Hello! This week our main story is about the real meaning behind Putin’s comments on a blockbuster investigation suggesting an FSB hit squad poisoned Navalny. We also look at why the demand for Russia’s COVID-19 vaccine has been so weak, and tell the story of Oleg Tinkov, a flamboyant banker who has had a dramatic change of fortune this year.
Please note that there will be no newsletter next week because of the festive period, but we will return for one more weekly update this year. Season’s greetings!
Putin weighs in on evidence the FSB poisoned Navalny
President Vladimir Putin commented Thursday on this week’s big story – an investigation that produced evidence the Federal Security Service (FSB) organized the poisoning of opposition leader Alexei Navalny earlier this year. Putin did not really try to make excuses, even admitting some of the facts. But he denied the Russian authorities tried to poison Navalny.
- After a flurry of damning articles into Putin, his family and inner circle this month, the Monday report by investigative outlet Bellingcat on Navalny’s poisoning was still explosive. In short, Bellingcat identified 11 staff at a secret branch of the FSB who were likely involved with the August attempt to kill Navalny with the poison Novichok.
- Eight of the 11 men have been following Navalny since 2017, including trips to 37 different Russian cities. This includes the August trip to Siberia that ended with Navalny in a critical condition in hospital. The other 3 men, according to Bellingcat, oversaw the work from Moscow. Mobile data suggests they were all in close contact at crucial moments during the poisoning. Half of the group has a background in chemistry or medicine, and two of them are former employees of the secret laboratory that developed Novichok in the Soviet era.
- Much of Bellingcat’s research is based on information acquired on the black market: details of flights, telephone conversations and GPS data that reveals the locations of FSB staff as they tailed Navalny. In an explanation of their methodology, Bellingcat said this kind of information can be purchased in Russia “for a few hundred euros”. This is true: in Russia there is a big, easily accessible personal data market. For instance, you can get the geolocation of a telephone at a particular point in time for $130, while the details of an individual’s flights over the course of a year would set you back $30. All the data for their investigation likely cost Bellingcat no more than a million rubles ($13,000), according to The Bell’s calculations.
- Initially, the Kremlin was unsure how to react. Putin’s press secretary, Dmitry Peskov, unexpectedly cancelled his daily press briefings, citing preparations for Putin’s annual televised press conference Friday. But an unofficial response began circulating on Tuesday: propagandists on social media began suggested the FSB was merely observing Navalny and the Bellingcat report was a CIA operation.
- At Putin’s big press conference, the Kremlin realized a question about the FSB and Navalny could not be avoided, so they took the initiative and Putin was asked about the Bellingcat investigation by a journalist from the slavishly pro-Kremlin tabloid LifeNews. The journalist in question is known for his bizarre behavior at a 2015 summit in Minsk when he literally barked in the faces of several Ukrainian journalists.
- In response to the question, Putin repeated talking points that had already aired on social media: Bellingcat’s research ‘laundered’ the reports of U.S. spies who were monitoring their FSB counterparts. As the U.S. secret services support Navalny, their Russian equivalents need to keep an eye on the opposition leader, Putin said, indirectly confirming details uncovered by Bellingcat. “Of course, our secret services need to watch him. But that’s a long way from saying they need to poison him. Who benefits from that? If they wanted to do it, they would have finished the job,” Putin said.
- In accordance with a longstanding tradition, Putin did not mention Navalny’s name. Instead, he used several elaborate euphemisms, including “the patient in that Berlin hospital” (Navalny underwent treatment in Berlin after the poisoning).
Why the world should care
Putin clearly sees no need to emphatically refute allegations of Russian state involvement in Navalny’s poisoning. Many observers, including Navalny himself, took Putin’s words as an admission of guilt. Putin made similar comments about the 2018 poisoning of former spy Sergei Skripal in the United Kingdom. Once again, it shows the Kremlin lives by its own logic: Russia is at war with the West and that justifies actions otherwise regarded as crimes.
Russia’s COVID-19 vaccine is a hard sell
Russia’s Sputnik V vaccine against COVID-19 has been available for two weeks and it’s quite clear there is a lack of willing takers. The 70 vaccination points in the capital have been so quiet that jabs are now available to anyone, not just the medics and teachers who are supposed to be first in line. Only 16,000 doses have been issued in Moscow, a city of 12 million people.
- COVID-19 vaccinations began in Moscow on December 5. Initially, the vaccines were intended to go only to doctors and teachers. However, it’s clear the rules aren’t working: dozens of journalists signed up for injections and nobody was interested in who they were, or where they worked. Here’s one example, and here’s another.
- Everyone who got vaccinated reported a lack of queues at the vaccination centers, and most said that they were the only patients having jabs. The official figures confirmed that the vaccination program is moving slowly — on Thursday, Moscow Mayor Sergei Sobyanin announced that, in 11 days, 16,000 people had been vaccinated. That’s 1,450 people a day, or roughly half the planned capacity. At this rate, it will take 22 years to vaccinate Moscow’s entire population.
- This is not unexpected. The average Russian is suspicious of the authorities and many regard Russian medicine as substandard. A survey at the start of November suggested 59 percent of Russians were not prepared to have a COVID-19 vaccine, and, in the following two months, that figure has risen 5 percentage points.
- Putin this week missed an obvious chance to promote the vaccine. During his big press conference he said he had not had the jab because he is over 65 and not yet formally eligible. Russians are unlikely to buy that. Everyone knows that, if the Kremlin believed the vaccine was safe, Putin would already have had his injection.
Why the world should care
Creating and distributing a vaccine is not enough to defeat the coronavirus. Now, governments all over the world need to persuade people to actually get the vaccine. It looks like this might be particularly difficult in Russia.
Arrest, Leukemia and falling out with Yandex: Tinkov’s roller coaster year
Oleg Tinkov, the founder of Tinkoff Bank, is one of the few Russian billionaires whose wealth is not built on natural resources. He’s also one of the country’s most charismatic businessmen. In 2020, Tinkov’s story became a soap opera: illness, prosecution by the U.S. tax authorities and a failed ‘deal of the year’ with internet giant Yandex. The Bell this week investigated how Tinkov fell afoul of the U.S. authorities, tried to sell, and rethought his approach to doing business.
- Tinkov’s problems began in March when he was arrested in London at the request of the U.S. authorities. After his passports were seized, he was bailed on a bond of £20 million ($27 million). Shortly after, the Californian Ministry of Justice alleged Tinkov concealed $1 billion in income when renouncing his U.S. citizenship in 2013. Three days later, the banker revealed he was battling leukaemia. The U.S. launched extradition proceedings, but the process has stalled for nine months due to Tinkov’s health.
- Acquaintances of the businessman explained that his attempt to sell Tinkoff Bank was primarily motivated by the tax case, which left Tinkov under house arrest in London. This contradicts what the banker said at the time, which was that he had “all the cash” he needed to repent the “errors of his youth”.
- What were these ‘errors’? Tinkov renounced his U.S. citizenship in 2013 and reported that his annual income was $206,000. In fact, at that time, Tinkov was already a dollar billionaire: three days before he gave up his passport, TCS Group, the parent company of Tinkoff Bank, floated on the London Stock Exchange and Tinkov’s stake was valued at no less than $1 billion, according to the U.S. Ministry of Justice.
- It’s likely Tinkov submitted the documents to renounce his citizenship before the IPO, but red tape meant they were registered afterwards. Why take such a risk? Clearly, to reduce his tax bill. But how big was the risk? Until last year, the U.S. tax authorities checked only a small percentage of ‘refuseniks’, something which was well-known in legal circles. But Tinkov apparently came onto the radar of the tax authorities in 2017. This was about the time when the ‘Paradise Papers’ were released and showed Tinkov turned as one of the clients of the Bermuda company involved in a complex tax avoidance scheme.
- Selling Tinkoff Bank to Yandex would have more than covered any expenses from his U.S. case — the deal was expected to raise about $5.5 billion, of which Tinkov would get more than $2 billion in cash and share options. However, the two sides could not agree. Tinkov wanted more money or more influence — and Yandex refused. Tinkov himself told Forbes he was willing to relinquish control for no less than 25 percent of the market price, not the proposed 7 percent. “I’m seriously ill, tired of haggling and I decided to pull out of the deal,” the businessman said subsequently.
- Instead of selling the whole bank, Tinkov instead sold part of his stake, successfully raising over $300 million. The bank’s management is currently preparing for expansion and is looking to move into Europe. The first steps are already underway — in 2020, the bank’s parent company, TCS Group, became the biggest investor in Vivid Money, a financial start-up launched in Germany by former Tinkoff staff.
- Oleg Tinkov has set up a fund to support leukaemia treatment in Russia, and plans to spend $200 million on this endeavor. He also wants to lobby new laws on tissue donation, and create a single database of potential bone marrow donors. Tinkov has taken swipes at Russia’s other billionaires, recently posting: “Hey, oligarchs! You’ve bought up half of London, but back home the only people investing in parks or foundations are entrepreneurs who didn’t profit from post-Soviet privatisation… Shameful!
Why the world should care
Tinkov is one of Russia’s most colorful self-made businessmen, whose bank is extremely popular among the younger generation. It will be interesting to see how his life-changing experiences in 2020 alter his views on both politics and business.