An unprecedented campaign to defend Deputy Prime Minister Igor Shuvalov is now unfolding after major business publications accused him this week of taking bribes. Wall Street Journal Share Deals Open Window on Kremlin Financial Times, first piece Kremlin mired in Gazprom deals Financial Times, second piece 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, stated what a wonderful and honest man he is. Voloshin, the former head of Yeltsin's administration, even wrote a special heart-rending blog post on Echo of Moscow (a Russian radio station), claiming this was all just intrigue surrounding the new government. Sure, of course. Intrigue around the government—especially considering that the first Barron's article came out even 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 Kremlin hyperactivity are obvious: they are not defending the bribe-taker Shuvalov, who is useless to anyone and would be thrown under the bus in three seconds. They are defending two men who are the real support and backbone of the "vertical of power"—the ones who paid those bribes. Usmanov
2. Abramovich
These charming gentlemen may make their money 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 public 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 inconveniences as losing their visas. Just imagine it: losing a UK visa or a Schengen visa. That would mean—horror of horrors—having to LIVE IN RUSSIA. A nightmare and unbearable torment. So let's sort out 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 mostly 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 with them generated so much money, the answers were extremely vague. Here is a typical media report from that time: First Deputy Prime Minister Olga Shuvalova's wife is a housewife, but that does not stop her from not only earning very well, but multiplying her income. 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 government 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 to his wife. True, at first Olga still had to work to help her husband raise their three children. But for the past several years, that has no longer been necessary: the family's assets already generate fantastic income. Still, the nature of the couple's "gold-bearing" assets remains a secret to this day. "All information about the [Shuvalovs'] income has been published on the government's website," repeats the deputy prime minister's press secretary, using a line polished over the years. According to a former Shuvalov colleague, the official's wife holds a securities portfolio, and transactions involving it allowed her not to lose face compared 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 produced record profits in a difficult market is impossible to understand, but the family's real estate and land holdings did not change significantly over the year. So, as you can see, Shuvalov has been in government since 1997, and "at first Olga still had to work to help her husband raise their three children, but then things somehow worked out.* So how exactly did they work out? In simplified form, the story looks like this: There is a company called Severin, owned by Olga Shuvalova. That is an indisputable 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. Severin owns a company called Redcliffe
That same Redcliffe acquired control, through a share transfer, over a company called Sevenkey.
"Sevenkey" sounds very much like the name of some village somewhere in Smolensk Region. Something like Savyonki. But let's not be misled: in Savyonki, there is nothing 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. An indisputable fact. Here are all four SWIFTs. What for? For what beautiful eyes did Abramovich/Shvidler transfer $50 million to Shuvalov's wife? For nothing at all. I can only assume 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, when the Shuvalov camp was forced to explain this $50 million transfer somehow, did they invent a story that, as it turns out, Shuvalov had held an option since time immemorial 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 many people would have had to know about it. There was an attempted merger of Sibneft and Yukos, so due diligence was conducted before the deal; this option should have been documented. 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 still had to work to help her husband raise their three children." We own 0.5% of Sibneft, but raising three children is still hard for us. 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, officially the key company in billionaire Usmanov's holding group, which could easily get a loan from any bank, for some reason borrows those Shuvalov $50 million from him
Why would Usmanov need this? Unclear. Why would Shuvalov need it? That part 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 by putting your own money in a bank deposit—you won't achieve even one-tenth of that result. Then again, you're not Shuvalov. One good turn deserves another: after Usmanov borrowed money from the right place, business started going very well for him. Even in the difficult days of the financial crisis, news wires were reporting things like this: Russia will guarantee a $1 billion loan to be provided by VTB to Alisher Usmanov's Metalloinvest. The decision was made by a commission headed by First Deputy Prime Minister Igor Shuvalov. (Reuters, September 8, 2009) And in February 2008, Sevenkey transfers its first $80-plus million to its owner, Redcliffe, as dividends
And in 2009, housewife Olga Shuvalova declares an income of 367 million rubles. Voilà. That's the whole trick. None of the published documents are insider material; they are available to anyone in open sources. For example, they are on the website of Natalia Pelevina, who has already appealed to the Prosecutor General's Office demanding an investigation into the scheme. There is also a fairly detailed account 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 here? We have every reason for Russian Deputy Prime Minister Igor Ivanovich Shuvalov to be under investigation for accepting bribes on an especially large scale. And alongside him, under investigation 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 holy war on Shuvalov/Abramovich/Usmanov/Shvidler: The "Shuvalov case" is one of the few where all the documents and evidence are available. As I wrote above, they were checked by lawyers for the world's largest business publications and their authenticity was confirmed. The people involved are utterly repulsive, both morally and politically. Just look at this Shuvalov. He doesn't just take bribes in the millions—he also lives in a kind of ostentatious, brazen luxury. Look at his list of assets: he *owns about a quarter of a 175-square-meter apartment, another apartment measuring 109 square meters is jointly owned with his wife. The first deputy prime minister also had free use for five years of two land plots totaling about 4,000 square meters. In addition, Shuvalov rented a residential house and utility building measuring 643 square meters in Russia, a residential house measuring 1,479 square meters in Austria, and an ap**artment measuring 424 square meters in the United Kingdom. The first deputy prime minister and his wife jointly owned seven cars: 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. ** *Hasn't he become completely shameless? For the last 15 years he has been in government service; when he entered government, we were told that "***at first Olga still had to work to help her husband raise their three children," and yet ***he openly buys these Mercedeses and Jaguars in some utterly bizarre quantities. Houses in Austria, apartments in the UK. A separate act of outrageous 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 luxury and pretension so over the top it was almost cartoonish: the "Shuvalov family monogram" on cast-iron grilles, and so on. The only thing missing is peasant women breastfeeding the master's greyhound puppies. In other words, the man is openly declaring to everyone: yes, I am a state official. I take bribes and live a deliberately luxurious life. A classic. And 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 was tightening and that we must rally around the national leader, or else foreigners would 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. 3. Obviously, we are unlikely to achieve criminal prosecution of these crooks inside the country any time soon: these are all 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 individuals violated the FCPA and a host of other regulations. In short and simplified terms: bribing a Russian or Zimbabwean official is a criminal offense under U.S., UK, and EU law. We must push for all three of them to be held accountable. And then for 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 do not care about Russia in the slightest. They live in Austria/London. This is exactly the kind of campaign these crooks fear most. They don't care about a hundred letters to the Investigative Committee, but they are terrified of being banned from entering the European Union. So that is exactly what we should do—what they fear. What I propose: We have created a Facebook group, "Shuvalov to the Dock," through which we will coordinate the work. Please join. We are now working out 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 be a public servant. Formal complaints to the DOJ (and we will think about where else) and other bodies that investigate FCPA violations and similar offenses, from Russian citizens and from U.S./UK citizens (for this purpose we are looking for former compatriots willing to help Mother Russia). Mass political appeals to congressmen, members of parliament, and so on. In other words, standard methods of foreign public campaigns. We need Russian expatriates here too—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 television to attend that meeting. In the near future I will try to meet with Ambassador McFaul and hand him an official demand from Russian citizens to begin 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 subject of meetings between the Russian opposition and the American ambassador. Enforce your laws in the interests of U.S. and Russian citizens. That would be a real reset. Every foreign official planning to meet with Shuvalov will receive a hundred letters from us explaining who Shuvalov is and how he became a multimillionaire. Coordinated public hammering of Promisekin and Talkskin, 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. Join in. 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 "Shuvalov to the Dock," but also a public page, "Shuvalov to the Dock." Join the first and be sure to "like" the second. Please share this post using the buttons below—"recommend" (fb), "tweet," and "like" (vk)—in case some of your friends still haven't heard about it. Update. Shuvalov's Wikipedia article looks like this today :)