Putin ally seeking top economic post is accused of massive corruption
Russia's top anti-corruption blogger has singled out Kremlin official Igor Shuvalov as an example of official corruption that has jumped sharply in the past four years.
Russia's top anti-corruption blogger, Alexei Navalny, has taken aim at one of President-elect Vladimir Putin's top lieutenants, accusing longtime top Kremlin official Igor Shuvalov of amassing tens of millions of dollars through illicit transactions with Russian oligarchs.
Mr. Navalny's allegations, supported by scans of many key documents, appear to show offshore trusts owned by Mr. Shuvalov's family making tens of millions of dollars in profits through investments that would be banned by conflict-of-interest laws in almost any country other than Russia.
The Russian oligarchs who have siphoned money into Shuvalov family trusts include Roman Abramovich, owner of Britain's Chelsea football club, Navalny says. "These nice people [like Abramovich] earn their living selling our natural resources, but prefer to live abroad… To give officials bribes is a crime in the part of the world where they like to spend their time," though Russian law is murky, he says.
Although even Navalny seems unclear whether Shuvalov has broken any Russian laws, experts say the documents illustrate how Russian officials, who are not subject to the tough media scrutiny and strict conflict-of-interest regulations common in Western countries, are able to amass personal wealth while in civil service.
In a statement to the media, Shuvalov said he has done nothing wrong. "As a lawyer, I have without fail followed the rules and principles on conflicts of interests. For a lawyer, this is sacred," he said.
Russia, which is No. 143 on the Berlin-based Transparency International's 2011 Corruption Perceptions Index, has registered a sharp jump in official corruption since Dmitry Medvedev became president in 2008.
"Much has been known about Shuvalov for several years, about his 'business activity', his way of life and his property," says Andrei Piontkovsky, a trenchant Kremlin critic and expert with the official Institute of Systems Analysis in Moscow. "But he is just one example of what's going on all around us. He's only different because he doesn't conceal what he's doing – committing what would be called crimes in much of the world – even though he is deputy prime minister of Russia."
Shuvalov, a lawyer who worked with many of Russia's richest men before going into state service in 1997, makes no secret of his wealth, which he says was acquired in the private business sector. His defenders say he's being targeted by political enemies because he's in the running for a top economic posting in Mr. Putin's next government, after serving as first deputy prime minister in Mr. Medvedev's government for the past 4 years.
His supporters argue that Shuvalov's only sin has been greater openness about his personal finances than most Russian officials. His income statements show him earning $13 million last year, about 10 times more than the average Russian cabinet minister. According to his property disclosures, he and his wife own extensive real estate in Russia, Britain, and Austria, plus about seven luxury cars.
But documents published by Navalny, and also by leading Western financial newspapers in recent days, suggest that his family has made huge fortunes during his years of public service.
The Financial Times has detailed a deal in which a Shuvalov family trust, acting through a vehicle provided by Russian billionaire Suleiman Kerimov, invested $18 million in the Russian natural gas giant Gazprom in 2004. At the time, Shuvalov was a top economic aide to then-president Putin and the Russian government was planning to liberalize Gazprom's share trading procedures, which led to a huge jump in share prices. By 2008, the holding was worth at least $118 million, according to the FT.
Other extraordinarily lucrative investments, carried out through the auspices of Russian oligarchs such as Abramovich and Alisher Usmanov, have netted the Shuvalov family tens of millions of dollars in profits, according to Navalny, and Western sources, including a recent investigation by the Wall Street Journal.
"The issue on the table now is whether Shuvalov will be in the new cabinet, and this will be decided after Putin' s inauguration in early May," says Stanislav Belkovsky, director of the independent Institute of National Strategy in Moscow. He says powerful rivals are leaking documents and information about Shuvalov to Navalny and Western media in an effort to discredit him.
"None of this negates the fact that these documents that have been made public do look very compromising," adds Mr. Belkovsky. "But in Russia, where just about everybody is touched by corruption, such facts aren't going to make a big impact."
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