Inside Putin’s Russia …

Posted on July 11, 2017. Filed under: From Russia with Love |

From Google News …

In developed capitalist democracies, financial, media and energy companies are private enterprises that don’t report to presidents.

In Russia, things are different. Most of those businesses are majority-state-owned corporations, virtual branches of the government. And that means when you talk to the head of a Russian bank or oil company, you are effectively talking to the Kremlin.

In 2000, when Vladimir Putin assumed the presidency, he consolidated competing power centers — media, business, local government, opposition parties and the Parliament — under his authority.

He called it “a vertical of power.” This system now includes organized crime and cybercriminals. Today the top management of these enterprises are Putin allies, and many, like Mr. Putin himself, have worked in the security services, specifically in the K.G.B. and its successor organization, the F.S.B.

The Russian government owns the major television outlets and, according to Russian journalists, sets the daily news agenda.
The head of Rosneft, the state-owned oil company, is Igor Sechin, a former K.G.B. and F.S.B. security officer who served as a top lieutenant to Mr. Putin.

Gazprom, the state gas company, is run by Alexei Miller, another former St. Petersburg associate of Mr. Putin. With exclusive rights to export gas, Gazprom controls prices, pipelines and energy diplomacy in Russia. It also owns the country’s largest media holding company, Gazprom Media.

The deal Mr. Putin made with these companies, oligarchs and banks was that they would be free to make money with state help (often to the detriment of the Russian people) as long as Mr. Putin and his cronies got their cut of the profits — and the Kremlin and security forces were free to govern without interference.

Failure to comply could lead to loss of one’s company or worse: The oil magnate Mikhail Khodorkovsky challenged Mr. Putin on corruption in 2003 and was stripped of his company and put in jail. Oligarchs once close to Mr. Putin have died under suspicious circumstances.

There was one more part of this arrangement: Since the government facilitated the moneymaking, the Kremlin could also demand in return payments or loans to favored individuals and institutions — no questions asked.

All this is important to understand when considering the case of Jared Kushner, Mr. Trump’s son-in-law and senior adviser.

According to news reports, Mr. Kushner held a secret meeting with the chief executive of a Russian bank, Vnesheconombank, or VEB, in December, before the Trump administration took office. The purpose of the meeting remains unclear. Was it related to some diplomatic issue, as the White House has suggested? Or was it about Trump or Kushner family enterprises?

It is possible the meeting was entirely legal (although actually doing business with the bank would not have been). Because of the nature of Russian banks, either scenario raises troubling questions.

In the case of the major Russian state banks, their lending decisions are often politically directed, and when capital is tight — such as after the 2008 recession or the 2014 imposition of sanctions by the United States and the European Union on banks for supporting Moscow’s military adventurism in Crimea and eastern Ukraine — the Russian government has provided cash infusions from the state treasury.

The bank executive Mr. Kushner met with last December, Sergey Gorkov, is a graduate of the Russian Foreign Intelligence Service academy. His bank, VEB, is regularly used by the Kremlin to finance politically important projects, including some of the infrastructure for the Sochi Olympics in 2014, which cost the Russian government a total of about $50 billion.

VEB also bailed out Ukrainian banks after the 2008 global financial crisis and purchased two failing steel plants in Ukraine — aid reportedly designed to keep President Yanukovych, a Putin ally, under the Kremlin’s control.

In Chechnya, the bank provided funds for an industrial park to Ramzan Kadyrov, the republic’s ruthless leader and a staunch Putin loyalist. The bank also purchased shares in a Ukrainian steel maker from a Russian-Canadian partner of Mr. Trump in 2010, who built a Trump hotel in Toronto.

VEB employed and financed the defense of a Russian intelligence operative, Evgeny Buryakov, who was deported in April after pleading guilty and being sentenced in 2016 to 30 months in prison for his role in a spy ring.

That ring also attempted in 2013 to recruit Carter Page, a foreign policy adviser to the Trump campaign who has sought to do business with Gazprom. Another Trump campaign adviser, Michael Caputo, did work for Gazprom Media in the early 2000s.

The United States government is aware of the special role Russian banks play in advancing Moscow’s espionage efforts and foreign policy. That is almost certainly one reason the F.B.I. has been looking into computer communications between Alfa Bank, a private bank with close Kremlin ties, and the Trump Organization, as part of its broader investigation into Russian meddling in the 2016 election.

Russian banks conduct legitimate business with law-abiding companies around the world, including American banks. But their close ties to the Russian government make Mr. Kushner’s meeting with Mr. Gorkov worthy of deeper scrutiny.

Mr. Gorkov is part of the Putin power vertical. When Mr. Kushner spoke to him, he was also talking to the Kremlin, and we should know what they discussed.


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