When, on Friday (25), Western governments announced their intention to freeze assets belonging to Vladimir Putin as punishment for the invasion of Ukraine, there was nothing to indicate that they had knowledge of valuable assets that could be linked to the Russian president.
In reality, little is known about what Putin owns and where his assets may be. Despite years of speculation and rumours, the extent of his fortune remains opaque, although billions of dollars have passed through the accounts of his close friends and luxury real estate has been linked to his family members.
Officially, according to his public financial statements, Putin earns about $140,000 a year and owns a small apartment.
But that wouldn’t explain the so-called “Putin Palace,” a massive property on the Black Sea estimated to be worth more than $1 billion, with a highly complex ownership history that doesn’t include the president. Russian, but has been linked to its government in many ways.
The official information would not explain the “Putin’s Yacht”, a $100 million luxury vessel that has long been linked to him in speculative reports, either. (The yacht, called Graceful, was tracked leaving Germany for Russia just weeks before the Ukraine invasion.)
There is also the apartment $4.1 million in Monaco bought through an offshore company by a woman believed to be Putin’s lover. And there is the expensive mansion in the south of France linked to his ex-wife.
The problem for the United States and its allies is that none of these assets can be directly linked to the Russian president.
Western governments have so far focused sanctions on people suspected of acting as Putin’s representatives, in the hope that this will increase pressure on him. And most of the new penalties, like those adopted after Russia’s annexation of Crimea in 2014, continue to be aimed at oligarchs close to Putin. These include Kirill Shamalov, his former son-in-law and major shareholder in a Russian petrochemical company, construction tycoon Boris Rotenberg and investor Gennady Timchenko, considered the sixth richest person in Russia.
The sanctions will make it impossible for the targeted people from accessing assets or carrying out financial transactions in the United States, United Kingdom and the European Union, where penalties were announced. They will essentially freeze cash and assets that can be linked to the names on the list, putting cash, debt and even real estate sales beyond their reach.
But Russian elites have lived under Western sanctions for most of the past 10 years and have long hidden their assets under a complex labyrinth of corporate owners to avoid identification. Often their dealings only come to light publicly when files from offshore law firms or secret banks that work with clients interested in hiding their wealth are leaked.
Paul Massaro, a senior adviser to the US agency Helsinki Commission, which has been advising lawmakers on sanctions on Russia, said it was not always clear to US officials which assets would be affected.
“It means that the sanctions we impose on these people will not be much more than embellished press releases, since without knowing what those assets are, we have no way of freezing them,” he explained.
For him, however, even if the US has only a limited view of Putin’s fortune, it is worth imposing sanctions “to freeze what we can, freeze what we know and communicate to people that these people are not welcome in our system. “.
A European diplomat highlighted the symbolic value of the effort, describing it as a “politically important signal”.
Having his name added to the list of “Foreign Citizens of Special Designation,” Putin joins a small but notorious subgroup of heads of state that includes Venezuela’s Nicolás Maduro, North Korea’s Kim Jong-un, and Bashar Al- Assad from Syria. Russian Foreign Minister Sergei Lavrov is also subject to the sanctions.
“We are united with our allies and international partners to ensure that Russia pays a heavy economic and diplomatic price for its invasion of Ukraine,” US Treasury Secretary Janet Yellen said in a statement on Friday.
Estimates of Putin’s fortune vary widely. One of the most sensational statements came from Bill Browder, a US-born financier who in 2005 was banned from entering Russia after falling out with the country’s oligarchs. In 2017, testifying before Congress, he said he believed Putin’s fortune could exceed $200 billion, an extraordinary amount that would have made him the richest man in the world at the time.
Anders Ashlund, an adjunct professor at Georgetown University and author of the book “Russia’s Crony Capitalism”, estimated the Russian president’s fortune at about US$ 125 billion (R$ 645 billion). He argued that much of it may be hidden in a web of tax havens, under the control of Putin’s allies, friends and relatives.
On a few rare occasions, people close to Putin’s inner circle have spoken publicly about his fortune. In 2010, Sergei Kolesnikov, who said he was a business associate of a Putin ally, wrote an open letter to Russian President Dmitry Medvedev saying that Putin was building a massive mansion on the Black Sea coast that would be known as the Putin Palace. In the letter, which he sent after leaving Russia, Kolesnikov said the mansion had cost more than $1 billion (£5.16 billion), money accumulated through “corruption, bribery and theft”.
The Kremlin insists that Putin is a man of simple tastes. He often distributes images of him camping in the Siberian forests and denies that he owns any palaces.
Financial information leaks also offer interesting clues about Putin’s proximity to wealth, although he himself does not appear in the data. The Panama Papers, a large set of files from an offshore law firm exposed in 2016, revealed the secret wealth of many people close to Putin, including cellist and longtime friend of Russian President Sergei Roldugin, who, according to documents presented to a Swiss bank, received more than $8 million a year (he had previously told the New York Times: “I don’t have millions”).
Last year a new leak of files from firms specializing in offshore tax havens, known as the Pandora Papers, showed that a woman believed to be Putin’s lover had bought the apartment in Monaco. It was one of several assets she amassed that were collectively worth an estimated US$100 million.
But according to researcher Nate Sibley of the Hudson Institute’s Kleptocracy Initiative, Putin ultimately doesn’t need to have a huge fortune, because he is an autocrat “who controls everything.”
“When people say he has this or that much, what does that mean?” he asked. “Do you mean he’s going to sell his possessions, retire and live in St. Tropez?
