vladimir putin's war in ukraine has led
to governments around the world bringing
sanctions against a vast network of
russian oligarchs
i'm authorizing additional strong
sanctions severe sanctions the strongest
package of sanctions but to fully
understand why we need to know how the
relationship between russia and its
oligarchs developed
for this we can look at the experiences
of three prominent figures
mikhail kordakovsky once the richest man
in russia now living in exile in london
roman abramovich previously the eighth
richest man living in the uk
now in exile from the west
and vladimir putin the former kgb
intelligence officer
now the president of russia
so how did the kgb influence putin and
his oligarchs
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in the early 1980s even before mikhail
gorbachev's perestroika reforms that
would aim to liberalize the rigidly
planned soviet economy
it had become clear to factions inside
the kgb the change was coming
the security agency operating between
soviet and western territories was best
placed to see just how badly the soviet
union was struggling against the west
as a result the kgb began creating a
shadow economy which they could control
designed to generate money that they
would use for their own activities
they set up a black market network to
smuggling embargoed western goods and
technologies
began experimenting with ways they could
make money within the closed soviet
economy
and found methods of hiding money via
proxies outside of the soviet system
or whatever might come next
one such kgb experiment involved mikhail
korokovsky
having risen rapidly through the
communist youth league
he was chosen to head an initiative to
provide computer programming as well as
finding ways to make money from
scientific research
to achieve this
kodakovsky needed permission to make
money
which was illegal at the time
he also needed computers which were
still under embargo from the west
the kgb provided both and kodakovsky
went on to effectively head up the
soviet union's first private business
in 1985 when the perestroika reforms
were introduced
the kgb experiments accelerated
but the real moment of change came with
the fall of the soviet union
korokovsky and others like him
who had already started making money
took full advantage of their newfound
freedoms and the oligarch was born by
which we mean a billionaire russian with
close political connections
at one point in this period it was
estimated that just seven oligarchs
controlled 50 of russia's economy
and the kgb
it was dismantled and broken into four
new services seemingly losing all
control over russia's finances
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roman abramovich's story is typical of
many of the oligarchs
establishing small businesses under the
perestroika reforms before diversifying
their interests in the post-soviet era
however his steep rise came after being
taken under the wing of boris berezovsky
an older more established billionaire
with strong political connections
berezovsky helped abramovic secure the
ownership of russian oil company sidneft
in a type of deal which was typical of
the time
a rigged auction where only a fraction
of the company's real value was paid
and in this case the russian state
loaned abramovich over half of the
winning bid
abramovic and berezovsky would later
fall out over the sidney deal they would
also experience vastly differing
fortunes
after becoming increasingly critical of
vladimir putin berezovsky ended up
exiled in london
and in march 2013 he was found dead in
his home
the cause of death remains open
in contrast just under a decade after
the sibnef deal abramovic sold the
company back to the russian state
for 13 billion dollars
while mikhail kordekovsky and roman
ramovich were starting to make their
first money vladimir putin was employed
as a kgb officer tasked with recruiting
agents in an area of east germany where
the security service operated their
shadow economy
after the fall of the soviet union under
instruction from the kgb he moved to
saint petersburg
there he quickly ascended to the
position of deputy mayor and was
involved in numerous deals not
dissimilar to the subnet deal
in both of these roles putin became
adept in the ways of the new russia
when putin became president he
immediately began consolidating the
country's wealth and power
starting with the investigation and
arrest of media tycoon vladimir gazinsky
although he was later released this sent
a warning not just to the press but to
the oligarchs too
he began redistributing wealth and
control over state resources amongst his
friends
many of them xkgb
his critics also allege that he became
extremely wealthy himself his fortune
being held by a series of proxies
this was different from the soviet-era
corruption where state officials might
receive payoffs and better living
conditions
now in the putin era state officials
were becoming immensely wealthy as
wealthy as the oligarchs
the fates of mikhail kolkovsky and roman
abramovich
only goes to further emphasise the new
rule of order in putin's russia
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in february 2003 putin gathered the
remaining members of the powerful
semi-bankischener for a meeting
mikhail korikovsky made a presentation
on behalf of all the oligarchs alleging
state corruption was contributing to 10
to 20 losses against russia's gdp
he was effectively accusing putin and
his officials
kordokovsky had misjudged putin who
turned the conversation on its head
shifting the discussion to how the
billionaires came by their wealth
over a period of ten years the russian
government arrested and charged mikhail
kodakovsky with fraud tax irregularities
embezzlement and money laundering
he was in prison for nine years his
company's liquidated and his assets sold
off in a closed auction
the experiences of both korikovsky and
gazinsky show us how easily wealth can
be seized in russia because most of the
oligarchs had come to attain their
wealth by the same means
the key to maintaining their position
was by pledging loyalty to putin
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having been close to both putin critic
boris berezovsky and former president
boris yeltsin roman abramovich could
have been viewed as being in a
vulnerable position
but abramovich like the other surviving
members of the semi-bankishana fell into
line
tax investigations came and went
and around the same time he also began
to use his fortune for seemingly civic
purposes
yet while allegations have been made
regarding abramovic's close ties with
putin
it's something he's always denied
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if it were not for russia's invasion of
ukraine
putin's oligarchs would have remained
unscrutinised
leaving many in the west continuing to
believe they were simply successful
financial industrial billionaires
in reality we now know that modern
russia is run more akin to putin's days
in the kgb
where loyalty wealth and back channel
dealings
are the means of operation
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