Anonymous Generosity: the Foundations Sponsoring Putin’s Re-Election

Russian President Vladimir Putin may be run­ning for reelec­tion as an inde­pen­dent can­di­date, at least offi­cial­ly — but his elec­toral cam­paign is whol­ly fund­ed by the rul­ing United Russia par­ty and 22 affil­i­at­ed foun­da­tions. They have con­tributed the entire 400 mil­lion rubles (US$ 7 mil­lion) that any can­di­date can legal­ly spend on the election.

This is the first time Putin’s elec­tion has been fund­ed in this way. When he last ran for reelec­tion in 2012, a sig­nif­i­cant por­tion of the funds were pro­vid­ed by busi­ness­es and pri­vate individuals.

The actu­al source of the foun­da­tions’ fund­ing is not clear — so the Organized Crime and Corruption Reporting Project (OCCRP) decid­ed to try to find out who was behind them.

Reporters found a num­ber of insid­ers, includ­ing Gennady Timchenko, one of the country’s wealth­i­est busi­ness­men; rel­a­tives of Andrey Vorobyev, gov­er­nor of the Moscow region; and Irina Shoigu, the wife of the min­is­ter of defense. Furthermore, some of the foun­da­tions have, in the recent past, received sup­port from the state and from state-con­trolled companies.

The approach is a nov­el way to finance a pres­i­den­tial race.

It’s a headache, since the scheme isn’t trans­par­ent. Before we were able to at least see and legal­ly iden­ti­fy those indi­vid­u­als who were offi­cial­ly and direct­ly con­tribut­ing funds to Putin’s elec­toral cam­paign,” said Stanislav Andreychuk, coor­di­na­tor of Golos, a move­ment that pro­tects vot­ers’ rights. “Now, thanks to these foun­da­tions, we don’t even know who stands behind these … donations.”

Indeed, the foun­da­tions have not revealed who spon­sors them, and they don’t like to talk about them­selves. Reporters were not able to find a sin­gle web­site with any finan­cial account­ing. And attempts to find out more by tele­phone twice end­ed with the same demand — to end the conversation.

There’s no web­site. All the account­ing can be found at the min­istry of jus­tice and tax inspec­torate. We’re not a pub­lic com­pa­ny,” snapped one rep­re­sen­ta­tive of a foun­da­tion locat­ed at United Russia’s Moscow address. “Let’s end this dis­cus­sion. Anyway, your calls are get­ting a lit­tle exhausting.”

Independent” Foundations

The cen­tral foun­da­tion behind Putin’s reelec­tion cam­paign is the National Foundation for the Support of Regional Cooperation and Development (NFPR in Russian). It is the founder of 20 region­al foun­da­tions, all using sim­i­lar names, which con­tributed to the pre-elec­toral race.

Many of these are reg­is­tered at the address­es of region­al United Russia par­ty offices, and until 2015 all of them — includ­ing the NFPR — used the words “United Russia Party Support Foundation” in their names.

Oleg Polozov is the NFPR’s pres­i­dent. Portraits of President Putin and Prime Minister Dmitry Medvedev hang in his Moscow office at 3 Banniy Alley — which he shares with United Russia’s Central Executive Committee.

Nevertheless, Polozov assured OCCRP that the foun­da­tions are inde­pen­dent of the polit­i­cal par­ty, and that though they were found­ed in the ear­ly 2000s to pro­vide it with finan­cial sup­port, it exer­cis­es no direct con­trol over them.

After 2014, a legal change meant that the foun­da­tions were no longer able to col­lect mon­ey for the par­ty direct­ly. But they could sup­port its social projects — plant­i­ng trees, hold­ing sport­ing events and so on, said Polozov. He isn’t him­self a mem­ber of United Russia, but said that he “sym­pa­thizes with its projects.”

So how did these foun­da­tions become the sole spon­sors of Putin’s pres­i­den­tial campaign?

There was no order from on high about it. The ini­tia­tive came from the foun­da­tions them­selves. As the say­ing goes, the ear­ly bird gets the worm,” said Polozov. “We got togeth­er, dis­cussed every­thing, and in a few days got all the mon­ey togeth­er for a spe­cial pre-elec­tion account with Sberbank.”

A per­son who worked for the United Russia par­ty con­firmed to OCCRP that there had been no offi­cial order for the foun­da­tions to play such a role. Nevertheless, the source said, their ini­tia­tive was dis­cussed infor­mal­ly at the high­est polit­i­cal lev­els and there appear to have been no objections.

None of the foun­da­tions are pub­lic and trans­par­ent about their finances. Though they are legal­ly required to pub­lish their reports on an annu­al basis, they have yet to do so.

Is that nec­es­sary?” asked Polozov in response to ques­tions about the foun­da­tions’ transparency.

In many tra­di­tions it’s not accept­able to shout from every cor­ner that you’re doing a good deed. Furthermore, there are dif­fer­ent orga­ni­za­tion­al cul­tures. In one of them, one needs … pub­lic­i­ty to attract spon­sors. In the oth­er, the cir­cle of spon­sors has already formed, and it’s no longer nec­es­sary to adver­tise one­self. If the goals and tasks of the foun­da­tion are being real­ized, then why does it need a web­site?” said Polozov.

The Importance of Keeping in Touch

A mul­ti-sided trans­formable board, which adver­tis­es the cam­paign of Vladimir Putin ahead of the upcom­ing pres­i­den­tial elec­tion, on dis­play in a street in Moscow, January 2018. Photo ©: REUTERS/Sergei Karpukhin

The NFPR and its asso­ci­at­ed foun­da­tions were found­ed in the ear­ly 2000s, around the same time that the United Russia par­ty itself was formed. When reporters inves­ti­gat­ed their reg­is­tra­tion doc­u­ments, they found that some of them, includ­ing the NFPR, shared their Moscow address and tele­phone num­ber with busi­ness­es con­nect­ed to promi­nent offi­cials, their rel­a­tives, and peo­ple known to the president.

This use of the shared tele­phone num­ber, which appeared in the foun­da­tions’ reg­is­tra­tion doc­u­ments as recent­ly as January 2018, is unusu­al, experts point­ed out, except in cas­es when a gen­er­al num­ber for a build­ing, accoun­tants’, or lawyers’ office is used. That is not the case here, how­ev­er.

“This could be one of sev­er­al signs that these orga­ni­za­tions are con­nect­ed with one oth­er,” con­firms Alexander Zakharov, a for­mer Russian tax min­istry assis­tant and part­ner of Paragon Advice Group.

Fishy Relations

One of the con­nect­ed firms is the Russian Fish Company, once a major fish sup­pli­er in the Russian mar­ket. The com­pa­ny was once owned by Andrey Vorobyev, the cur­rent gov­er­nor of the Moscow Region and an old acquain­tance of one of the founders of United Russia — Minister of Defense Sergey Shoigu. Vorobyev’s father had worked with Shoigu for many years.

In ear­ly 2000, Andrey Vorobyev left the busi­ness to begin a career in pol­i­tics, first becom­ing an advi­sor to Shoigu dur­ing the latter’s brief tenure as deputy prime min­is­ter. Vorobyev then head­ed the United Russia Support Foundation (the NFPR’s name before 2015).

After Vorobyev’s tran­si­tion to pol­i­tics, he trans­ferred the seafood com­pa­ny to his broth­er Maxim, accord­ing to Forbes. As the pub­li­ca­tion report­ed, the company’s for­tunes grew along­side Vorobyev’s polit­i­cal suc­cess­es in the 2000s. This was when the Russian Fish Company, which lat­er became a sub­sidiary of the Russian Sea Group, became one of the lead­ing sup­pli­ers of salmon, mack­er­el, trout, her­ring, and smelt to the Russian market.

In 2011, Maxim Vorobyev found a new, pow­er­ful part­ner — Gennady Timchenko, a friend of the pres­i­dent, became a co-own­er in the seafood business.

Neither Andrey Vorobyev nor Russian Aquaculture (for­mer­ly Russian Sea Group) respond­ed to ques­tions about con­nec­tions between the fish­ing com­pa­ny and the foun­da­tions. The Russian Fish Company claimed to have no ties to polit­i­cal activ­i­ties, nor could it pro­vide infor­ma­tion on the shared tele­phone number.

The Ministry of Emergency Investments

The seafood busi­ness is not the only con­nec­tion between the foun­da­tions, Timchenko, and Vorobyev. Some of the foun­da­tions own busi­ness­es them­selves — and these were con­nect­ed to the same men.

According to the Russian com­pa­ny reg­is­ter, the NFPR once owned a sig­nif­i­cant share (60 per­cent) of a firm called Arleya Palatium, also orig­i­nal­ly reg­is­tered at United Russia’s address in Moscow. Judging by tele­phone direc­to­ries, Arleya Palatium used the same tele­phone num­ber as the par­ty foun­da­tion and the fish company.

Among Arleya Palatium’s own­ers was an off­shore firm based in Cyprus that also owned a share of Vorobyevs’ and Timchenko’s seafood company.

It’s also curi­ous that the phone num­ber indi­cat­ed by Arleya Palatium in its reg­is­tra­tion doc­u­ment was used by Kordex, a Timchenko com­pa­ny which owns a 12.5 per­cent share in SOGAZ, the insur­er of Russian state gas giant Gazprom. In 2013, the val­ue of this share was esti­mat­ed at approx­i­mate­ly six bil­lion rubles ($185 mil­lion). Following the intro­duc­tion of sanc­tions against him, Timchenko trans­ferred Kordex to his daughter.

The com­pa­ny has an illus­tri­ous pedi­gree — it was pre­vi­ous­ly owned by a com­pa­ny that helped finance the con­struc­tion of the elab­o­rate man­sion known as “Putin’s Palace” in Gelendzhik, on Russia’s Black Sea coast, which is alleged­ly owned by the Russian president.

Neither Timchenko nor Vorobyev explained these con­nec­tions, nor did they answer ques­tions as to whether these com­pa­nies sup­port­ed United Russia’s par­ty foundation.

Enter Shoigu

Arleya Palatium also con­nects the foun­da­tion to the fam­i­ly of Russian Defense Minister Shoigu.

Though the com­pa­ny was a com­plete unknown, and had been found­ed just months before, it was named by the Ministry of Emergency Situations — which was then head­ed by Shoigu — as an investor in the con­struc­tion of a reha­bil­i­ta­tion cen­ter for fire­fight­ers and emer­gency work­ers just 300 meters from Josef Stalin’s dacha in Moscow’s Matveyevsky for­est. Soon after the build­ing was fin­ished, Arleya Palatium moved in.

Sometime lat­er, a diag­nos­tic lab­o­ra­to­ry owned by the Russian firm Rekapmed appeared in the same office. This firm is major­i­ty owned by Irina Shoigu, wife of Russia’s Minister of Defense, and by Yekaterina Zhukova, wife of the first deputy chair­man of Russia’s State Duma.

Contacted by reporters, Rekapmed said that the firm was found­ed to research east­ern med­i­cine, and that it does not col­lab­o­rate with the oth­er orga­ni­za­tions reg­is­tered at the same loca­tion. The firm also said that Irina Shoigu had only been the firm’s “tem­po­rary founder” until February 2015, and that Yekaterina Zhukova was the founder until May 2015. Nevertheless, accord­ing to state reg­istry doc­u­ments, the two women are still the company’s co-own­ers. Sergey Shoigu did not respond to requests for comment.

Whose money?

The case of the secre­tive foun­da­tions exem­pli­fies the inter­re­lat­ed nature of pol­i­tics and busi­ness in Russia, say observers.

A for­mer employ­ee of the pres­i­den­tial admin­is­tra­tion said that some of the peo­ple con­nect­ed to the foun­da­tions — Andrey and Maxim Vorobyev, Sergey Shoigu, and Gennady Timchenko — are a fair­ly close-knit group who enjoy the trust of the pres­i­dent him­self. While there are no records avail­able to prove how much mon­ey, if any, the trio have pro­vid­ed to the Putin cam­paign, they have cer­tain­ly pro­vid­ed it with the nec­es­sary infra­struc­ture to col­lect money.

Polozov, the head of the NFPR, says that, at least since 2013, the foun­da­tion has not worked with Maxim Vorobyev and Timchenko’s busi­ness­es in any way, has nev­er received any funds from them, and does not do so today. Polozov calls “ridicu­lous” the idea that the 22 foun­da­tions were made spon­sors of Putin’s elec­tion cam­paign in order to hide the iden­ti­ty of the real donors.

If some­body want­ed to hide it away, they’d just hide any­way,” said Polozov.

The NFPR head said that the foun­da­tions serve the pur­pose of mak­ing sure dona­tions are vet­ted and improp­er dona­tions are quick­ly removed.

Polozov told reporters that many peo­ple want­ed to con­tribute to the president’s reelec­tion cam­paign, and the idea was not to sin­gle any­body out. “The foun­da­tions solved that prob­lem,” he con­clud­ed. He assured reporters that the NFPR, at the request of region­al foun­da­tions, thor­ough­ly exam­ines the “clean­li­ness” of all dona­tions, and that the Ministry of Justice knows the donors and has thor­ough­ly checked them.

Once again, Polozov would not dis­close who exact­ly donates to the foundations.

It’s not even clear whether they cur­rent­ly receive mon­ey from state-owned com­pa­nies and state insti­tu­tions — but at least some of them have in the past.

In 2015, Omskenergo, a state-con­trolled ener­gy com­pa­ny, decid­ed to pro­vide finan­cial assis­tance to the Omsk Foundation for Regional Cooperation and Development. One year lat­er, the Yugra Territorial Energy Company, also con­trolled by the state, pro­vid­ed char­i­ta­ble sup­port to one of the local foun­da­tions (as the company’s press release says). And in 2017, the Voronezh City Council decid­ed to grant the use of a munic­i­pal build­ing to the Voronezh Foundation for Regional Cooperation and Development for five years, free of charge. Meanwhile, the Samara Foundation is host­ed by Samara’s munic­i­pal cen­ter for com­mu­nal services.

Deep pockets

The secre­cy of the foun­da­tions spon­sor­ing Vladimir Putin’s elec­toral cam­paign is not the only issue which rais­es ques­tions. The finan­cial account­ing of these foun­da­tions shows that not all of them had always been wealthy enough to donate sub­stan­tial sums to the pres­i­den­tial race. In fact, for the entire­ty of 2016, sev­er­al earned less mon­ey than they’re cur­rent­ly donat­ing to the campaign.

According to their tax fil­ings, the Kaluga Foundation for Regional Cooperation and Development col­lect­ed a lit­tle over half a mil­lion rubles ($7,600) in 2016, but donat­ed a sin­gle sum of 15 mil­lion rubles ($227,000) to the cam­paign. The Volgograd Foundation, which col­lect­ed five mil­lion rubles ($76,000), has mus­tered a one-off pay­ment of 10 mil­lion ($152,000). The Pskov Cooperation Foundation, which scraped togeth­er 840,000 rubles ($12,700), gave three times that num­ber to the pres­i­den­tial race. Meanwhile the Kemerovo Foundation, which had col­lect­ed 20.9 mil­lion rubles ($315,000), poured 25 mil­lion ($380,000) into the cam­paign, accord­ing to the Central Electoral Commission. And all the while, all these foun­da­tions still spend mon­ey through­out the year on events and the main­te­nance of their organizations.

NFPR pres­i­dent Polozov explained that the larg­er sums of mon­ey being donat­ed by the foun­da­tions can be explained because their own donors made con­tri­bu­tions specif­i­cal­ly for Putin’s elec­toral cam­paign. In Polozov’s words, while the foun­da­tions did not pub­licly announce that they are col­lect­ing funds for the pres­i­den­tial race, their per­ma­nent spon­sors had been informed.

The Generosity of Future Generations

The list of donors to the pres­i­den­tial cam­paign includes two wealthy foun­da­tions which both gave a min­i­mum of two mil­lion rubles ($30,300) each. These are the People’s Projects and Civic Initiatives Foundation and the Foundation for the Support of Future Generations, which are both also reg­is­tered at the United Russia address in Moscow (the lat­ter of which also uses the same tele­phone num­ber). In 2016, donors gave them near­ly one bil­lion rubles.

A mul­ti-sided trans­formable board, which adver­tis­es the cam­paign of Vladimir Putin ahead of the upcom­ing pres­i­den­tial elec­tion, on dis­play in a street in Moscow, January 2018. Photo ©: REUTERS/Sergei Karpukhin

Nobody could explain exact­ly which “people’s projects” or “future gen­er­a­tions” these foun­da­tions sup­port, nor how they came by such sums of mon­ey. But it is known that they have sup­port­ed the elec­toral cam­paigns of United Russia’s par­lia­men­tar­i­ans and region­al gov­er­nors. Neither foun­da­tion has a web­site. And peo­ple list­ed as their direc­tors or founders on the state reg­istry did not want to answer ques­tions, or assured reporters that they hadn’t had any­thing to do with the foun­da­tions for a long time.

The President of the People’s Projects and Civic Initiatives Foundation, Olga Tomenko, asked reporters to call back, and then stopped answer­ing her phone alto­geth­er. Yury Puzynya, one of the co-founders of both foun­da­tions, assert­ed that he hadn’t had any­thing to do with them for over two years.

I haven’t worked for United Russia since 2015, I passed every­thing onto… Let’s stop this con­ver­sa­tion,” said anoth­er of the co-founders, Olga Shabalina.

Unusually, a rep­re­sen­ta­tive of United Russia told reporters that the par­ty knows noth­ing about its two wealthy benefactors.

Why Now?

The rea­son behind the change from indi­vid­ual sup­port to Putin, as has been done in the past, to the new wall of opaque foun­da­tions, is unclear.

Some experts believe one pos­si­ble rea­son could be to “not spoil the whole pic­ture of dona­tions to Putin’s elec­tion with com­pa­nies and indi­vid­u­als,” since in pre­vi­ous years some dona­tions to his cam­paign had to be returned for var­i­ous rea­sons. The process of screen­ing unde­sir­able donors and cast­ing them aside had tak­en a lot of time and energy.

It’s also pos­si­ble that this method of financ­ing was cho­sen so that spon­sors would not be put off by for­eign sanctions.

Some spon­sors might be dis­turbed by the risk of sud­den­ly appear­ing in a sanc­tions list due to their sup­port­ing Putin. Others, it’s pos­si­ble, are already under sanc­tions and do not want their names and the names of their com­pa­nies pub­licly list­ed among the donors to the pres­i­den­tial elec­toral cam­paign,” sug­gests Golos coor­di­na­tor Andreychuk.

Anonymous Generosity: the Foundations Sponsoring Putin’s Re-Election

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