Hello! This week we look at yet another round of rumors over the deteriorating health of Chechen leader Ramzan Kadyrov and assess his standing with the Kremlin following the death of Yevgeny Prigozhin. We also unpick what a record court case in London brought by a jailed Russian billionaire could reveal, and address the fate of a former Russian investment banker turned separatist leader in Nagorno-Karabakh.
The mystery of Ramzan Kadyrov’s flailing health
Russia’s top domestic political story last month was the mystery swirling around Chechen leader Ramzan Kadyrov after it emerged that the 46-year-old feudal warlord, a key figure in the Putin system, has serious health problems. In mid-September, Chechen opposition Telegram channels even reported his death. In a bid to show those reports had been greatly exaggerated, Kadyrov hit the airwaves and set about stoking some political intrigue concerning his potential successor.
- Rumours about Kadyrov’s poor health have been around for a while — sources first told Novaya Gazeta about the Chechen leader's ailing condition a few years ago. In summer 2022, according to reports, his unspecified condition grew worse. By December, the rumors had grown so persistent that Kadyrov, seeking to dispel any concerns, decided to perform 35 push-ups on live TV. But the intrigue remained. In spring 2023, Kadyrov did not attend President Vladimir Putin’s address to the Federal Assembly, an event that the Russian elite is expected to show up for. At the time, German newspaper Bild cited opposition reports that he had serious kidney problems.
- Nobody knows the truth about Kadyrov’s condition. Sources of Novaya Gazeta’s Elena Milashina (one of the most credible reporters on Chechnya) described the disease as an one that is difficult to treat and, in 30% of cases, results in death. Without naming the actual condition, they said it can lead to kidney and lung failure (which would explain Kadyrov’s evident breathing difficulties). “The disease is accompanied by attacks of excruciating pain, which keep sufferers awake. Not even strong painkillers, typically given to late-stage cancer patients, can help,” Novaya Gazeta reported.
- In mid-September, Chechen Telegram channels (and then Ukrainian media) began reporting that Kadyrov’s health had deteriorated further yet again. Some reports suggested that he was at death’s door, others said he was in a coma or had in fact already died. The well-known anonymous Russian Telegram channel VChK-OGPU published photos of several expensive cars with Chechen number plates gathered outside the Moscow Central Clinical Hospital, the Kremlin’s trusted medical institution for the country’s elite. However, Kadyrov soon popped up alive on his Telegram channel, posting photos that suggested he was visiting a relative in the hospital. Nobody believed him. Alexei Venediktov, former editor-in-chief of the Ekho Moskvy radio station, reported that Kadyrov is suffering from kidney failure and was at the hospital for a round of dialysis.
- Periodic reports of a deterioration in Kadyrov’s condition are routinely accompanied by his own media machine starting to boost the public profile of his sons as potential successors. Since summer 2022, when Kadyrov’s condition allegedly began to decline, Chechen TV has regularly broadcast reports featuring his three sons – Akhmat (17), Zelimkhan (16) and Adam (15). In the fall, the Chechen leader released a video of them firing a machine gun, which he said was on the frontlines in Ukraine. The video also showed prisoners they had allegedly captured. During another alleged deterioration in Kadyrov’s illness in spring 2023, Putin publicly met his oldest son, Akhmat, for the first time.
- This time, Kadyrov’s youngest son Adam got the starring role. And even by Chechen standards, it took a pretty extreme form. A week after the first unsubstantiated reports of his death, Kadyrov published a clip of 15-year-old Adam beating a prisoner in a pre-trial detention center in Chechnya’s capital, Grozny. The prisoner, Nikita Zhuravel, was a young man who investigators said burned a copy of the Koran outside a local mosque in Volgograd and later told the FSB that he did so on orders from the Ukrainian security forces. The criminal case against Zhuravel was pointedly transferred to Chechnya for investigation.
- No Russian officials commented on or reacted to the video, which blatantly showed criminal behaviour. The reason soon became clear when a couple of days later, Putin welcomed Ramzan Kadyrov himself to the Kremlin in a televised meeting, indicating such actions are not a concern for the president.
What does it mean?
After Yevgeny Prigozhin’s uprising, Ramzan Kadyrov found himself in an unusually vulnerable position. Throughout 2022, Kadyrov had positioned himself as the owner of a private army comparable to the Wagner Group (although Wagner, unlike Kadyrov’s men, had an identifiable track record of military achievements). Along with Prigozhin, Kadyrov too had spoken out and complained about Russia’s military leadership and the performance of the country’s regular army in Ukraine.
In Feb. 2023, when the Wagner leadership irrevocably fell out with the defense ministry, Kadyrov understood that continuing to support Prigozhin could be dangerous. He started to unwind his alliance with the mercenary boss and turned into a critic of his former ally. Since the June uprising and Prigozhin’s death two months later, Kadyrov has remained in an awkward position – he is now the only high-profile figure leading a large paramilitary group, something that the Kremlin may feel differently about following the Prigozhin saga.
For now, having secured a public meeting with the president even against the background of the scandalous video featuring his son, Kadyrov has reinforced his status. As for his successors, Kadyrov does not seriously believe that any of his sons – none of whom have yet turned 18 – are ready to take over his role immediately upon his likely demise. Novaya Gazeta’s Milashina suggested that the PR campaign for Kadyrov’s kids is instead an attempt to protect them after their father’s death, showing that the Kremlin will guarantee their safety.
Why the world should care
This wave of events and reports leaves no doubt that Ramzan Kadyrov is seriously ill. And that should seriously worry the Kremlin. Chechnya is a hugely important region for Vladimir Putin: in the 1990s it was a symbol of violent separatism, and successfully quelling the separatist movement was a key foundation of Putin’s rise to power. Since then, his entire policy in Chechnya has been built on Kadyrov’s leadership. A change of power in the region could pose a challenge for Moscow.
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Jailed billionaire demands $14 billion from Russian state companies
Despite serving a 19-year jail term, Russian billionaire Ziyavudin Magomedov showed last week that he is willing and able to strike against state companies from a prison cell, lodging a case with London’s High Court demanding $14 billion in compensation for assets seized from him following his arrest in 2018. The claims mainly concern Rosatom and Transneft, the principal defendants in the case. According to Magomedov, the two firms received the bulk of his appropriated assets – the FESCO transport group and a stake in the Novorossiysk Commercial Sea Port. Rosatom and Transneft are among the few remaining Russian companies that still have overseas assets, and thus have something to lose if the court finds against them.
What’s going on?
Magomedov brought a case before the British court back on July 20, but his lawyers only officially announced the details last week. Reuters has reported on the case, and the Financial Times reviewed the materials in some detail.
- Alongside Transneft and Rosatom, U.S. investment fund TPG (which owned 17.4% of FESCO) and Emerati port operator DP World (which planned to purchase a further 35-40% stake in FESCO) are named as defendants in the case. Magomedov claims that all four were part of a conspiracy, encouraged by the Russian government, to steal his assets. Transneft and Rosatom were the main beneficiaries of the scheme, while TPG and DP World actively assisted them, Magomedov’s representatives alleged in the court filings.
- Magomedov’s claim is worth $13.8 billion, based on his valuation of a 32.2% stake in the FESCO transport group ($8.8 billion) and 25% of the Novorossiysk port ($5 billion). The billionaire’s lawyers say it is a record amount for a claim before London’s High Court, outside of class-action lawsuits.
- In a press release, Magomedov’s representatives noted that he may file additional cases in respect of other appropriated assets — in particular, grain terminals which “allegedly fell into the hands of people closely linked to the Russian establishment ... and after Russia’s invasion of Ukraine were repeatedly described as ‘strategic’ to Russia’s war interests.” Magomedov’s biggest grain-related asset was a 49% stake in United Grain Company, which was acquired by state-owned bank VTB.
- Representatives of both TPG and Rosatom have said the claims against them are groundless.
Who is Ziyavudin Magomedov?
Ziyavudin Magomedov was regarded as one of the main beneficiaries of Dmitry Medvedev’s presidency. He was owner of the Summa group, featured on the Forbes List of Russian billionaires and studied with one of Medvedev’s closest advisors, Arkady Dvorkovich. He acquired all his principal assets during Medvedev’s 2008-2012 spell as president.
In March 2018, Magomedov and his brother, former senator Magomed Magomedov, were arrested on embezzlement charges (The Bell was the first to report on the nature of the charges). Later, the pair were charged with creating an organized crime group. In December 2022, Ziyavudin was sentenced to 19 years in a high-security prison, with Magomed handed an 18-year sentence. Between the arrest and sentencing, the brothers lost most of their assets, which were either sold to state-owned companies or directly confiscated by Russian authorities. Throughout, the brothers have been held at Moscow’s notorious Lefortovo pre-trial detention center, where they are still awaiting the outcome of an appeal.
Why the world should care
Magomedov’s claim threatens the potential of genuine losses for two major Russian state companies. Both Rosatom and Transneft hold significant assets abroad. Transneft has oil pipelines that, even after the EU oil embargo, have continued to deliver fuel to the Czech Republic, Slovakia and Hungary. And Rosatom is the only major Russian company against which neither the EU nor the U.S. has imposed sanctions. It continues to build power stations throughout the world (including in Europe with Hungary’s Paks II plant). If Magomedov manages to win his case, foreign courts would have actual assets they could seize.
Just as importantly, thanks to the lawsuit we are likely to discover more about how the relationship between businesses and the Russian state worked in recent years. Like with Boris Berezovsky’s cases against Roman Abramovich that lifted the lid on how prosecutions of businessmen and the appropriation of assets were organized in the 1990s and 2000s, this case could give the world similar details about how the Russian state went about the same task in the 2010s and early 2020s.
We have already learned something about how Transneft boss Nikolai Tokarev operates. According to Magomedov’s filings, before his arrest he held talks about selling a 25% stake in the Novorossiysk port to Transneft for $1.3 billion. But after he was arrested, representatives of the state-owned company told him that Tokarev had promised to ask Putin to release Magomedov, so long as he sold his shares for $750 million. Magomedov agreed, but nevertheless remained behind bars.
Azerbaijan detains Troika financier who became Karabakh separatist leader
One of the best-known Russian financiers of the 2000s was among the victims of the crisis in Nagorno-Karabakh — the billionaire founder of Troika Dialog, Ruben Vardanyan. The former businessman, who sold his Russian assets in the early 2010s to invest in his native Armenia, was for a brief period the leader of Artsakh — the Armenian name for the self-proclaimed and unrecognized state that had been under the control of ethnic Armenians until Azerbaijan seized the region last month. Vardanyan has now been captured by Azerbaijani troops and faces up to 12 years in prison.
- Since Azerbaijan took control of Nagorno-Karabakh, the region’s Armenian population has been fleeing en masse. Almost 100,000 people — from an estimated population of around 120,000 — have gone to Armenia. Among the thousands of Armenian refugees trying to leave was Karabakh’s best-known Russian resident, Ruben Vardanyan, who was arrested by Azerbaijani authorities as he tried to cross the border. As a former head of the unrecognized republic of Artsakh, the billionaire and former owner of the Troika Dialog investment company faces up to 12 years in jail in Azerbaijan.
- Vardanyan’s Troika Dialog was one of the biggest and best Russian investment and brokerage outfits in the 2000s. Apart from private clients, the government also highly valued its services. Troika purchased shares in two leading Russian auto manufacturers – AvtoVAZ and Kamaz – on behalf of Rostec (then called Rostekhnologii), led by Putin’s friend Sergei Chemezov. (Subsequently, the stakes were sold to Renault-Nissan and Daimler, and have since been nationalized). Naturally, Vardanyan’s bank provided personal services to the Russian elite, and a few years ago it emerged that Chemezov and another of Putin’s friends, Sergei Roldugin, used Troika Dialog’s offshore network to transfer funds earned in Russia to accounts in the West.
- As is customary in Russia, the state generously rewarded Vardanyan for his assistance — in 2013, state-owned Sberbank purchased Troika Dialog for $1.5 billion.
- After selling, Vardanyan spent more time and money on projects in his native Armenia and Karabakh, usually on issues connected with education or providing social services. Everyone who knows Vardanyan well has said this was the billionaire’s enduring wish — to take the money he earned in Russia and use it to improve his homeland.
- But the timing was bad. In late 2022, Vardanyan, who traces his roots to the disputed region, became Minister of State (de facto prime minister) of Artsakh. Within just a few months, by February 2023, he was forced to leave office due to disagreements with Yerevan. Vardayan insisted on holding Karabakh to the very end, but the Armenian government recognized that this was impossible. After Vardanyan’s resignation, he stayed in Karabakh, unable to leave due to an Azerbaijani blockade put in place last December.
- The big question now is whether Moscow will bail out a man who offered so much help to the Kremlin and the country’s elite in the past. In that regard, Vardanyan has one potentially significant problem — to become PM of Artsakh last year, Vardanyan had to renounce his Russian citizenship. At the time, the Kremlin saw it as a betrayal. Vardanyan’s acquaintances say Russia is still likely to try to protect him, but it is unclear how long he might have to spend in an Azerbaijani jail.
Why the world should care
In Moscow, Vardanyan’s story is seen as a real human drama. It’s not often that Russian businessmen who have made a fortune — much of it through deals with the state — make genuine sacrifices for their ideals. The Kremlin’s response, and whether it is willing to pull Vardanyan out of an Azerbaijani prison, will help us better understand the current relationship between the Russian authorities and business.