• Sun
  • Aug 31, 2014
  • Updated: 10:43am
NewsWorld

US questions Putin's links to oil tycoon Gennady Timchenko

Sanctions target 'buddy' who became one of Russia's wealthiest oligarchs

PUBLISHED : Monday, 24 March, 2014, 4:48am
UPDATED : Monday, 24 March, 2014, 4:48am

When the US expanded its sanctions to include members of Vladimir Putin's inner circle, one name jumped out - Gennady Timchenko, who rose from obscurity to become one of Russia's richest men.

His Gunvor Group enjoyed a similarly meteoric rise and is now the fourth-largest oil trading firm in the world.

In explaining the sanctions, the US treasury department claimed what others have long suspected. "Timchenko's activities in the energy sector have been directly linked to Putin. Putin has investments in Gunvor and may have access to Gunvor funds," it said.

Gunvor denied the Putin link, calling the allegations "outrageous" and saying: "President Putin has not and never has had any ownership, beneficial or otherwise, in Gunvor." But the personal ties between the two have raised questions.

Like Arkady Rotenberg, another businessman on the sanctions list who has enjoyed success under Putin, Timchenko is an old judo buddy of Putin's.

Forbes magazine estimated Timchenko's wealth at US$15.3 billion, calling him "one of the most powerful people in Russia".

Putin has said he has had nothing to do with the oligarch's business activities. In 2011, Putin said that although he had known Timchenko from when Putin worked in St Petersburg city hall in the 1990s, he "had never meddled" in Timchenko's interests and did not plan to.

"Timchenko got into business ... from the very start, when privatisation was allowed. I assure you ... it was absolutely without my participation," Putin said.

But Timchenko and a committee headed by Putin had a short-lived venture in the 1990s, and a firm headed by Timchenko gained from an oil-for-food scheme set up by Putin in 1991, Britain's Financial Times said.

Timchenko set up Gunvor in 2000. It held a small share of the market until 2003, when the break-up of Yukos, the oil firm of Putin's enemy Mikhail Khodorkovsky, offered a big opportunity.

Gunvor's revenues grew from US$5 billion in 2005 to US$43 billion in 2007, a feat that many doubt could have been accomplished without good political connections.

According to Investcafe analyst Andrei Shenk, US treasury claims that Putin is a beneficiary of Gunvor are not very believable.

"It's hard to imagine that Putin would directly own any stakes. First, it would be almost impossible to prove this, and secondly, there is no need [to own shares]. It would carry a risk but no especially good commercial benefit," he said.

Nonetheless, Timchenko is among the Putin-connected businessmen to profit from lucrative Olympic construction projects.

The opposition figure Alexei Navalny's Anti-Corruption Foundation gave Timchenko a silver medal in mock awards for the "winners of the Olympics before their start," reporting that his SK Most construction company received a contract to build part of the famously expensive motorway and railway between Sochi's mountain and coastal clusters of Olympic venues.

Navalny estimated that SK Most received 180 billion of the 264.2 billion roubles (HK$56 billion) spent on the project.

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