Where Putin Operatives Are Hiding Their Money, Revealed

(PresidentialWire.com)- On the day he invaded Ukraine, Russian President Vladimir Putin invited a group of his country’s wealthiest businessmen to the Kremlin.

Putin reportedly told the group that the invasion was “necessary.” “We all recognize the world we live in,” he said, referring to possible US and EU economic sanctions.
Each invitee was a Russian economic powerhouse. Fourteen are billionaires. Their enterprises were in major industries like oil, banking, and chemicals. Some have known Putin for two decades.

Despite their closeness to Putin and status in Russia, many have been shifting their riches outside for years. According to confidential documents in two troves known as the Pandora Papers and Paradise Papers, more than half of the 37 attendees are related directly or indirectly to offshore corporations that handled transactions worth hundreds of millions of dollars.

According to records provided to the International Consortium of Investigative Journalists, at least 21 of the attendees of the Kremlin conference had assets in the British Virgin Islands, Cyprus, and other tax havens. This tally covers 2007 to 2018.

The high percentage of offshore holdings among Putin’s guests illustrates how top Russian businesses have moved wealth abroad and rely on opaque transactions. Offshore companies can shield personal fortunes from investigators, tax authorities, rival tycoons, and Russian state financial predators.
Offshore firms, founded years ago for unrelated purposes, may circumvent current economic penalties imposed by the West on Putin’s allies. The US, UK, and EU have targeted all but two of the businessmen who attended the Kremlin meeting.

Putin has long pushed against “offshorization,” linking it to tax evasion and money laundering. Some Russian economic analysts believe he may have discreetly accepted and possibly benefited from the practice.

According to economic research, offshore businesses hold up to $1 trillion in Russian money, representing a considerable share of the Russian economy. According to some estimations, wealthy Russians have as much wealth overseas as the entire Russian population has at home. The Paradise and Pandora Papers documents named the money drain.

Notable guests include Vagit Alekperov, former head of Lukoil, an energy firm with over 230 filling stations in the US. According to the documents, Alekperov held offshore firms that made millions of dollars in investments and loans. Topaz Opportunities Ltd., his BVI business, invested $130 million in a Belizean company and later lent it $60 million. Topaz then made two $237 million loans to a British Virgin Islands business.

Julia Friedlander, a CIA analyst, and senior policy adviser in the Office of Terrorism and Financial Intelligence at the US Treasury Department, said Putin allows his tight circle to access state firms and state funds. “Much of it goes offshore.”

As a result, the number of attendees with offshore holdings at the Kremlin meeting on February 24 may be higher than the number reported in the Pandora and Paradise Papers, which contain millions of documents but only provide a partial picture of the global offshore financial system.
However, the Paradise and Pandora Papers indicate how the conference participants exploited offshore corporations for various operations and projects.
They are used for yachts and planes.

A $600 million boat owned by billionaire Andrey Melnichenko is held by Valla Yachts, a Bermuda-based firm mentioned in the Paradise Papers. A $65 million Gulfstream G650 owned by billionaire Leonid Mikhelson’s Isle of Man firm, Golden Star Aviation Ltd, also appears in the Paradise Papers.

Melnichenko and Mikhelson did not respond to requests for comment.
It’s striking how often these wealthy Russians collaborate on offshore projects.
The documents show that Aven, a banker, an economist who helped Russia restructure its markets in the 1990s, shared two BVI businesses with three other millionaires.

According to records, a billionaire metals mogul, Andrey Bokarev, co-owned two British Virgin Islands firms with fellow billionaire Iskandar Makhmudov.

Putin has met with wealthy Russian businessmen throughout the years, including on the invasion day. According to conversations with Putin published in the 2000 book “First Person,” he began meeting with Aven, Alekperov, and Vladimir Potanin in 2000.
Aven told US investigators looking into Russian meddling in the 2016 presidential election that “50 affluent Russian businessmen… frequently meet with Putin in the Kremlin.”

At the Feb. 24 meeting, several attendees benefited from the chaotic privatization of government assets that spawned a slew of billionaires.

Potanin helped create the “loans for shares” program, which allowed many wealthy Russians to buy large stakes in state-owned businesses for relatively little money. The EU called Aven “one of Vladimir Putin’s closest oligarchs” and counseled the government on market economy transition. Alekperov was a deputy minister in the Soviet Union’s Oil Ministry. He joined Lukoil a year after the Soviet Union collapsed.
Others at the summit include newer stars in technology and other disciplines. Some are government relatives.

History indicates that defying Putin may be costly despite their money and influence. Former Russian richest man Mikhail Khodorkovsky was imprisoned for tax evasion, and other allegations that his supporters claim were politically motivated. Putin pardoned him a decade later, and he was freed.

According to the study, to Aven, Putin’s ideas were instructions, and he “knew there would be consequences for Aven if he did not follow through,” according to the study.

The 1990s saw a surge of Russian capital flight as wealthy Russians decided their assets were safer elsewhere. This wealth transfer would eventually become a political issue, provoking Putin’s vocal resistance.

“Round-tripping” refers to reinvesting profits from offshore enterprises back into Russian firms. This strategy can save money on taxes and keep assets hidden from prying eyes.

Financial capital “flees Russia mostly out of fear,” according to William Spiegelberger, an American lawyer who ran the International Practice Department of Rusal before US sanctions in 2018. “Russia is a very risky place for wealthy people.”

But Putin has regularly emphasized — and bemoaned — the role of offshore corporations since 2012. “The large level of offshore investments and ownerships in the Russian economy is a fact,” he told the Federal Assembly that year. He said that 9 out of 10 “important transactions” involving significant Russian corporations were unregulated.

He brought it up again a year later, relating it to tax evasion, fraud, and money laundering. The executives of banks, insurance companies, pension funds, and other financial institutions must be held criminally liable.

Putin encouraged persons with offshore firms to return their capital to Russia in 2014, guaranteeing them full amnesty and no questioning regarding the sources and methods of their capital acquisition. ‘The squeeze’ would not be put on a person who legalizes their possessions and property in Russia. And the IRS won’t bother them.

But Putin’s campaign was a flop, as seen by the number of businessmen who still retain offshore interests. Maybe his vocal attacks on offshore finance were never meant to be public policy but rather a menace to these business figures.

The US and European governments have also tried to curb the influence of offshore firms, with mixed results.

The Corporate Transparency Act, passed last year, requires many corporations and limited liability firms to disclose their owners. Under British pressure, the British Virgin Islands have regulated shell businesses.

But critics believe these steps have failed to bring global offshore transparency and accountability.