Russian oligarchs claim powerlessness while projecting influence

Oliver Bullough



The Brits have seized a yacht, which is apparently owned by a Russian oligarch. I don’t know who that oligarch is, because he’s hiding behind a Nevisian shell company (Nevis is one of my “favorite” tax havens: read all about it in Moneyland), and his boat flies a Maltese flag. But we do know the Phi has an “infinite wine cellar.”

I don’t know what an infinite wine cellar is, but it may be one of these or, less excitingly, one of these. Still though, it’s surely the most interesting thing that has ever been mentioned in a National Crime Agency press release, and that’s something.


There can be few more contrasting media outreach policies than those currently being run by Vladimir Putin and Volodymyr Zelensky. Putin, having banned journalists from calling the horror he’s unleashed on Ukraine a “war” and shut down what remained of Russia’s independent media, has taken to state television to rant about “cancel culture.”  Zelensky meanwhile seems to give so many interviews it’s a wonder there are enough hours in the day, and yet remains thoughtful and engaged in all of them.

Last week, he spoke to four Russian journalists, and shared some interesting snippets about oligarchs, and the contacts he’s had with them (the question was sparked by a piece in the Wall Street Journal about the White House asking the Treasury, at Zelensky’s request, to delay sanctions on Roman Abramovich because he was helping with peace talks).

  • “I’ll tell you this: all of these people are scared of sanctions. I am sure that there’s no particular patriotism in this,” he said, of the peace proposals. “We understand the comfort that they lived in, and which they are leaving or have already left, and there is no light ahead. Of course there are looking for a way out.”
  • “Some have even got in touch to say they are ready to help restore Ukraine after the war: ‘we are ready to give money, we are ready to move our business to Ukraine, we live in England or Switzerland now… can we do something, so the sanctions list passes us by?’.”

That impression of oligarchs as feeling helpless while the Western alliance freezes their assets tallies interestingly with the views expressed by sanctioned oligarch Oleg Deripaska on telegram, after Joe Biden’s speech in Warsaw. If you look past the tone of the post, you end up with the impression of a man who dislikes the war but genuinely can’t understand why he’s been sanctioned since he has no influence over what’s going on.

  • “I learned with surprise from this strange evening speech by the American president in Warsaw that, it turns out, this war for NATO is with the oligarchs. Supposedly they planned everything. Who??? Potanin with Yevtushenko???? It’s a big surprise,” he wrote (it works a bit better in Russian, though to be honest I always find powerful Russians’ use of heavy sarcasm a bit jarring).

What can we learn from this?

There has been a lot of confusion about what sanctions are for: are they to force insiders to turn against Putin, or are they to confiscate assets under the control of the Russian state? Are they to “freeze” or “seize”? Are they being imposed against criminals or against a security threat? Which side you come down on depends on your opinion of the Russian regime: is it primarily a kleptocracy, or primarily an autocracy?

The leaders of Germany have quite rightly been heavily criticized for believing that trading with Russia would somehow tame the Kremlin, but they were not alone in trying to force Putin into their intellectual model: us kleptocracy enthusiasts have been doing the same thing.

Sanctions against Russia since Putin first invaded Ukraine in 2014 have been at least partly based on the assumption that, by costing the oligarchs money, the West could force them to put pressure on Putin, as if Russia were a corporation and they were big institutional shareholders. That has clearly not worked. In fact, it looks like the sanctions in place for the last eight years have made Russia more autocratic, and less kleptocratic, by reducing the amount of wealth available and concentrating more power with Putin.  

  • “The direct effect of the financial sanctions is apparent. From 2010–2013, Russia’s fixed investments, after the global financial crisis, increased by an average of 6.2% a year, but during the sanction’s years 2014–2020, they declined by an average of 0.5 percent a year. According to the IMF, total factor productivity decreased by half a percent a year from 2014–2018 and gross external outflows averaged 2% of GDP a year. These were effects of Western sanctions, not of the lower oil price,” says this report from the Atlantic Council.

As the Russian economy has stagnated, and foreign financing has become harder to access, oligarchs have become ever more reliant on the Kremlin, meaning that their freedom to act independently of the Kremlin (while retaining their wealth) has clearly become ever more circumscribed. This would appear to explain Deripaska’s confusion about being blamed for Putin’s war in Ukraine. He feels that he had no say in it, so why should he suffer for it?

Most Western governments have resisted explaining exactly what they want sanctions to achieve, though Biden had a go last week. He said that he just wants to degrade Russia’s capacity to attack others.

  • “These officials and oligarchs have reaped enormous benefit from the corruption connected to the Kremlin, and now they have to share in the pain,” he said. “These international sanctions are sapping Russian strength, its ability to replenish its military, and its ability — its ability to project power.  And it is Putin — it is Vladimir Putin who is to blame, period.”

Biden did not attempt to say why Putin was doing what he was doing, beyond having “a craving for absolute power and control.” He appears therefore to be coming down on the side of seeing Putin as a classic autocrat.

I can see why he’s doing that, but I think that it remains important to remember that Kremlin-connected oligarchs have stolen vast fortunes from the Russian people and have laundered those fortunes with the help of an army of Western enablers. They are not autocrats motivated solely by a desire for power, but also kleptocrats driven by greed. Their transnational kleptocratic networks have helped them cement control of their wealth, and project influence into Western countries. It isn’t enough to freeze their wealth therefore, we need to prevent more such theft in future, by dismantling those networks, and seizing the assets.

  • “The need for far greater, sustained efforts by Western governments to curb dirty money infiltrating our economies and prosecute corrupt businesspeople helping to undermine our security has been made crystal clear by recent events. We need to see far greater law enforcement funding and far greater coordination in investigations by Western governments, supported by widespread public understanding of the dangers,” as Frank Vogl put it in a recent column.

There are good initiatives by civil society pushing for more work on this, including Nowhere to Run, which traces international sanctions efforts. On top of identifying further targets for sanctions, we must make sure that Western countries also adequately resource their sanctions offices, to make sure that the lists that have been published lead to real assets being frozen, as well as enforcement actions against any enablers that seek to help oligarchs evade the restrictions. This is particularly a concern in the U.K., where the office has 38 employees (more accurately, it has “37.8 full time equivalent staff”) compared to 204 in the U.S. equivalent.

  • “The Government is right to see economic sanctions as a critical weapon in resisting Putin’s war. As such the Government needs to consider increasing the Office of Financial Sanctions Implementation’s resources without delay and to provide surge capacity in the form of staff with appropriate expertise,” noted a U.K. parliamentary committee.

We also need to know who owns what, to prevent oligarchs hiding behind ever-more shell companies and infiltrating their wealth back into our societies, and we need to make sure we do it properly. There was a lot of hope that Geographic Targeting Orders introduced in 2016 would drive dirty money out of Manhattan and Miami-Dade, two of the favored U.S. destinations for kleptocratic investment, by forcing all-cash purchases of real estate to declare the real owner. A new study suggests, however, that they effectively had no impact at all on the kind of money flowing into real estate in either city, because they did not receive adequate back-up.

  • “We contend that the lack of overt enforcement and validation of the ownership information failed to create a sufficient deterrent effect to drive out participation in the sector by illicit actors,” the report’s authors write.

It’s a pretty obvious point: if you don’t properly enforce the laws you pass, they don’t have much of an effect. And countries need to act together to prevent money just slipping out of one jurisdiction into another.

  • “Russian money could also wind up in America. Holding company structures can obscure the identity or nationality of the beneficiary and also allow owners to skirt sanctions rules on beneficial ownership,” said Lakshmi Kumar, policy director at nonprofit Global Financial Integrity. Minimal disclosure requirements around ownership of private companies and property in the U.S., for instance, raises the likelihood that tainted money will “rebrand itself, essentially, and exploit loopholes.”


How else to deprive Putin of his wealth? There has been a lot of concern about how much Russia earns from exporting fossil fuels to Europe, which is thus sanctioning him with one hand, while funding him with the other. A new report by energy experts lays out a pathway for Europe to de-Russify its energy system.

  • “This will require an unprecedented level of European solidarity, a combination of a Marshall Plan and a Berlin Airlift to redistribute energy around the continent as needed and support the transition,” the report states. “European politicians continue to obfuscate and pander to Russia by refusing to consider a full-scale boycott. In this they are reaping the Faustian bargain made by Gerhard Schroeder and other politicians when they intentionally made European energy security dependent on the dictator in the Kremlin. Now Europe must pay for this decision – we have no other choice.”

It may look utopian, but even the FT is now calling for Europe to pool energy procurement decisions, and to take advantage of its huge weight as a gas purchaser.

  • “The 1970s shocks came from the young Opec flexing its muscles. The 2020s shocks should give birth to a European anti-Opec,” notes Martin Sandbu.

The way for democrats to fight back against oligarchs is to act together.


Many of you may have listened to the BBC’s podcast on how North Korea makes a living from financial crime, forgery, hacking and other associated skulduggery. If you haven’t listened to it, you should, because it’s an amazing insight not just into the regime, but also into how financial crime works.

Journalist Geoff White is back with The Lazarus Heist, a book based on the series, for which I got hold of an advance copy. It’s not out for another couple of months but I’d recommend pre-ordering it, because it’s as eye-opening as the podcast was.

Of course we’re all talking about Putin right now, but the fact North Korea – a weird combination of a cult and a mafia clan – has just launched its first ballistic missile for five years is deeply alarming.