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Russia's Putin tightens grip on elites with overseas asset ban
August 29, 2013 / 4:31 PM / 4 years ago

Russia's Putin tightens grip on elites with overseas asset ban

* New laws bar officials from holding bank accounts, assets abroad

* Critics say Kremlin increases control of elites

* Little sign officials comply, opponents seen vulnerable

By Gabriela Baczynska

MOSCOW, Aug 29 (Reuters) - Russian billionaire Roman Abramovich owns England’s Chelsea football club, a fleet of luxury cars, a collection of modern art, homes around the world and a 160-foot superyacht with room for three helicopters and its own submarine.

But he has now given up another of his prize assets, a seat in a Russian regional parliament, in time to comply with new laws that bar state officials, their spouses and children under 18 from holding bank accounts or other financial assets abroad.

“Much of his business interests are abroad and it just did not seem feasible to change that, especially under the short deadline given,” Abramovich’s Moscow spokesman John Mann said of the 46-year-old tycoon’s decision to step down as head of the legislature in the remote Chukotka region last month.

The laws, which have come into effect this month, are part of a campaign by President Vladimir Putin to force wealthy officials to keep their money in Russia.

His supporters say the measures will help fight corruption and ensure officials have the country’s interests at heart.

“Those who consider themselves Russian politicians, not foreign or foreign-dependent politicians, will undoubtedly take action to transfer all their financial assets to Russia,” said Irina Yarovaya, a pro-Putin deputy who heads the parliamentary committee entrusted with fighting graft.

But Putin’s opponents say the laws, which also require officials to file extensive declarations of all foreign real estate they hold, give the president another tool to control Russia’s elite as he tries to tighten his hold on power following protests against his rule in 2011 and 2012.

Dmitry Gudkov, a lawmaker critical of the Kremlin, says he opted to give up a stake in a Bulgarian firm and declare two flats he owns there, in order to be in line with the laws. But he said he does not expect the measures will do much to fight corruption.

“In Russia, all the power is concentrated in one pair of hands; there is just nobody to fight graft as there are no independent institutions of power,” Gudkov said.

BILLIONAIRES RESIGN

Abramovich is not the only billionaire to resign an official post since the laws were enacted. Two of Russia’s other richest men, Andrei Guriev and Dmitry Ananyev, were among those who quit the upper house of Russia’s parliament since June.

Guriev said in a statement he wanted to focus on his businesses, which include fertiliser company PhosAgro . An aide to Ananyev said the co-owner of Promsvyazbank wanted to pursue other projects, denying his resignation was connected to the restrictions on ownership of foreign assets.

The measures appear to limit the political careers of other tycoons with high-profile foreign business interests, like Brooklyn Nets basketball team owner Mikhail Prokhorov, who placed third as a challenger to Putin for the presidency last year.

Maria Lipman, a Russian political analyst at the Carnegie Moscow Center, said the measures ensure that those who remain in politics are more easily kept in line.

“Having assets abroad means a person is less vulnerable to Russian authorities,” she said. “This is a campaign to ‘nationalise’ the elites. It’s aimed at intimidating them, ensuring they are fully under control.”

Russians have become accustomed to the great wealth and power of their “oligarchs” - billionaires who cycled in and out of high office under Boris Yeltsin, after the fall of Communism.

When he first took power, Putin took several of them on, driving some out of the country and jailing the richest and most outspoken, Mikhail Khodorkovsky. Those who stayed in Russia toned down their political activities or acted as supporters of the Kremlin.

But the megayacht-owning tycoons are not the only Russians who have assets abroad. Many in the emerging middle class have kept their money overseas to protect it from a domestic banking system that collapsed in 1998, wiping out savings of depositors.

Gudkov, the parliamentarian critical of Putin, estimated that one in three lawmakers was in business and under suspicion of having assets abroad.

Vladimir Pozdnyakov, a member of the lower house’s committee responsible for checking parliamentarians’ income and wealth declarations, said in July only 39 members of the 450-seat house had acknowledged having foreign accounts or assets abroad.

Ownership of foreign property has brought down officials, including lawmaker Vladimir Pekhtin, who quit as head of the lower house’s ethics committee and resigned his seat this year to try to disprove accusations that he owned real estate worth $2 million in Florida which he had not declared.

But critics say the new measures are full of loopholes, can be easily bypassed by transferring assets to adult children or other intermediaries, and fail to tackle offshore havens.

The authorities are responsible for assessing the declarations, which could give the Kremlin the power to use them to go after officials that fall out of favour.

“They are creating this to have a political instrument of control,” said Ivan Ninenko of the Transparency International watchdog. “This system offers impunity in exchange for loyalty.”

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