Palace, yacht and hidden fortune: how Putin allegedly maintains a luxurious life

Dubbed “Putin’s Palace,” the 190,000-square-foot mega-mansion was allegedly built for his personal use at the expense of billionaire oligarchs, whom he allegedly allowed to thrive in Russia’s notoriously corrupt economy as long as they shared the wealth – with him.

The property has its own amphitheater, an underground hockey rink and a private seaport, according to a documentary filmed by Russian opposition leader Alexei Navalny’s anti-corruption group. There is a no-fly zone in the sky above and a no-boat zone in the surrounding waters.

The magnificent fortress contrasts sharply with the tiny 800-square-foot apartment that Putin claims in his official 2020 financial report.

Yet despite the luxury of a hilltop sanctuary, “I would be very surprised if Putin ever sets foot there again,” Nate Sibley, a Russia corruption expert who advises members of Congress, told CNN.

Sibley said the palace symbolizes what he sees as a bygone era, when Putin, aided by the wealth of the oligarchs, lived a luxurious lifestyle that he could never afford on his government paycheck. While Putin is believed to have hidden a fortune through such means early in his career, Sibley said, he has since become less reliant on his wealthy benefactors and has instead surrounded himself with loyalists to the government and military who share his hardline nationalist views. .

The shift, some Russia experts told CNN, could make it harder for Putin to personally take the economic sanctions the US and its European allies have imposed to punish him for invading Ukraine.

Putin has placed himself, as Sibley puts it, “above the fray.”

It wasn’t always like that. Nearly two decades before Putin drew the ire of the international community with his latest unprovoked invasion of Ukraine, the Kremlin dropped Russia’s richest man from his private jet and accused him of crimes against the state.

Mikhail Khodorkovsky, an oligarch worth $15 billion at the time, sat in a cage in the middle of the courtroom during a highly publicized trial. Khodorkovsky, who has been critical of government corruption under Putin, was found guilty of tax evasion and fraud, although he claimed the charges were politically motivated. Putin pardoned him in 2013 and he has lived in exile ever since.
Biden promises to seize the Russian oligarchs' yachts.  That's where they are now

Putin’s bold move against the billionaire oil tycoon was seen as a signal to other oligarchs: You can be next.

The tactics demanded the unwavering loyalty of the oligarch class.

The ensuing influx of money, gifts and goodwill is one explanation why Putin, who claims a salary of just $140,000 a year, is suspected of being one of the richest men on the planet. He is rumored to own or have access not only to the Black Sea Palace, but also to a $100 million yacht, according to published reports. CNN was unable to verify Putin’s connection to the palace or the yacht. The Kremlin denied reports of Putin’s alleged hidden wealth.

That the property and other assets are not in his name is irrelevant, said Tom Bergis, author of a book on international money laundering called Kleptopia. Bergis compared Putin to the Godfather and said that everyone understands that when he asks an oligarch for something, it’s not really a request.

Mikhail Khodorkovsky (left) and his closest associate Platon Lebedev in the cage of the accused in the courtroom in Moscow on July 12, 2004.

“Ultimately, they owe the boss everything they have. And Putin can, with a snap of his finger, as he has shown in the past, take everything,” Bergis said. “As powerful as they may seem, they are ultimately dependent on him.”

Several of Putin’s closest associates, including childhood friends, a woman who was reportedly his former mistress, and a professional cellist who is godfather to one of his daughters, secretly amassed huge fortunes outside of Russia during his time in power. financial documents.

A complex web of shell companies, offshore banks and hidden transactions hide their wealth, with accounts hidden inside each other like Russian nesting dolls. But a series of leaks in recent years from firms that facilitate the offshore financial system, including the Panama Papers and the Pandora Papers, have stripped away some of those layers of secrecy.

Assets linked to Putin’s inner circle include an apartment in a luxury Monaco building overlooking the principality’s glitzy harbor. The fourth-floor apartment was purchased in 2003 for $4.1 million by the British Virgin Islands-registered shell corporation Brockville Development Ltd., according to documents released by Washington Post show.
According to documents received International Consortium of Investigative Journalists and informed mail as well as The keeper. The company was registered just a few weeks after Krivonogih, who was 28 at the time, gave birth to a girl.
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The independent Russian newspaper Proekt, which was banned from the country last year, reported that Putin began a relationship with the Krivonogs in the 1990s, before he became president, and that her daughter’s middle name means “daughter of Vladimir.”

Krivonogikh refused to comment on Putin to reporters, but her daughter, who had tens of thousands of followers on Instagram before she recently deleted her account, recognized interviewers that she looks like the president.

In addition to an apartment in Monaco, Krivonogikh owns a majority stake in a ski resort where Putin was seen riding the slopes, several other luxury apartments in St. Petersburg, and a yacht, according to the Post and Guardian.

The leaked documents do not clarify the source of the fortunes amassed by Putin’s inner circle. But in a number of cases, related businesses and financial institutions have won lucrative government contracts.

Russia has the most wealth hidden in offshore tax havens, both in terms of absolute volume and conservative estimates. $800 billion in 2017 — and as a percentage of national GDP, according to report for 2020 Atlantic Council.

The informant is holding an envelope.

On average, 10% of global GDP is offshore. However, in 2015, offshore wealth accounted for 60% of GDP in Russia, according to 2018 Journal of Public Economics research paper, latest estimate available.
Experts say that about a quarter of this dark money is indirectly controlled by Putin and his close-knit circle of oligarchs and represents “serious threat to national securityin USA. The Mueller report illustrates how Russian offshore accounts were used to interfere in the 2016 elections.

Earlier this month, the Justice Department announced the creation of a task force to enforce sanctions and other economic restrictions aimed at isolating Russia from world markets. The KleptoCapture task force will not only target Russian officials and oligarchs, but also “those who help or cover up their illegal activities.”

White House announces new sanctions against Russian oligarchs

Gary Kalman, director of the US office of Transparency International, an anti-corruption advocacy group, said imposing sanctions would not be easy.

“It’s extremely difficult for law enforcement to try to ‘follow the money’ because at some point you literally hit a brick wall,” Kalman said. “There is literally no paper trail.”

The United States and the UK are ideal places to store large sums of money, are among the deepest financial markets in the world, and both accept anonymous shell companies, according to the Atlantic Council.

A group of international researchers have found that shell companies in the US can be set up in less than an hour for only $200without having to legally disclose who owns or controls it. For decades, Western companies — banks and law firms — have profited by helping Russian oligarchs hide their money by creating complex corporate structures that make it almost impossible to link assets or bank accounts to individuals.
Russian President Vladimir Putin (center) and Defense Minister Sergei Shoigu (right) watch the Navy Day military parade on July 27, 2014 at the main naval base of Severomorsk, Russia.

In the eyes of some longtime Putin watchers, the enigmatic Russian leader has shifted his focus from pursuing wealth to consolidating power.

“It is difficult to understand what exactly is going on inside the Kremlin and in the mind of Vladimir Putin. But he’s more and more in close contact with a very small group of people, and they tend to be more on the military and intelligence side than the business people,” said Jill Dougherty, former head of CNN’s Moscow bureau, “because obviously If Putin cared about business, he wouldn’t be fighting this war in Ukraine.”

“Now it’s not the business of the oligarchs,” said Stanislav Markus, assistant professor of international business at the University of South Carolina. “Today in the Kremlin, guns speak loudest, not money.”

Whether or not priorities within the Kremlin have changed, Maria Pevchikh, head of investigations at the Navalny Anti-Corruption Foundation, argues that both the Black Sea palace and the Russian invasion of Ukraine demonstrate that Putin sees himself as much more than a government official.

“He sees himself as a king, a kind of king,” Pevchikh told CNN. “He has big plans. He sees himself as a historical figure, so powerful, so powerful, so important, and they put a lot of money into this narrative.”

Scott Glover contributed to this report.

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