Putin faces sanctions, but his assets remain a mystery

When Western governments announced Friday that they planned to freeze assets belonging to President Vladimir V. Putin of Russia as punishment for invading Ukraine, there was no indication that they knew of any significant assets that could be linked to him.

In fact, very little is known about what Mr Putin owns and where it could be. Despite years of speculation and rumour, the extent of his wealth remains insanely opaque, even as billions of dollars have been funneled through the accounts of his close friends and luxury properties tied to family members.

Officially, Mr. Putin earns about $140,000 a year and owns a small apartment, according to his public financial disclosures.

But that wouldn’t explain “Putin’s Palace,” a huge Black Sea estate estimated to have cost more than $1 billion, with a Byzantine ownership history that doesn’t include the Russian president, but is connected to his government in various ways. . Nor would the revelations take into account “Putin’s Yacht,” a $100 million luxury vessel long linked to him in speculative news reports. (The yacht, Graceful, was tracked as it left Germany for Russia several weeks before the invasion of Ukraine.)

There is also the $4.1 million apartment in Monaco, bought through an offshore company by a woman who is allegedly Putin’s lover. And then there’s the expensive villa 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.

Until now, western governments have targeted their sanctions on people suspected of serving as Mr Putin’s proxies, in the hope that this will increase the pressure on him. And most of the new sentences, such as those following Russia’s 2014 annexation of Crimea, still target oligarchs close to Putin. These include Kirill Shamalov, his former son-in-law and a major shareholder in a Russian petrochemical company; Boris Rotenberg, a construction magnate; and Gennady Timchenko, an investor who is said to be Russia’s seventh richest person.

The sanctions would make it impossible for those targeted to access assets or conduct financial transactions in the United States, Britain and the European Union, where the sanctions were announced last week. They would essentially freeze money and property that can be traced back to those on the list, putting cash and securities, or even real estate sales, out of reach.

But the Russian elite, who have lived under Western sanctions for most of the past decade, have long preferred complex labyrinthine labyrinths of corporate ownership to avoid scrutiny. Often their messing around and acting publicly only comes to the surface with the leaking of files from offshore law firms or secret banks targeting those who want to hide their wealth.

Paul Massaro, a senior adviser to the US Helsinki Committee who has advised members of Congress on sanctions against Russia, said it was not always clear to US officials which assets would be affected.

“It means that the sanctions we hit on these people will be largely glorified press releases because without knowing what these assets are, we can’t freeze them,” he said.

But even if the United States has only a limited view of Mr Putin’s wealth, sanctions are worth “just to freeze what we can, freeze what we know, and let people know that these people are not welcome.” in our system,” said Mr. Massaro.

A European diplomat emphasized the symbolic value of the effort, describing it as “a politically important signal”.

By being added to the US Treasury Department’s list of “Specially Designated Nationals,” Mr. Putin joins a small but notorious subgroup of heads of state, including Venezuela’s Nicolás Maduro, North Korea’s Kim Jong-un, and Bashar. al-Assad of Syria. Sergey V. Lavrov, the Russian foreign minister, was also subject to the sanctions.

“We are united with our international allies and partners to ensure that Russia pays a heavy economic and diplomatic price for its continued invasion of Ukraine,” Treasury Secretary Janet L. Yellen said in a statement on Friday.

Estimates of what Mr Putin might be secretly worth vary widely. One of the most startling claims came from Bill Browder, an American-born financier who was banned from Russia in 2005 after clashing with oligarchs there. He testified before Congress in 2017 that he believed Mr Putin’s wealth could total $200 billion, an extraordinary amount that would have made him the richest man in the world at the time.

Anders Aslund, an adjunct professor at Georgetown University and author of the 2019 book “Russia’s Crony Capitalism,” estimated the Russian president’s wealth at about $125 billion. He argued that much of it could be hidden in a web of offshore paradises owned by Mr Putin’s allies, friends and relatives.

On rare occasions, people close to Putin have spoken publicly about his wealth. In 2010, Sergei Kolesnikov, who said he was a business partner of an ally of Putin, wrote an open letter to the then President of Russia, Dmitry Medvedev, alleging that Mr Putin was building a huge estate on the coast of the Black Sea that would be known as Putin’s Palace. It had cost more than $1 billion, collected through “corruption, bribery and theft,” Kolesnikov wrote in his letter, which he sent after leaving Russia.

The massive project includes a movie theater, hookah lounge and pole dance stage, according to a report and documentary released last year by imprisoned opposition leader Aleksei A. Navalny and his associates. Several oligarchs close to Putin have been involved at various times, including Mr Shamalov’s father. Last year, billionaire Arkady Rotenberg, a childhood friend of the Russian president, stepped forward to claim he owned the property and was developing it into a hotel and apartments.

The Kremlin maintains that Mr Putin is a man of simple taste, and regularly circulates images of him clearing it in Siberian forests, denying ownership of palaces.

“Putin has no need for luxury,” state television host Dmitri Kiselyov said on his show early last year, after Mr. Navalny’s video investigation of the estate.

Leaks of financial information have also provided tantalizing clues as to Mr Putin’s closeness to wealth, even if he doesn’t appear in the data himself. The Panama Papers, a trove of files from an offshore law firm revealed in 2016, revealed the secret wealth of many close to him, including Sergei Roldugin, a cellist and longtime friend who raked in more than $8 million a year. according to documents filed with a Swiss bank. (He had previously told The New York Times, “I don’t have millions.”)

Last year, a new leak of files from companies specializing in offshore tax shelters called the Pandora Papers revealed that the woman alleged to be Putin’s lover had bought the apartment in Monaco. It was one of a number of assets she had amassed with an estimated value of $100 million.

But ultimately, said Nate Sibley, a researcher with the Hudson Institute’s Kleptocracy Initiative, Mr. Putin doesn’t have to own a huge fortune because he’s an autocrat who “controls everything.”

“When people say he’s worth so-and-so, what does that mean?” he asked. “Are they really saying he’s going to make money and retire to St. Tropez?”

Anton Troianovski contributed to reporting.