RUSSIA´S OLIGARCHS POWERLESS TO OPPOSE PUTIN OVER UKRAINE INVASION / THE FINANCIAL TIMES

Russia’s oligarchs powerless to oppose Putin over Ukraine invasion

President responds to any criticism with reprisals, leaving business leaders with diminished influence

Max Seddon in Moscow

Business leaders, assembled in alphabetical order, convene for a meeting with Vladimir Putin at the Kremlin last week to discuss the Ukraine invasion © EPN/Newscom/Avalon

As Russia’s tanks rolled into Ukraine last week, Vladimir Putin gathered the country’s top businessmen in the Kremlin’s ornate Hall of the Order of St Catherine to discuss their response to the economic shocks that would follow.

The Russian president, seated about 20ft away in a conspicuous social-distancing measure, told them he had “no other choice” but to invade Ukraine — and, if they wanted to keep their businesses, neither did they, according to people briefed on the meeting.

“It was a pointless meeting. 

The main idea was to explain himself. 

The explanation was: ‘I get it, but I didn’t have any other way out.’ 

That’s really what he thinks,” one of them said.

The EU on Monday froze the assets and imposed travel bans on more than half a dozen of Russia’s most prominent businessmen in a move officials have said is aimed at compelling the country’s elite to demand Putin change course.

But the power dynamic of the meeting made for a much starker message to the assembled billionaires. 

He warned that anyone who avoided doing business with companies sanctioned by the west would face punishment under the law — implying that the oligarchs had to make a stand — while also stating that Russia would help companies hit by western sanctions.

The comprehensive guest list for the meeting, where attendees sat in alphabetical order, showed that any form of dissent has become a distant prospect as Putin’s power becomes near-absolute, people close to some of the attendees said.

Though some, such as banker Petr Aven and Vladimir Yevtushenkov, owner of the Sistema conglomerate, were among the first to make a fortune in Russia’s turbulent 1990s, they were outnumbered by the heads of the state-run banking and energy groups that now dominate Russia’s economy — many of whom have ties to Putin’s inner circle.

Mikhail Fridman, Aven’s business partner, has criticised the war in general terms but told reporters on Tuesday he did not want to attack Putin directly because it “will not have any impact for political decisions in Russia” while endangering his employees.

“Nobody really wants to suffer. 

But the message is we will have to,” said a senior state banker. 

“Being on the US sanctions list used to be a status symbol of patriotism. 

But now it’s a requirement. 

If you’re not on it, it’s suspicious.”

The meeting showed how far Russia — and Putin himself — had come since his first meeting with the oligarchs a few months after he took office in 2000.

Then, the fledgling leader offered a deal to the wealthy businessmen: keep the gains they had made from privatising Russian state assets after the Soviet Union’s collapse in return for pledging fealty and staying out of politics.

Since then, Putin has imposed his will on the oligarchs by responding to any criticism with reprisals, leaving them with vastly diminished influence — and some of them in prison, such as the former oil magnate Mikhail Khodorkovsky, who spent 10 years in prison on tax and fraud charges that were largely seen by international observers as politically motivated.

Some who built their fortunes before Putin came to power — such as Khodorkovsky and the banker Sergei Pugachev — have left the country. 

A few other more recently minted businessmen have left the country or been arrested.

“The smart oligarchs get how things work here and the dumb ones aren’t oligarchs any more,” a senior Kremlin official said. 

“Everyone who doesn’t like it is out, or in prison.”

Russia’s wealth is even more concentrated in the hands of a few people today than it was when Putin took power.

The 500 Russians with a net worth of more than $100mn control 40 per cent of the country’s household wealth, according to a study by the Boston Consulting Group last year. 

That means Russia’s super-rich are three times wealthier than their average counterparts globally.

But those vast riches do not bring political power.

And even if Russia’s oligarchs were to demand changes from Putin, they would still be unable to change his mind, one of the people briefed on the meeting said.

“Imagine they go to complain to Putin,” said a diplomat from a European country where several Russian oligarchs own large assets. 

“They say, ‘Can you please revise your policy? I lost $4bn of my $5bn’. 

Putin says, ‘Do you want to keep the $1bn?’”

Individuals hit by EU measures

Alisher Usmanov

Alisher Usmanov is a Russian billionaire who was once the country’s richest man. 

A metals and technology tycoon, Uzbekistan-born Usmanov controls Russia’s second-largest phone network, MegaFon, and metals giant Metalloinvest, along with other businesses through his USM Holdings. 

Usmanov was among Facebook’s biggest investors at one point and held a stake in Russia’s largest internet company, Mail.ru, before selling in 2021.

Mikhail Fridman

Mikhail Fridman co-founded Alfa Group, which owns Russia’s largest privately owned bank Alfa-Bank, its biggest supermarket chain X5 and mobile operator Veon. 

He runs private equity firm LetterOne, which he set up with partners in London in 2013, using $14bn raised from the sale of a stake in oil group TNK-BP to Rosneft, to invest in energy, telecommunications and technology. 

Fridman divides his time between Moscow, where the Russian edition of Forbes estimates his fortune at $15.5bn, and London, where he was named the UK’s 11th richest man by the Sunday Times. He grew up in Lviv, western Ukraine.

Petr Aven

Petr Aven, Fridman’s partner, joined Alfa after serving as Russia’s trade minister in the early 1990s and he chaired the group’s bank. 

He divides his time between London and Moscow. 

Aven has published several books based on interviews with fellow big players in Russia’s turbulent 1990s, including one on the late oligarch Boris Berezovsky.

Alexei Mordashov

Alexei Mordashov, Russia’s richest man, owns Severstal, one of Russia’s leading steelmakers. 

He worked his way up from serving as an economist at Severstal’s producing enterprise at Cherepovets in northern Russia to becoming a main shareholder at the company. 

His other business interests include a 32 per cent share in German tour operator Tui, and he owns half of Tele2, one of the largest telecommunications companies in Russia.