Taking on Russia's ‘oligarchs’

Meduza looks at the businessmen, state officials, and companies targeted in the latest U.S. sanctions

On Friday, the world got a look at the latest U.S. sanctions against Russia. The U.S. Treasury Department’s new “designations” target seven Russian “oligarchs” and 12 companies they own or control, 17 senior Russian government officials, and a state-owned Russian weapons trading company and its subsidiary, a Russian bank. Washington says the measures are a response to “a range of malign activity around the globe” conducted by the Russian government, which operates “for the disproportionate benefit of oligarchs and government elites,” Treasury Secretary Steven Mnuchin said in a press release.

The new list, which is supposed to single out “those who benefit from the Putin regime and play a key role in advancing Russia’s malign activities,” focuses on individuals and companies that work with the Russian government or in Russia’s energy sector. Washington also sanctioned Rosoboronexport and its subsidiary the Russian Financial Corporation for collaborating with the Syrian government.

Below, you’ll find a list of everyone and everything swept up in the Treasury Department’s new sanctions. Washington’s official justifications for these designations appear in quotes.

The businessmen

The total worth of all the “oligarchs” sanctioned by the U.S. government on Friday added up to $29.5 billion. By Friday evening, falling stocks erased $1.25 billion from this total, according to the newsletter The Bell.

• Oleg Deripaska (worth $5.1 billion, says Forbes). Added to the list for acting “for or on behalf of, directly or indirectly, a senior official of the government of the Russian Federation” (Washington doesn’t say whom) and for his workin Russia’s energy sector. “Deripaska has said that he does not separate himself from the Russian state. [...] Deripaska has been investigated for money laundering, and has been accused of threatening the lives of business rivals, illegally wiretapping a government official, and taking part in extortion and racketeering. There are also allegations that Deripaska bribed a government official, ordered the murder of a businessman, and had links to a Russian organized crime group.”
• Suleiman Kerimov ($6.3 billion). Added to the U.S. sanctions as a member of Russia’s Federation Council. “He is alleged to have brought hundreds of millions of euros into France — transporting as much as 20 million euros at a time in suitcases, in addition to conducting more conventional funds transfers — without reporting the money to French tax authorities. Kerimov allegedly launders the funds through the purchase of villas. Kerimov was also accused of failing to pay 400 million euros in taxes related to villas.”
• Igor Rotenberg ($700 million). Added to the U.S. sanctions list for his work in the Russian energy sector. “Rotenberg acquired significant assets from his father, Arkady Rotenberg, after OFAC designated the latter in March 2014.”
• Kirill Shamalov ($1.3 billion). Added to the U.S. sanctions list for his work in the Russian energy sector. “Shamalov married Putin’s daughter Katerina Tikhonova in February 2013 and his fortunes drastically improved following the marriage; within 18 months, he acquired a large portion of shares of Sibur, a Russia-based company involved in oil and gas exploration, production, processing, and refining.”
• Viktor Vekselberg ($12.4 billion). “In 2016, Russian prosecutors raided Renova’s offices and arrested two associates of Vekselberg, including the company’s chief managing director and another top executive, for bribing officials connected to a power generation project in Russia.”
• Vladimir Bogdanov ($1.9 billion). Added to the U.S. sanctions list for his work in the Russian energy sector. Bogdanov serves as the general director of Surgutneftegaz, which was hit with U.S. sanctions back in 2014.
• Andrey Skoch ($6.9 billion). Added to the sanctions list as a deputy in the State Duma. “Skoch has longstanding ties to Russian organized criminal groups, including time spent leading one such enterprise.” Skoch told Gazeta.ru: “I don’t understand it. They say it’s connected to Ukraine, but I don’t even know. I’ve never even been to Crimea and I don’t have any remaining ties to Ukraine.”

The U.S. Treasury Department also sanctioned 12 companies associated with the businessmen listed above, including Basic Element, Rusal, En+ Group, the Kuban agroholding company, Russian Machines, Igor Rotenberg’s NPV Engineering, Kirill Shamalov’s Ladoga Management, Oleg Deripaska’s GAZ Group, and Viktor Vekselberg’s Renova Group.

Top managers at state companies

• Andrey Akimov, board chairman at Gazprombank.
• Andrey Kostin, board chairman at VTB Bank. Kostin told Kommersant: “I’ve been punished because the American administration considers the Russian government’s policies to be wrong. That is very sad.”
• Alexey Miller, board chairman at Gazprom. Miller told Channel 5: “When I didn’t land on the first sanctions list, there were even some doubts that maybe something was wrong. But no, finally they’ve added me. That means we’re doing everything right.”
• Sergey Fursenko, board member at Gazprom Neft.

All the top managers listed above were added to the Treasury Department’s sanctions list as state officials.

State officials

• Alexey Dyumin, governor of the Tula region. “He previously headed the Special Operations Forces, which played a key role in Russia’s purported annexation of Crimea.”
• Mikhail Fradkov, former head of the Foreign Intelligence Service and president of the Russian Institute for Strategic Studies, “a major research and analytical center established by the President of the Russian Federation, which provides information support to the Presidential Administration, Federation Council, State Duma, and Security Council.” RISS is suspected of drafting Russia’s plans to interfere in the 2016 U.S. presidential election.
• Viktor Zolotov, head of the Russian National Guard.
• Nikolai Patrushev, secretary of Russia’s Security Council. Patrushev told NTV: “I’ve been to the U.S. — I’ve been several times. Just because they’ve levied whatever sanctions doesn’t mean that we’re not going to be in contact with them. There are other countries where we can talk and address these issues.”
• Alexander Zharov, head of Roskomnadzor (Russia’s federal censor). Zharov told Gazeta.ru: “I take this as high appraisal of Roskomnadzor’s work.”
• Vladimir Kolokoltsev, head of the Interior Ministry.
• Timur Valiulin, head of the Interior Ministry’s General Administration for Combating Extremism.
• Vladimir Ustinov, presidential envoy to Russia’s Southern Federal District.
• Alexander Torshin, deputy chairman of Russia’s Central Bank.
• Konstantin Kosachev, member of the Federation Council and head of the Senate’s International Affairs Committee.
• Vladislav Reznik, State Duma deputy.
• Evgeny Shkolov, presidential advisor.
• Oleg Govorun, head of the Presidential Directorate for Social and Economic Cooperation with the Commonwealth of Independent States Member Countries (and South Ossetia and Abkhazia).

What do these sanctions do?

Everyone added to the Treasury Department’s list is banned from traveling to the United States. American officials have also frozen all assets belonging to these individuals and companies in the U.S., and American citizens are prohibited from doing any business with them. These rules apply to any ventures where the sanctions individuals own at least half of the business. The U.S. government did not implement “secondary sanctions,” which would have also enforced the restrictions on non-American citizens and businesses. Secondary sanctions, according to The Bell, were the “real risk” that worried Russian oligarchs.

Americans and American companies have until June 5 to cut off all collaboration with the sanctioned companies. All payments for these contracts, moreover, must be transferred to a special account in a U.S. bank. By June 15, these American citizens and companies must file reports with the Treasury Department, detailing the termination of their collaboration with any of the sanctioned businesses or individuals. Any Americans working for the Russian individuals or companies sanctioned by the U.S. government will have to find new jobs.

Oleg Deripaska’s businesses have already posted major losses in financial markets. Stocks in Rusal, which earned 10 percent of its revenue last year ($1.4 billion) in the United States, fell 17.7 percent on the Russian stock exchange, and securities in Deripaska’s company En+ Group fell more than 20 percent in London. “The company regrets this development,” a Rusal spokesperson told the magazine RBC. In late 2017, En+ Group’s net debt reached $12.2 billion, while Rusal’s net debt was $7.7 billion.

Aside from Deripaska, only Viktor Vekselberg has sizable investments in the United States, where he owns shares in the venture fund Maxfield Capital, which operates in the U.S., Israel, and Europe. In California alone, Maxfield has investments in dozens of companies, such as the e-health app Doctor Chrono and and online education platform Edwin. Suleiman Kerimov also has investments in Silicon Valley (in Snapchat and SoundHound).

Mikhail Prokhorov is likely doing backflips today. In late February, Prokhorov’s Onexim Group sold its last 6 percent in Rusal to Vekselberg and Leonard Blavatnik for an estimated $660 million.

There was virtually no change in the value of shares in Russian state companies named by the U.S. Treasury Department and state companies whose directors were sanctioned on Friday, probably due to the fact that Gazprom has been under American sanctions for years already.

What is the “Kremlin list”?

Published in January 2018, the “Kremlin list” was prepared in compliance with the Countering America’s Adversaries Through Sanctions Act (CAATSA), which the U.S. Congress adopted in the summer of 2017. The Treasury’s actions on Friday are Washington’s latest response to Russia’s alleged meddling in the 2016 U.S. presidential election. CAATSA enshrined in law sanctions against Russia over Moscow’s annexation of Crimea and intervention in eastern Ukraine, making the policy harder to rescind than a simple executive order.

The “Kremlin list” included the names of many top state officials and businessmen considered to have close ties to Vladimir Putin. The list didn’t include sanctions when it was published in January, but Secretary Steven Mnuchin promised they weren’t far off.

Story by Viktor Davydov and Alexander Polivanov, translation by Kevin Rothrock