters. Hockey rinks do vary, of course, but in general this is very close in size to a standard hockey rink.
We estimated its value at 5 billion rubles based on this listing. We simply recalculated by square footage. But in reality, we were still being conservative. That figure does not include finishing work or even the garages costing 5 million rubles each, which the Chemezovs of course also have there.
Now let’s take a look at Chemezov’s disclosure form. And we’ll be surprised, because we won’t find our apartment there. The trick is that it appears in the disclosure filed by his wife, Yekaterina Ignatova. And it is listed very cleverly—there are two non-residential premises of 700 square meters each.
Camouflage. Some Rostec employee goes to look at the bosses’ assets. He sees “non-residential premises.” He thinks: probably some warehouses or barracks. But in fact it’s a little apartment worth 5 billion rubles.
So what does Chemezov’s wife do? She’s a businesswoman. And where does she do business and make money? That’s right—in Rostec structures headed by her husband.
In a normal country, this situation would immediately be labeled for what it is: CORRUPTION. But not in Putin’s Russia. Here, it’s considered normal.
Yekaterina Ignatova’s best-known and most frequently described business venture was that she founded a company called KATE and announced that it would produce automatic transmissions for AvtoVAZ, a large stake in which belongs to Rostec.
Have you ever heard of Russian-made automatic transmissions being installed in our Ladas? Neither have we.
The company was founded 15 years ago, in 2004. Two years later, in 2006, a prototype transmission was shown at the Moscow auto show. Big plans were announced: they had supposedly begun building their own factory in Kaliningrad, which would produce as many as 260,000 automatic transmissions a year. By the end of 2006, they promised to launch the first production line with a capacity of 80,000 units annually. By year’s end, naturally, nothing had happened. Nothing happened in 2007 either; bloggers merely asked what was going on with the transmission. In 2008, silence again. And then in 2009, finally! The news was splashed everywhere: starting in 2012, the Lada Priora would come with an automatic transmission, and KATE would make it. A year later, AvtoVAZ itself announced Chemezov’s wife’s transmissions on its website. Success seemed inevitable. Then 2012 arrived, and automatic transmissions really did start being installed—but Japanese ones.
After 2012, there were many, many more announcements and promises. Any day now, the transmission was supposedly going to appear in all new Lada cars. Literally every kind of effort was thrown into promoting and supporting KATE—lobbying, financing, whatever was needed. Judging by the news, AvtoVAZ DREAMED of getting transmissions from KATE, Chemezov personally attended presentations, land was allocated for the factory in Kaliningrad, a Rostec bank issued a loan—but NO-THING happened, absolutely nothing.
No factory, no Russian automatic transmissions in Ladas. In the financial statements for all those years: microscopic turnover and nothing but losses.
So that’s your billionaire businesswoman. A business that failed shamefully by every possible measure. By all rights, it should have been shut down long ago, b-b-but then a miracle happened. A fairy godmother—the very same fairy godmother who gave Chemezov Rostec—came to his wife’s rescue too.
KATE received an order to create the transmission for Putin’s Aurus limousine project. This is the car you all saw at the inauguration that year. Putin proudly rode in it for 500 meters. Inside it sits a very real transmission made by Chemezov’s wife. Judging by KATE’s reports, its suddenly revived website, and its newly launched YouTube channel, Putin personally breathed new life into Yekaterina Ignatova’s business. Along with another 1 billion rubles in prepayment, just in case.
The fairy godmother was so generous that she even awarded Chemezov’s wife the Medal of the Order “For Merit to the Fatherland,” 2nd class. Here is the document confirming the award. So now you know exactly what kind of “service to the Fatherland” our country especially values.
To sum up: nothing worked out. Except for the 5-billion-ruble apartment and God knows how much more money in offshore accounts.
This is an utterly Russian story. The wife of a state corporation chief becomes a businesswoman. It’s unclear what exactly she does, everything fails, yet she and her husband earn many times more than, say, the head of Apple or Microsoft.
I very, very much want every Rostec employee to see this video and stop asking silly questions about why their salary is so low. It could have been high. But then how would Sergei Chemezov and his wife have bought an apartment like this?
Something had to be sacrificed.
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