Oligarchs & the opposition

Russian opposition splits over support for lifting sanctions on oligarchs

Lobbying by prominent billionaires Mikhail Fridman and Pyotr Aven in an attempt to have European sanctions on them lifted caused a bitter row last week. The tycoons, who are co-owners of one of Russia’s biggest investment outfits, Alfa Group, tried to recruit the leaders of Russia’s opposition in their quest. When it emerged that Leonid Volkov, one of jailed opposition leader Alexei Navalny’s closest colleagues, was involved in lobbying on behalf of the duo, he had to step down from his role with the Anti-Corruption Fund (FBK). It was also announced that Fridman and Aven are selling one of their main Russian assets.

City Hall’s “slush fund”

The scandal followed an FBK investigation into how Moscow City Hall allegedly used a magazine as a “slush fund.” In particular, Navalny’s colleagues accused the family of Alexei Venediktov, ex-editor-in-chief of liberal radio station Ekho Moskvy of taking City Hall’s cash.

The investigation found that, since 2019, a company owned by Venediktov’s wife took $8.9 million from City Hall and spent it on the publication of the “My District” magazines, which are distributed freely around Moscow. Navalny’s team alleged that the costs were inflated and part of the money ($300,000) was pocketed by Venediktov himself. In return, according to the investigation, Venediktov helped the authorities out by being an official cheerleader for the electronic voting system introduced for city elections.

Navalny’s supporters believe that the use of electronic polling in Moscow — like across Russia — was a means of rigging the vote for pro-Kremlin candidates.

Volkov described Venediktov as a dangerous enemy because “he works far more subtly” and is more likely to deceive “regular people” than state propagandists. Venediktov responded that he published the magazines at a commercial rate and did not earn a kopeck for himself.

A letter in support of the oligarchs

In answer to these allegations, Venediktov published a letter signed by several representatives of the Russian opposition (including Volkov) and independent jounrlaists . The letter was addressed to senior figures at the EU — president of the European Commission Ursula von der Leyen and foreign policy chief Josep Borrel — and argued in favor of lifting sanctions on Fridman, Aven and fellow Alfa Group shareholders German Khan and Alexei Kuzmichev. The text emphasized that Fridman, Alfa’s major shareholder, is “known for his liberal views” and was a friend of murdered opposition leader Boris Nemtsov. It added that Alfa Group was never close to the authorities or to Putin, that the company invested in Ukraine, steered clear of politics and tried to help Ukrainian refugees.

Signatories including politician Leonid Gozman, businessman Yevgeny Chichvarkin, co-founder of opposition TV channel Dozhd Vera Krichevskaya, publicist Vladislav Inozemtsev and journalist Sergei Parkhomenko confirmed the document was genuine.

Volkov claimed Wednesday that he had not signed the letter in its published form and claimed his signature had been “photoshopped.” However, the next day Venediktov published another letter to Borrel, dated Oct. 14, 2022, that was signed by Volkov and written under a letterhead from the ACF (the international arm of the FBK).

This letter was similar to the first one, although it contained an added appeal for Aven (who is on the FBK’s own “list of 6,000” targets for sanctions). Volkov argued that the EU was able to freeze the assets of these “oligarchs” precisely because they were honestly earned and not hidden (unlike the wealth of state officials), thus demonstrating that sanctions against them were unjust and unreasonable. Volkov singled out Aven, despite his presence at a meeting with Putin two days after the invasion, for “publicly declaring his pointed opposition to Russian aggression in Ukraine,” leaving Russia with his family at the end of February and repeatedly stating an “unambiguously negative attitude” to Putin’s policies.

After the letter was published, Volkov announced he was “taking a break from his public activities as chairman of the board of ACF International.” He said the October letter was a “big political mistake” and admitted he sent it on behalf of the FBK without the knowledge of his colleagues. He said his colleagues will now “decide how they view the possibility of working together” with him in the future. And he claimed that he wrote to Borrel in the hope of sparking a “chain reaction of public criticism of the war and a split among Russia’s elite.”

Аlfa shareholders dispose of Russian assets

After the letters were published it emerged that Fridman and Aven were selling their stakes in Alfa Bank, Russia’s largest private bank. This is not their first sale of Russian assets since the start of the war in Ukraine: in the fall, their Dutch holding VEON announced the sale of mobile operator Vimpelcom (Beeline) to management. Alfa’s shareholders clearly want to try and demonstrate that they are leaving Russia. They hope this will help them escape from Western sanctions, a colleague of the billionaires told The Bell.

Fridman and Aven began to distance themselves from Russia in 2013 after Alfa Group completed the most lucrative sale in its history, selling 25% of oil company TNK-BP to state-owned Rosneft for $13.9 billion. During the 10-year history of TNK-BP, Alfa’s shareholders and their partners, billionaires Viktor Vekselberg and Leonard Blavatnik, had earned $54 billion from the oil company, Forbes calculated at the time of the sale.

Alfa’s shareholders invested $15.4 billion in a new company, LetterOne, which was registered in Luxembourg and was supposed to make foreign investments. At the end of 2021, LetterOne’s assets were worth $26.8 billion. After Fridman, Aven, Kuzmichev and Khan were sanctioned, however, their stake in LetterOne, like all their other European assets, was frozen. Prior to that, the businessmen managed to transfer part of their shares to a fifth Alfa Group co-owner, Andrei Kosogov, the only one of the team to escape sanctions. He boosted his minority holding in LetterOne to a controlling stake.

The publication of Volkov’s letter could complicate matters for Fridman and Aven in Russia. By turning to the FBK for support, they approached Putin’s biggest enemy. An acquaintance of the duo suggested that the Kremlin “would be very unhappy about this.”

In his recent state-of-the-nation address, Putin made special mention of businessmen who are fighting to have Western sanctions lifted. “I want everyone who is confronted by the West’s wolf-like ways to hear me: trying to run there, arms outstretched, begging for money and humiliating yourself is meaningless and, worse, useless,” he said. However, in the same speech, Putin also said: “living out your life in a property that has been seized, with your bank accounts blocked, is a human right for anyone. We won’t encroach on that right.”

Why the world should care

Alfa’s shareholders join Oleg Tinkov, an outspoken critic of the war in Ukraine, as the only Russian businessmen who have attempted to get support from the opposition in their bid to lift sanctions. These attempts will be closely followed by all sanctioned Russian billionaires, but it’s hard to predict the outcome. Western officials have not, so far, established a mechanism to lift sanctions against individuals. As many observers have pointed out, being put on a sanctions list is currently a one-way ticket — and offers no incentive to change behavior. In other words, it pushes wealthy businessmen into Putin’s arms.

Russia casts long shadow over Georgia’s political crisis

A major hub for Russian emigration since the war in Ukraine broke out — Georgia — finds itself at the center of a political crisis due to proposed legislation on “foreign agents.” The bill at the center of the row was endorsed by Georgia’s ruling party, which is accused by many of being pro-Russian. Its passage through parliament led to large street protests in the South Caucasus country that resonated with both Kremlin propagandists and Russia’s opposition.

• Georgia’s “Foreign Influence Transparency bill” requires any organization that receives funding from abroad to register as a “foreign agent.” Its authors say that this is modeled on the United States’ FARA law. However, the U.S. has rejected that comparison: instead, a State Department official compared the bill to its Russian equivalent. In Russia, any person or organization can be branded a “foreign agent,” a Soviet-era term that most people understand to mean espionage. The awarding of this status leads to financial penalties and open discrimination.
• Georgia’s parliament passed the bill on its first reading Tuesday. Soon, thousands of people were protesting on the streets of Tbilisi: police used water cannons and tear gas, while protestors threw Molotov cocktails, stones and other improvised missiles.
• President Salome Zurabishvili, who opposes the ruling party, backed the protests. But Georgia is a parliamentary republic — and the president has little real power.
• After several days of demonstrations, the bill was withdrawn. The ruling Georgian Dream party, criticized for being pro-Russian, whose deputies submitted the bill, blamed “radical forces” for leading the country’s youth into “illegal activities.” However, Georgian Dream’s statement said that the party will not abandon the legislation.
• The protests struck a chord with Russian opposition figures and state propagandists alike. Propagandists compared the protests to the Euromaidan, a mass anti-government movement in Ukraine in 2013-14 that led to a change in government (Putin has said repeatedly that it was a coup d’etat supported by the West). In their opinion, U.S. embassy staff in Tbilisi attempted to “organize a coup.” Russian state media also reported traffic jams at border crossings into Russia as people sought to flee from Georgia. However, the delays were most likely due to the fact that the checkpoint was closed due to bad weather the previous day.
• Independent Russian journalists used the Georgian protests to make a comparison with the lack of protests in Russia when similar legislation was passed in the late 2010s. Those saying such things were bitterly criticized on Twitter – Ilya Krasilshchik, former publisher of the independent Meduza news site, even went so far as to apologize for such a comparison. The consensus among his critics was that, at the time, protesters in Russia had neither political support nor international backing.

Why the world should care

Georgia has become a major destination for anti-war Russian emigrants — and has traditionally fraught relations with Russia. Tbilisi is just 120 kilometers from the Russian border. Serious political instability in the country could have unpredictable consequences. However, this does not look like a major political crisis: public protests in Georgia are not uncommon and the withdrawal of the bill appears to have calmed the situation.

Russia’s brands Putin-backed WWF a “foreign agent”

A notable addition last week to Russia’s “foreign agent” list was the Worldwide Fund for Nature (WWF). Oddly, this charity was funded by VTB, one of Russia’s biggest state-owned banks, for many years. And Putin has publicly lauded its work. However, in recent years the fund has faced criticism from pro-Kremlin environmentalists.

• In its announcement, the Justice Ministry accused the WWF of “trying to influence the decisions of the executive and legislative authorities of the Russian Federation, hindering the implementation of industrial and infrastructure projects”. It said the WWF disguised these efforts by claiming to be protecting the environment.
• Pro-Kremlin Russian ecologists first called for the WWF to be made a foreign agent last year. At that time, however, the government took the WWF’s side. Members of the Russian Ecological Society accused the WWF of discrediting both the Russian government and domestic conservation organizations. A month ago, Sergei Ivanov, special presidential envoy for environmental matters, also criticized the WWF.
• This is a dramatic change. In 2014, Putin publicly praised the WWF’s work. At that time, the Russian president highlighted WWF projects to restore the European bison population, protect the snow leopard from poaching, preserve the Amur tiger and return leopards to the Caucasus. Putin himself is closely involved in projects to return wild cats to Russia. In 2008, he personally attached a GPS collar to an Amur tiger and, in 2011, he observed scientists putting a similar device on a snow leopard.
• The WWF also worked closely with major state companies. The fund worked with oil giant Rosneft on biodiversity preservation programs and led a project with VTB to protect Russia’s wild cats. The bank donated several million dollars to the WWF.

Why the world should care

Nobody in Russia is safe from appearing on the “foreign agents” list. Even organizations whose work has been praised by Putin himself can fall out of favor. Today, it’s sufficient just to be an international NGO and associated with Western countries.