Why shining a light on Putin’s hidden web of influence matters

In 2012, when Ireland was in the throes of the financial crisis, the State-owned Irish Bank Resolution Corporation (IBRC) was finding it hard to get its hands on an international property portfolio that once belonged to the family of the bankrupt businessman Seán Quinn.

The IBRC had legal title to the portfolio, which included property in Ukraine and Russia; however, a “conspiracy” to prevent it being seized was being organised from Moscow and elsewhere. Offshore companies kept popping up like mushrooms and claiming they owned the buildings, and the claims were given credence by Kyiv and Moscow courts.

A large amount of money that ultimately belonged to the Irish public was being spent on legal fees as the IBRC sought to assert control over valuable buildings and their rent, but it was like trying to eat soup with a folk. Then the IBRC got into bed with some Russian oligarchs and a conglomerate they owned called the Alfa Group, in a deal where Alfa’s asset-recovery subsidiary would form a joint venture with the IBRC and split the proceeds of successful recoveries according to a formula agreed between them. “Any individual or organisation will be wary about being in conflict with such an influential player in the market,” IBRC executive Richard Woodhouse told the High Court in Dublin when explaining the move. Whoever was up to no good in Russia and Ukraine would back off when saw they were up against buddies of Vladimir Putin, seemed to be the thinking.

The Alfa Group’s main shareholders were Mikhail Fridman, German Khan and Alexey Kuzmichev. Another oligarch associated with the group was Petr Aven. All of these men were sanctioned by the United States, the UK and the European Union in the wake of the Russian invasion of Ukraine last year, with the sanctions citing the Alfa Group’s “strategic significance to the government of Russia”.

Why shining a light on Putin’s hidden web of influence matters

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The Alfa deal had collapsed by then. Putin’s violent intervention in Ukraine in 2014 and annexation of Crimea caused a collapse in Ukrainian and Russian property prices, and the IBRC-Alfa deal no longer stacked up commercially.

The deal is cited here as an example of the close ties that were formed between the West and figures close to the Putin regime in the years before the invasion of Ukraine. The Cyprus Confidential project, published this week and organised by the International Consortium of Investigative Journalists, of which The Irish Times is a media partner, shines a particular light on the role played by EU member state Cyprus in the administration of the multibillion-euro fortunes of now-sanctioned Russian oligarchs. Cypriot financial services firms, including the local branch of PwC, helped at least 96 of these oligarchs manage massive global investments in, among other assets, hedge funds in Dublin, a football club in Chelsea, an alumina plant in Limerick and shareholdings and property throughout the western world.

There are good reasons to look upon these investments as outreaches of the Putin regime which, in turn, is a strategic foe of Ireland and the western democracies. Earlier this month, The Irish Times reported that Ireland is among those countries that have been warned by the US that Russia wants to interfere in upcoming elections. In September, the European Commission warned that Russia might try to use online platforms to interfere in elections across the union. Last week stars of David that were graffitied on walls in Paris were believed by local police to be part of a Russian-influenced effort to intensify the discord created by the war in Israel and Gaza. Photographs were taken of the stars as they were painted and uploaded to social media accounts associated with a Russian online propaganda operation called Doppelgänger, which usually focuses on the war in Ukraine.

[ Leaked Roman Abramovich documents raise fresh questions for Chelsea FC ]

In her 2020 book Putin’s People, journalist Catherine Belton argued that the wealth of the Russian oligarchs is at the disposal of Putin and his regime. Among the Cyprus Confidential files are documents showing offshore payments to a well-known German journalist, Hubert Seipel, from the sanctioned Russian steel magnate Alexey Mordashov. Seipel has admitted Mordashov “supported” his books on Russia, adding that he always ensured he guaranteed his independence. The publishers of a 2015 book about Putin by Seipel have said they were not aware of the financial support.

Petr Aven of the Alfa Group, who features in the Cyprus Confidential files, spoke to the 2019 Mueller inquiry in the US that concluded that the Putin regime interfered in the 2016 presidential election won by Donald Trump. What Aven said to the inquiry chimes with the argument in Belton’s book.

“Aven told the Office,” the Mueller report said, “that he is one of approximately 50 wealthy Russian businessmen who regularly meet with Putin in the Kremlin; these 50 men are often referred to as “oligarchs”. Aven told the Office that he met on a quarterly basis with Putin, including in the fourth quarter of 2016, shortly after the US presidential election. Aven said that he took these meetings seriously and understood that any suggestions or critiques that Putin made during these meetings were implicit directives, and that there would be consequences for Aven if he did not follow through.”

Oleg Deripaska, the sanctioned oligarch associated with the Aughinish Alumina plant in Limerick, also features in the Cyprus Confidential files and the Mueller report, which refers to his being “closely aligned with Vladimir Putin.”

Assets worth hundreds of billions of euro associated with Russia have been seized or frozen by the West since Putin’s war on Ukraine. Given the war and the Putin targeting of western democracies, it is vitally important that this process is implemented with vigour and taken seriously by all EU member states. The Cypriot government has said it is doing its utmost to properly impose the new rules. Journalism such as Cyprus Confidential helps monitor those responsible for the sanctions regime, be they governments or private-sector actors such as financial services firms.

[ Cyprus Confidential: Read all the articles in this series ]

This ICIJ investigation reveals how EU-member state Cyprus drove the Kremlin’s financial machine and moved money for oligarchs, tyrants and criminals even after Ukraine invasion.