Talented businessman Gennady Timchenko

In answering writer Zakhar Prilepin's question on how oil trader Gennady Timchenko became a billionaire, Vladimir Putin retorted, “Whatever has to do with his business interests is his own business. I have never got involved in it and don’t plan to. At the same time, I hope he will ever stick his nose into my business.”

Putin confirmed that he and Timchenko had known each other “since his days working in St Petersburg”, and he didn’t hold back on the details: “He worked with this friends and colleagues at Kirishinefteorgsintez. When the privatisation of state companies got underway in the early nineties, they broke off their own piece of the pie which worked in exporting oil and oil products, and turned it into a private company.”

This is the naked truth. Novaya Gazeta had a in-depth piece on Timchenko’s business, which in deed did start in Kirishi in the early 90s (see #113, 2009).

The company Kinex got control in 1995 over IPP, a Finnish subsidiary of Urals, a joint Russian-Finnish enterprise cofounded by former intelligence officers Andrei Pannikov and Vyacheslav Rovneiko. Malov, Katkov and Timchenko, in particular, were in control of Kinex. Urals became a part of Surgutneftegaz, one of Russia’s largest, and undoubtedly most secretive oil companies. IPP is a group of companies whose structure branches out over a number of offshore companies in the Netherlands, Cyprus and the British Virgin Islands. The company continues to be successful to this very day, but Timchenko severed ties with it back in 2001.

And there would seem there is yet one more argument for Putin’s not participating in his friend’s business: if Putin wanted to help, Russia’s largest oil trader would now be called IPP. In actuality, Russia’s largest oil trader is called Gunvor, and Timchenko is one of its three co-owners.

So what happened back in 2001?

Rebranding!

We don’t know the reasons why it was to Timchenko’s advantage to distance himself from IPP. They probably go back to the 90s.

Timchenko, however, did complete cut all his ties with IPP. Novaya Gazeta discovered that Gunvor’s managing director in the Netherlands, Dirk Yonker, is the general director of two companies: International Petroleum Products (IPP) Holding and International Petroleum Products (IPP) in Amsterdam. Swedish attorney Sven Anders Olsson is IPP’s administrator at its Geneva representative office; Olsson is also the administrator of Gunvor’s Geneva office. Moreover, Olsson is the same attorney who is listed as the director of Meerwind, a Swedish company that founded Gunvor’s Moscow office (see #92, 2009).

But these are all just subtleties. What’s much more interesting is that besides Timchenko and Swede Torbjörn Törnqvist, Gunvor has a third shareholder whose name is not disclosed. If one were to suppose that Putin did not help Timchenko, then Gunvor’s success must be tied to this undisclosed third shareholder. Gunvor’s success stems from exporting a significant amount of Surgutneftegaz and Rosneft’s products.

Furthermore, exports began to make up a salient volume, by international standards, of Rosneft’s operations after the oil giant gobbled up Yuganskneftegaz under well-known circumstances. So Timchenko and his colleagues, no Igor Sechin, who no longer works for Rosneft, can be considered the obvious beneficiaries of the Yukos case

Surgutneftegaz is a private company, although there is even less known about its beneficiaries, as strange as that may sound, than Gunvor. Until 2003, a large number of the latter’s shares were under cross ownership, meaning that they belonged to the company’s subsidiaries, including 37% in Leasing Productions LLC. It later on was discovered that Leasing Productions switched owners, with the proprietor now NPF Surgutneftegaz, but no one knows whether company retained the shareholding.

Stanislav Belkovsky, for instance, suggested in an interview with Die Welt that Putin is the company’s owner. But that is getting into speculation. We’ll get back to the facts, which show that Putin was lucky, since Prilepin asked only about Timchenko, and not about the Rotenberg brothers, for example. The business talents of these judoists beared fruit when Putin had already fortified his place as president of Russia.

As Novaya Gazeta wrote (#68, 2009), Boris Rotenberg in 2003 founded the inconspicuous companies Basa-Torg and Postavka, which owned stakes in Gaztaged and Sibgazimpex, suppliers for Gazprom. In 2008, Gazprom sold five construction companies to Arkady Rotenberg. Among these companies were contractors for Gazprom and equipment producers (Volgogaz, Lenspetsstroygaz, Spetsgazremstroy, Volgogradneftemash and Krasnodar-Gazstroy).

At the same time, most of the companies one way or another linked to the Rotenberg brothers traded Russian jurisdiction for offshore jurisdiction. As a result, the brothers bought and then sold their share in the Novorossiysk Sea Port for a large profit. Now, the two are taking active part in the notorious highway project planned to be built through the Khimki forest.

Incidentally, it’s too bad that Prilepin didn’t put the two questions together that he had posed to the prime minister. The second question, remember, was about the embezzlement of billions at Transneft when the company was constructing the Eastern Siberia – Pacific Ocean oil pipeline (ESPO). Blogger and lawyer Alexei Navalny was the first to spread information about the company pillaging its coffers.

Putin answered in the sense that if the money had in fact been stolen, then those guilty would have been sent to jail long ago, while what we have on our hands here is the inappropriate use of funds.

Among the contractors in this great construction project, the Rotenberg brothers’ Krasnodargazstroy and Timchenko’s StroiTransGaz played evident parts.

This says more about their business talent than Putin’s answers.

The key point is that all the big projects realised by Timchenko or the Rotenberg brothers involve catering for state or quasi-state companies or participation in the state projects.