Propaganda and Collusion in the Trump-Russia Affair, Part 7
Propaganda and Collusion in the Trump-Russia Affair, Part 7
How Oleg Deripaska kissed the ring and went to war with American democracy
“Be my friend? Godfather?”
—Amerigo Bonasera to Don Vito Corleone in The Godfather (1972)
Last time, we looked at the, er, suspicious circumstances under which Russian president Vladimir Putin came to power. We also examined how he managed to reassert control over the various actors that had challenged the Kremlin’s authority during the first decade of post-Soviet rule.
Under his predecessor, Boris Yeltsin (1991-1999), billionaire oligarchs, regional governors, and criminal gangs acted as powers unto themselves. It was in this context that Oleg Deripaska, a budding oligarch who would later become the central player in Russiagate, prevailed in a violent contest for the country’s aluminum sector.
In Putin, however, Russia had a president who hailed from the security apparatus and boasted its unwavering support. Not only that, but he understood how to use the levers of state power to his advantage.
Though frequently overlooked, the implications of this development were enormous. Under Yeltsin, the sort of global influence operations that spawned Russiagate would have been impossible. So too would Russia’s invasion of Ukraine. Both required a regime capable of marshaling the country’s state agencies, billionaire class, regional governors, and criminal underworld toward a single aim. Only with Putin would it regain such authority.
Many of those who thrived in the chaos of the 1990s, such as Deripaska’s erstwhile patrons in the Russian mob, failed to navigate the momentous changes that accompanied Putin’s rise. Deripaska was among the few who did. By offering the president his unwavering loyalty, he bought himself a chance to survive and profit in the new environment.
The key events, we saw, took place in the summer of 2000. The sensational arrest of Vladimir Gusinsky, the one oligarch who had openly opposed Putin’s election, marked the opening salvo. Weeks later, Putin summoned the other oligarchs to a meeting at Stalin’s dacha outside Moscow. There, he confirmed what most of them had already begun to sense: He was in charge, and they were not.
While a couple of holdouts refused to buckle, Deripaska knew the score. He has presumably seen The Godfather. He understood that Putin was Don Vito and he Bonasera, a mere supplicant reduced to begging for the boss’s protection. He also understood that his assets, as well as those of his peers, were no longer really his; he was merely allowed to hold them at Putin’s discretion.
Deripaska is no coward, which should tell you something about the ominous atmosphere at the time. Submission to Putin was a necessity, not a choice.
As long as he remained loyal, he would maintain the Kremlin’s favor. But it came with a price; he would now have to make himself and his fortune available to serve the Kremlin’s aims. Chief among these was restoring Russia’s empire and influence on the world stage. Unbeknownst to Deripaska at the time, he had entered into a pact which would put him on a collision course with American democracy.
Today we review the evidence that Deripaska operates as a Kremlin proxy and survey his various activities in this regard. We will also consider what it says about the nature of wealth and power in Putin’s Russia. If Deripaska once embodied Russia’s descent into violent anarchy, so too does he illustrate its subsequent transformation into a kleptocratic autocracy.
From mighty boyar to Kremlin errand-boy
Despite all the ink spilled trying to understand Putin’s essence, there really isn’t all that much to the guy. He’s a thug. As such, he operates by a thug’s logic: Protection in return for loyalty.
But if the means are those of a mob boss, the ends are different. He does want to dominate the country and live the good life. But he also aims to reestablish Russia as an imperial superpower. The oligarchs, to him, are simply one tool among many he can deploy toward this goal.
By the end of his first term in office, in fact, they could no longer be considered oligarchs at all. The very term, deriving as it does from the Greek arkhḗ, or “rule,” implies a level of autonomous power they would never again possess. If at one time the oligarchs had dictated policy and appointments, they were now beholden to Putin.
That is not to say he personally directs their initiatives. They know what he wants without being told and take it upon themselves to get it done—whether it be financing extremist parties to sow division in the E.U. or backing Donald Trump over Hillary Clinton to destabilize the Western alliance. As Mark Galeotti, a specialist on Russia’s foreign influence activities, explained to TIME reporter Simon Shuster, “these are cats that like to bring dead mice to the Kremlin.”
Among the bearers of vermin is Deripaska. Here is how the Republican-led Senate Intelligence Committee described him in Volume 5 of its report on Russian interference in the 2016 election:
Since at least [2004], Deripaska has acted as a proxy for the Russian state and intelligence services. Deripaska has managed and financed Kremlin-approved and -directed active measures campaigns, including information operations and election interference efforts. Deripaska has conducted these activities in an effort to install pro-Kremlin regimes, control local economies and politicians, and strengthen Kremlin-aligned powerbrokers across the globe.
The committee goes on to note how “Deripaska’s work on behalf of the Kremlin included Deripaska’s use of his own personal wealth for Kremlin-directed projects, blending Deripaska’s interests and those of the Russian state.”
To help carry out these initiatives, Deripaska hired Paul Manafort. “Manafort’s influence work for Deripaska,” the committee bluntly states, “was, in effect, influence work for the Russian government and its interests.”
Manafort, you may recall, was a top official in Trump’s 2016 campaign and eventually served as its head. Emails made public by the Senate committee reveal how Manafort used his position to try and shape the campaign and incoming administration to Deripaska’s benefit. In working to hand the Trump presidency to Deripaska, however, he was effectively handing it to the Kremlin itself, a fact of which he was surely aware.
But how do we really know he’s a Kremlin-proxy?
Still, you might ask, how much evidence is there that Deripaska acts on Russia’s behalf?
Quite a lot, in fact.
For starters, Manafort himself believed it. The P.R. guru first came to Deripaska’s attention in late 2004. Ukraine was about to hold a presidential election, and things were not going the Kremlin’s way. Viktor Yushchenko, the likely winner, had pledged to restore democracy and further the country’s integration with the West. Putin regarded both prospects as anathema. Not only might a democracy on Russia’s doorstep start giving his own subjects ideas; it would also endanger his great-power project, which had no chance of succeeding if Ukraine were to break free of Moscow’s influence.
Hence, the Kremlin, with Deripaska’s help, undertook a massive initiative to boost Viktor Yanukovych, Yushchenko’s pro-Russian opponent and the favorite of Ukraine’s incumbent leadership. That’s the same Yanukovych who, a decade hence, would be ousted in the Euromaidan revolution.
But his day would have to wait. The coordinated efforts of the Russian and Ukrainian governments, which included a failed assassination attempt on Yushchenko and the blatant rigging of the election results, ended up backfiring. There followed a mass-uprising known as the Orange Revolution, which forced a do-over of the election and resulted in a victory for Yushchenko.
Deripaska did have a personal stake in these events; his conglomerate owned an alumina refinery in Mykolayiv, the second largest in the former Soviet region. But make no mistake: His main priority was to help the Kremlin.
If, for Putin, the Orange Revolution marked a humiliating setback, it offered Manafort an opportunity to market his services. In a memo obtained by the Associated Press, he detailed how the Kremlin could restore its influence in Ukraine and strengthen its hand in the rest of the former USSR, Europe, and the U.S.
Though the memo was addressed to Deripaska, the Kremlin was obviously the intended audience. “We are now of the belief that this model can greatly benefit the Putin Government if employed at the correct levels with the appropriate commitment to success,” Manafort wrote.
Evidently, the Kremlin agreed. Manafort would soon secure a long-term contract with Deripaska good for $10 million annually.
That Manafort saw Deripaska as a Kremlin proxy is not the only evidence behind the Senate committee’s claim, however. Another indicator is the Russian mogul’s longstanding practice of appointing known intelligence officers to key positions. Viktor Boyarkin, whom we met in an earlier part of the series, is one example. Boyarkin, you’ll recall, acted as an intermediary between Manafort and Deripaska during the 2016 campaign.
Valery Pechenkin is another. A former general in the Federal Security Service (FSB), he was tapped in 2018 to head Deripaska’s main holding company. Another key adviser, Georgy Oganov, has a more ambiguous background. But the Senate report’s description of him is telling; it refers to Oganov as “ostensibly a diplomat” before proceeding to discuss his activities over the course of several redacted pages.
Yet further evidence of Deripaska’s role is the lengths to which the Kremlin goes to protect him. For instance, in 2008, when the U.S. denied him a visa over his alleged ties to organized crime, Russia granted him diplomatic status, allowing him enter the country freely.
Deripaska would continue to benefit from such V.I.P. protection over the ensuing years. In 2018, Russian opposition leader Aleksei Navalny published an investigation appearing to tie Deripaska to Russia’s election-meddling venture in the 2016 U.S. election. Video and audio evidence shows Deripaska meeting on his yacht with deputy prime minister Sergey Prikhodko during the campaign’s final stretch. As Navalny notes, Prikhodko is the Kremlin’s top foreign policy adviser and almost surely would have been involved in directing the election effort. The report fueled speculation that Deripaska had been passing information from Manafort to Prikhodko, who in turn was using it to guide the operation.
However, as revealing as the exposé itself was the Kremlin’s response. In short, it freaked out, ordering YouTube, Instagram, and a host of media outlets to remove all related footage and reports. That’s quite a bit more than one would expect in the case of an ordinary meeting between a top official and a private businessman. If, on the other hand, the private businessman also happened to be a key agent in a sensitive state intelligence campaign, such paranoia might seem reasonable.
But we need not resort to exercises in deduction to conclude that Deripaska is a Kremlin-proxy; after all, he’s admitted it. “I don’t separate myself from the state,” he famously declared in a 2007 interview with the Financial Times. “I have no other interests.” There is a good reason for that, too, which is that his fortune, like that of every other Russian billionaire, is entirely subject to Putin’s whims. “If the state says we need to give it up, we’ll give it up,” he remarked matter-of-factly.
Be my friend? Godfather?
Surveying Deripaska’s work for the Kremlin
The aborted bid to install Yanukovych as Ukraine’s president in 2004 only marked the beginning of Deripaska’s career as a Kremlin agent. Manafort, together with his deputy, Konstantin Kilimnik, another reputed intelligence officer, became a key foot-soldier in these endeavors. The two collaborated with other alleged intelligence operatives in Deripaska’s employ, particularly Boyarkin. Their projects spanned the globe from the former Soviet Union to Europe to Africa.
Per the Senate report:
In some instances, Manafort and his associates were able to call on the Russian government’s help to advance Deripaska’s interests. Guinea was one example:
In other cases, they were working first and foremost to serve the Kremlin’s goals. In advance of Montenegro’s 2006 referendum on independence, Deripaska privatized the republic’s flagship aluminum plant, a failing enterprise he surely never wanted. To ensure the vote's success, he dispatched Manafort to assist Prime Minister Milo Đukanović, a mob boss who doubled as Montenegro’s head of state.
But Đukanović would eventually abandon his allies, pressing ahead with Montenegro’s plans to join NATO and expropriating Deripaska’s aluminum plant in the process. The Kremlin did not take it lying down. In the run-up to a pivotal election in 2016, Deripaska “was involved in funding and executing an aggressive Russian-directed campaign to overthrow the Montenegrin government and assassinate the Prime Minister in a violent coup,” the Senate report alleges. What evidence the committee has to support this claim is hidden behind pages of redactions, but in 2018 it was confirmed by Shuster in a TIME investigation.
In the end, Moscow’s coup attempt failed and Montenegro joined the alliance—which is one reason Russian troops are terrorizing Ukraine instead.
Deripaska turns his attention to the U.S.
When the Kremlin wants to bring a foreign government into line, Deripaska works to get it done. So when a notoriously compromised, celebrity business mogul made a bid for the American presidency in 2016, Deripaska did his duty, leveraging his relationship with Manafort to shape the campaign and subsequent administration.
The resulting scandal did not mark the end of his influence schemes, either. In 2018, the U.S. Treasury, backed by Trump’s outgoing national security adviser, sanctioned Deripaska and his company, Rusal. The move came as a shock not just to Deripaska but Trump himself, and the president and his allies responded by scrambling to let him off the hook. In a confidential agreement seen by The New York Times, the Treasury struck a deal with Deripaska that allowed him to settle hundreds of millions of dollars in debt to sanctioned Russian state bank VTB. It also removed Rusal from the sanctions list. To help the Trump administration justify its decision, Deripaska carried out a sham maneuver that ostensibly reduced his shareholding to below 50 percent while enabling him to retain effective control.
Then, just as Congress looked set to pass a resolution that would have scuttled the deal, it was blocked by Mitch McConnell, the GOP Senate Majority Leader. Why? At the time, Rusal was considering plans to invest $200 million in an aluminum mill in McConnell’s home state. The night before the Senate vote, representatives of McConnell and Deripaska held what the Washington Post described as “an amicable introductory chat” at a dinner in Zurich.
The vote never took place, allowing Rusal (though not Deripaska himself) to remain off the sanctions list.
Yet another scandal broke in January 2023, when a federal grand jury accused Charles F. McGonigal, the former top counterintelligence official in the F.B.I.’s New York office, of illegally working for Deripaska. During his time at the agency, McGonigal led investigations into some of Russia’s wealthiest elites, including Deripaska. After leaving his post in 2018, the indictment alleges, McGonigal violated U.S. sanctions on Deripaska by investigating a rival businessman and assisting in his efforts to secure a visa.
Precarious power, illusory wealth
Despite his close relationship with the Kremlin, Deripaska is hardly the most influential of Russia’s billionaires. One reason was his costly brush with bankruptcy during the 2008 global financial crisis. Though he was saved by a state bailout, his $28 billion fortune, then estimated to be the world’s ninth largest, was decimated, leaving him further indebted to Putin.
Even at his zenith, however, Deripaska never had a chance of entering Putin’s inner circle, a privilege reserved for a handful of the president’s cronies from St. Petersburg. That he would inevitably be consigned to second-tier status was laid bare in advance of the 2012 Russian Olympics. Like many other Russian billionaires, Deripaska was forced to contribute hundreds of millions of dollars toward the games. By contrast, Putin’s closest allies got paid, with longtime friends like Arkady Rotenberg and Gennady Timchenko benefiting from wildly overpriced construction contracts.
However, it bears emphasizing that none of their fortunes actually belong to them. Sure, they might officially own their companies—or, rather, be listed as beneficiaries of the offshore entities that own them. But while their property rights will always be recognized in London’s High Court, such formalities are ultimately irrelevant. So are any foreign citizenships they hold or where in the world they happen to reside. There’s a simple reason for this: As the Kremlin has demonstrated repeatedly, their lives can be snuffed out in an instant.
That’s also why attempts to estimate Putin’s personal fortune—a favorite pastime of pundits and financial analysts—make no sense. As long as he’s in office, his effective net worth is the entirety of Russia’s GDP. If Putin decides he wants to spend the country’s central bank reserves in a manic and frivolous shopping-spree à la Brewster’s Millions, is someone really going to tell him “no?”
In power, he has everything. But out of power? Nothing. There are no Cyprus L.L.P.’s or Gibraltar bank accounts with his name on them; it would leave him far too exposed. Any amounts he can transfer to his daughters remain limited for the same reason. He may think he can entrust his wealth to old buddies like Timchenko and the Rotenberg brothers, each of whom have become billionaires many times over and are widely believed to hold at least part of their fortunes on the president’s behalf. But in reality, he can’t.
Once you’re no longer able to control the world around you by threat of force, it suddenly matters whether your name appears on a document; absent that, you have no way of protecting your ownership claims. This is a lesson the Chernoy brothers learned the hard way in the late 1990s when they lost control of their empire to Deripaska. It is one that Vladimir Vladimirovich will also realize in the event he ever leaves office.
If you align yourself with Putin’s regime, you will eventually incriminate yourself and become vulnerable as a result. This is a feature of the system’s design and its key mechanism of control. Paul Manafort compromised himself from the moment he went to work for Deripaska and Yanukovych, men who, by virtue of their own Kremlin ties, were similarly vulnerable. Even Putin himself is exposed, as the end of his regime or his mere departure from it would spell his personal demise.
This dynamic is inherent to all authoritarian strongmen, in fact. How many people who served in Donald Trump’s administration, his campaigns, or even his legal defense teams emerged unscathed? How many both avoided indictment and came out with their reputations intact? If you choose to work for an evil scumbag, that’s your prerogative. But don’t think you’ll somehow ride off into the sunset afterwards.
Next time, we will conclude our Russiagate series, summing up its findings and exploring what it all means.
Until then…
Other entries in this series:
Propaganda and Collusion in the Trump-Russia Affair, Part 1
Propaganda and Collusion in the Trump-Russia Affair, Part 2
Propaganda and Collusion in the Trump-Russia Affair, Part 3
Propaganda and Collusion in the Trump-Russia Affair, Part 4
Propaganda and Collusion in the Trump-Russia Affair, Part 5