Entrepreneurs 20 December 2022

Putin’s pet liberal enters the power struggle at “Russia’s Google”

Kudrin’s term at the Audit Chamber was not due to end until 2024. He only learned of the invasion of Ukraine from the television and was shocked by the news, but had no intention of quitting his post ahead of schedule. Instead, Kudrin wanted to use all available means to demonstrate to Putin how this war was a devastating blow for the Russian economy. Kudrin also urged other influential economists to follow suit. However, by the summer they stopped reporting to Putin about the problems his war was creating for Russia — the president would get angry, and respond by talking about Russia’s historical mission.

Yandex co-founder Arkady Volozh spent a long time unsuccessfully trying to transfer several of the company’s assets abroad. After the war broke out, it became clear that this was now essential: one by one, business partners in the West backed away, members of the board of directors left the company and shareholders lost money.

Withdrawing parts of Yandex from Russia required the Kremlin’s approval — first, Volozh needed to be replaced with an owner more in tune with the authorities; second, this involved moving important technologies abroad. The idea of inviting Kudrin to negotiate with the Kremlin might have been proposed to Volozh by Charles Ryan, who remained on the board of directors. In the summer, Yandex’s board invited Kudrin to “become part of the team.”

It was assumed that Kudrin would take over Volozh’s role at the company and receive 5% of its shares (worth more than $500 million at current rates). But a source told The Bell that the former official is moving to a full-time job and will receive share options at a fixed price. “It’s a complicated remuneration package: salary, bonuses and options,” the source explained.

The big unanswered question is who exactly will take control of Yandex after Volozh leaves (the company is currently controlled by Volozh’s family trust and the company’s management via the Dutch-registered Yandex N.V.). So far, all parties in the negotiations have adopted the following scheme: the largest voting shareholder will be a special fund represented by Kudrin and three senior managers.

“They will be in control of Yandex, not the government or some kind of oligarch group,” said a source close to the company.

Kudrin’s voting share will be greater than that of the other senior managers. The current dispute is about how the decision-making process within the fund will function and how much power Kudrin will have over the other managers and new Yandex shareholders, two sources told The Bell.

Why the world should care:

On one hand, control over a major Russian IT company used by millions of people every day is an important issue in itself. And control over the “Russian Google” could fall to a man who comes directly from the public sector and who has no business experience. However, according to Yandex managers, Kudrin is genuinely engaging with every detail of his work.

On the other hand, Kudrin has in the past actively demonstrated his political position and has given every indication that he could pursue his own political ambitions. But now, all his interests are tied up with Yandex.

“If you imagine that Putin calls him tomorrow and invites him to be the next president, of course [Kudrin] will leave Yandex and take over the presidency,” a source told The Bell. “However, if he is offered the Prime Minister’s position, he would need to think about it. Most likely, he would take the job, but he might hesitate — whereas six months ago he would have agreed instantly. Of course, Kudrin has ambitions, but now he wants to earn money doing an interesting job.”

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