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Explainer: How rich is Putin, and can the West sanction his money in Ukraine crisis?
Niamh Cavanagh, Producer – February 24, 2022
Russian President Vladimir Putin on Thursday launched a “full-scale” attack in Ukraine, reportedly blasting missiles and bombs in cities at dawn. It came hours after the Kremlin leader declared war on Ukraine in a televised address calling for the “de-Nazification” of the country.
The response by the West has been swift. British Prime Minister Boris Johnson vowed that he would impose “massive” sanctions on Russia that would “hobble” its economy. Johnson said the details of the sanctions would be coordinated with the country’s international allies. He called for the West to end its dependence on Russian oil and gas as a response to the invasion of Ukraine. On Tuesday, Germany made the decision to shut down the Nord Stream 2 gas pipeline, an $11 billion project between Russia and Germany.
But many believe that these sanctions will do little to thwart Russia’s actions in Ukraine. Sen. Ben Sasse, R-Neb., said the sanctions amounted to too little, too late, to curb Putin’s aggressive moves. Many are calling for tougher sanctions aimed directly at Putin and his inner circle, which raises questions about just how wealthy the Russian president is, and where the bulk of that wealth is spread around the world.
In a scene out of a James Bond film, just days before it was believed that Western nations would impose sanctions on Russia, a $125 million superyacht believed to be owned by Putin was swiftly sailed from German waters to the Russian territory of Kaliningrad. The luxury yacht, named Graceful, had been left at a port in Hamburg for repair work before it abruptly left on Feb. 7.
One report revealed that the yacht was receiving several modifications, including a swimming pool extension and the enlargement of two balconies.
In 2017, Fortune magazine said Putin was believed to be the richest man in the world, with a net worth of $200 billion. Hermitage Capital Management CEO Bill Browder, who previously worked as a fund manager in Russia, said in 2015: “After 14 years in power of Russia, and the amount of money that the country has made, and the amount of money that hasn’t been spent on schools and roads and hospitals and so on, all that money is in property, bank, Swiss bank accounts, shares, hedge funds, managed for Putin and his cronies.”
Last year, a palace worth $1.37 billion was featured in a viral video by Russian opposition leader Alexei Navalny — who has since been jailed for allegedly embezzling donations, an accusation that he has vehemently denied. Navalny said the luxury Black Sea property was paid for “with the largest bribe in history. [They] built a palace for their boss with his money.” One builder described the palace as if the Egyptian pyramids were being built. “I reckon around 1,500 people worked at the construction site at that point,” the builder told the BBC in 2011. “There were Russians, Uzbeks; there were soldiers. There was a rush to get it finished.” According to others who worked at the site, the property included a Japanese garden, a gym made out of marble, an underground ice hockey rink and a vineyard.
A recent investigation by Forbes put forward a number of theories about how Putin could have amassed and hidden his fortune. One theory relates to Mikhail Khodorkovsky, a Russian oligarch who was once believed to be the richest man in Russia, with an estimated $15 billion fortune.
In 2003, however, he was imprisoned on charges of tax evasion and fraud. He continually denied these accusations. Khodorkovsky’s fortune was frozen and his companies were broken up. But Browder, who is wanted by Putin after being sentenced to nine years in prison in 2019 for tax evasion in Russia and funneling money overseas, told Forbes he believes the arrest could have allowed Putin to cut new deals with other oligarchs. “The deal was, ‘You give me 50 percent of your wealth and I’ll let you keep the other 50 percent,’” he said. “If you don’t, [I’ll] take 100 percent of your wealth and throw you in jail.”
Another theory is that Putin increased his fortune by using his position in government to help his family and close friends. Forbes suggested that those in his inner circle would offer him money or stakes in a company they acquired as a result of his help. One of Putin’s friends, Arkady Rotenberg, received more than $7 billion in state contracts in the lead-up to the Sochi Winter Olympics in 2014.
According to an investigation by Reuters in 2015, Putin’s daughter Katerina, then 29, had corporate holdings worth about $2 billion with her reported husband, Kirill Shamalov, son of Nikolai Shamalov, a longtime friend of the president. Financial analysts revealed that the wealth of Putin’s daughter stemmed mainly from a large publicly disclosed stake in a major gas and petrochemical corporation that Kirill acquired from another friend of Putin’s, Gennady Timchenko — who was hit with sanctions from the U.K. earlier this week. Along with the holdings, Putin’s daughter reportedly owned a villa in France worth $3.7 million. Not much is known about his other daughter’s wealth.
That’s what reporters in the West have uncovered. But what’s the official Russian party line about the president’s wealth? An annual list of declared earnings in the Kremlin stated that Putin is paid 8.6 million rubles per year, or $234,000, as president of Russia. In 2015, Putin famously claimed he did not know how much his salary was, saying: “They just give it to me, and I put it away in my account.”
The properties he declared in 2019 included two apartments, three Russian-made Soviet-era cars — two GAZ-M21s and a Lada Niva — and a Skiff trailer (also made in Russia), reported the Russian state-controlled media site RT. The value of the three cars adds up to no more than an estimated $27,000. In 2002, Lada Niva was awarded zero stars out of a possible four for safety after a dummy passenger was hit by the glove compartment so hard that it showed a risk for a traumatic brain injury.
Despite all the items listed, no international buildings or apartments were featured in Putin’s declaration, nor were any mega-yachts now berthed safely in Russian waters. So if Putin did amass the bankroll that Fortune magazine believes he has, where is the money, and how can Western countries come up with sanctions aimed directly at Putin’s real assets?