Kudrin Alexei Leonidovich, ex-Minister of Finance
«Russia's Power Families - 2011» / Kudrin Alexei Leonidovich, ex-Minister of Finance
Employed at: Government of Russia
Positions held: since 2000: Minister of Finance; since 2007: Deputy Chairman of the RF Government.
Business involvement: as civil servant, Alexei Kudrin is legally barred from business involvement. Alexei Kudrin’s declared 2008 income was 5,690 Mln. Rub.; in 2009, it was 9,239 Mln. Rub.; and in 2010 it was 7,857 Mln. Rub. In 2009, the Minister owned an Audi A6; and in 2010 – a Ford Thinkcity electric car (not yet available for sale in Russia; its price is estimated at over 2 Mln. Rub). Kudrin owns no real property; his wife lets him use a 327.9 m2 apartment free of charge.
Business influence: Starting in 1991, Alexei Kudrin worked at St. Petersburg Mayor’s Office; starting in 1993, he was the city’s Economics and Finance Committee (EFC) chairman. EFC was named in the investigation of Renaissance real estate company. According to Kommersant newspaper, Renaissance owner Anna Evglevskaya built luxury apartments and gave them to city officials as bribes, for which she was arrested and eventually convicted. During the investigation, Evglevskaya named top St. Petersburg Mayor’s Office staff whose services she paid for. According to the media, Evglevskaya said that, for $54,000, she took care of resettling tenants of an apartment that shared a wall with the apartment of St. Petersburg Mayor Anatoly Sobchak, which resettlement benefited Sobchak. Based on Evglevskaya’s testimony, the General Prosecutor’s Office criminally prosecuted Sobchak, who fled the country. A number of city officials were arrested, including Victor Kruchinin (future head of RF President’s reception area and administrative department).
Andrei Bakonin (Konstantinov) (chairman of St. Petersburg Creative Union of Journalists and head of Azhur Media Holding), stated (citing Ministry of Internal Affairs sources) that “in March-April 1995, Anna Anatolyevna (Evglevskaya) gave $10,000 to one of the St. Petersburg Economic and Finance Committee heads who then facilitated illegal execution of documents,” thus enabling the receipt of several hundred million rubles allegedly for heating main repair. The media recalled this incident during St. Petersburg mayoral elections in 1996, naming EFC chairman Sergei Vyazalov. Vyazalov and Kudrin were not charged.
Two years later, Kudrin testified in criminal case No. 694259 regarding abuses in the funeral branch – a city service overseen by former St. Petersburg Deputy Mayor Vladimir Putin. Adduced to the case file was Putin’s October 7, 1994 Instruction “On Special-purpose Consumer Operations Government Facility” concerning the burial of unclaimed bodies and the need to amend budgetary expenditures. Putin tasked Alexei Kudrin with supervising the execution of this Instruction. According to the investigators, the number of unclaimed bodies in St. Petersburg was systematically overstated, and the funds embezzled.
Nobel Prize founder Alfred Nobel’s family members (residents of Sweden) said they met with EFC chairman during their visit to St. Petersburg, and Alexei Kudrin’s assistant accepted foreign currency (in Swedish krona) in order to restore the Nobels’ neglected graves at Smolensk Lutheran cemetery. However, workers at the cemetery said they never received this financial assistance, and did minor grave repairs free of charge. The Nobel family members said they were told during the investigation that around $40,000 was improperly spent. When interrogated, Alexei Kudrin admitted contact with the Nobel family, but denied receiving money from them.
EFC head Kudrin and deputy mayor Vladimir Putin are also named in criminal case No. 144128 initiated in 1999 in connection with Dvadtzaty Trest (20th Trust) Construction company operations (Trust head Sergei Nikeshin was member of the St. Petersburg Legislative Assembly). The investigation used documents from a 20th Trust audit by the RF Ministry of Finance Audit Department, which was conducted on the instruction of the municipal administration for combating economic crime. According to audit documentation, Kudrin signed agreements in order to secure several million dollars in government loans for 20th the Trust, which funds the Trust then wired to over 20 companies in Spain, Finland, Sweden, Germany, Belgium, Ireland and the US. The investigation ended when Vladimir Putin was inaugurated President of Russia, with lead investigators saying they experienced unprecedented pressure [to close the case].
In 2000, Alexei Kudrin was interrogated in criminal case No. 31913 involving government housing loans that Kudrin distributed among his St. Petersburg City Hall coworkers.
Critics accused the Finance Minister of lobbying on behalf of KIT Finance investment bank. Kommersant and other business media noted that KIT Finance had “a very strong lobby in the government.” Alexei Kudrin publicly supported the bank.
KIT Finance Bank management operations are historically linked to St. Petersburg’s Palmira Bank established on April 29, 1992 by entrepreneur Otar Margania, who was on the Palmira Bank board of directors from 1994 to 2004. Margania is an ethnic Georgian Jew, a so-called ebraeli. This community was widely represented in St. Petersburg in the 1990s among the economic elite, and was also informally represented in the areas of defense, security and law enforcement. Margania and Kudrin attended and graduated from the same college, and kept in close personal and business touch even after Kudrin moved to Moscow. In 2000, Alexander Vinokurov became Palmira Bank’s chairman of the board of directors. Vinokurov (Otar Margania’s acquaintance) had previously worked at Baltonexim Finance investment company, which changed its name to Web-Invest Bank a year later, and changed its name again in 2005 to KIT-Finance.
After Alexei Kudrin’s appointment as Minister, individuals named above were involved in financial and political conflicts over the assets of Alrosa JSC, the Russian diamond monopoly. A considerable share of Alrosa was held by the Republic of Sakha (Yakutia). During Yakutia’s 2001 presidential elections, Alexander Vinokurov’s Baltonexim Finance investment company asked the prosecutor’s office to initiate a criminal case against Regional head Mikhail Nikolayev under various Articles of the RF Criminal Code in connection with the local finance ministry’s outstanding accounts payable. According to Kompaniya magazine, such a request by Baltonexim Finance may have been solicited by Otar Margania (Alexei Kudrin’s non-staff advisor). Under threat of criminal prosecution, Nikolayev withdrew his candidacy, and Vyacheslav Shtyrov became Yakutia’s President. Thereafter, RF Finance Minister Kudrin became chairman of Alrosa’s board.
After Kudrin came to the diamond mining industry in 2002, Web-Invest (until then a small St. Petersburg loan institution), became underwriter of Alrosa JSC’s bond issue and general agent in the bond issue of the Yakutian government. Alrosa JSC started depositing large sums at Alexander Vinokurov’s Web-Invest bank overseen by Otar Margania. In particular, in 2004 Web-Invest received $75 Mln. in temporarily available funds.
Fedor Andreyev was appointed to Alrosa JSC at the same time as Kudrin, becoming Alrosa’s First Vice President for Finance. According to SPARK-Interfax, from April 1999 to January 2002, Alexander Vinokurov was listed as general director of LenRos-Invest CJSC, established by Fedor Andreyev (Vinokurov’s colleague from TverUniversalBank and Baltonexim Bank). A KIT-Finance quarterly report indicates that, in 2002, Andreyev held a 19.99% share of the Bank through Composition-Asset Management LLC.
Between 2003 and 2009, Vinokurov’s friend Andreyev worked at Russian Railways OJSC, with Web-Invest Bank placing Russian Railways shares while Andreyev worked at the Bank. In July 2009, Fedor Andreyev returned to Alrosa JSC as President, and is still President today. Kudrin continued as Alrosa’s supervisory council chairman until 2011.
Alexander Vinokurov’s and his colleagues’ role was believed to be merely technical, as asset and financial strategy was likely set by Otar Margania, based on his relationship with Alexei Kudrin. Forbes described key decision making in the Russian diamond industry as follows: “Otar Margania is well known in the precious stones industry. Margania is non-staff advisor to Alexei Kudrin, the Deputy Prime Minister and Minister of Finance. Kudrin heads Alrosa’s supervisory council and oversees the precious stones industry. Experts polled by Forbes believe Margania has great influence on Kudrin, and that Margania’s companies now hold a significant part of the Investment Group’s shares that are not controlled by Alrosa.”
The “Investment Group” referred to by Forbes is Alrosa Investment Group (IG) OJSC, which, according to SPARK-Interfax, is owned by private investors not connected to Alrosa JSC. The [Alrosa] monopoly let the Investment Group take over the management of large promising deposits of gold and precious stones (up to 200 Mln. carats of diamonds in Archangelsk Region and 700 tons of gold in Yakutia).
Alrosa IG was set up from among Moscow Sobinbank entities. Sobinbank was named in the Bank of New York (BoNY) US money laundering scandal involving billions of dollars. Forbes reports that “New York Southern District Court heard the case involving the freezing of $15.3 Mln. in Sobinbank’s correspondent account at BoNY … the Court agreed with the US government that Sobinbank’s correspondent account and other accounts were used ‘as channels to secretly transfer around $7 Bln. from Russia in order to finance suspicious or illegal transactions’.”
Starting in 2001, Sobinbank co-owner Khalid Aprilevich Omarov was listed as chairman of Alrosa IG’s board. Omarov’s name in some official documents is also spelled as Khalid Aprel-ogly Omarov and Khalid Oprel-ogly Omarov. Prior to 1997, the banker Omarov lived St. Petersburg where, the media say, he met Otar Margania. The Alrosa IG founder was believed to be close to the Chechen community. The media also often said that Khalid Omarov is a close relative of Georgy Safiyev and Imran Ilyasov (Safiyev and Ilyasov are cousins); the information has not been refuted. Safiyev (killed in the US in 2002) headed Russian Capital Bank. Ilyasov was convicted as head of Kingisepp organized criminal group that specialized in contract killings.
According to SPARK-Interfax, Alrosa IG (which Forbes says is overseen by Otar Margania) controlled KIT Finance Bank shares through a number of companies, so diamond mining income may well have been used to fuel KIT-Finance Bank growth.
Public sources have described how this was done. Otar Margania chairs Vozrozhdeniye Bank’s board. In 2003, Alrosa JSC deposited 1.6 Bln. Rub. at Vozrozhdeniye Bank at 2% annual interest, although with this type of transaction it could have earned at least 10% at any other Russian bank.
According to Kommersant, one theory is that this deposit was a condition for issuing loans intended to be used to buy a 75% share of Moscow Stud Farm No. 1 (MSF), which occupied land near Rublevo-Uspenskoye Highway. After buying the 75% share, new owners planned to use the land for commercial development. According to Vedomosti newspaper, a group of investors headed by Vozrozhdeniye (Renaissance) Bank and Alrosa IG eventually bought 900 ha. of the land, valued at $3 billion.
At the time, media cited conjecture by former Alrosa JSC legal department head Gamlet Akopyan that “Alexei Kudrin and Alrosa president Alexander Nichiporuk were directly involved in embezzling company funds that may have later been used to take over Moscow Stud Farm No. 1 land.”
In his letter to RF General Prosecutor, Akopyan described how the Stud Farm land was bought: “Funds were transferred from Vozrozhdeniye Bank to five companies (Avtodorpostavka LLC, Multifunctional Systems LLC, MIR Consulting LLC, Energogroup LLC and Sinist LLC) involved in buying land shares of Moscow Stud Farm No. 1… These five companies together hold a 21.06% share of Entrepreneurship Development Bank (EDB) JSCB, and the companies’ directors (I. Kulakov, A. Pankin, S. Ioganson and V. Arnautov) were working at EDB and were thus subordinate to then-EDB board chairman Alexander Nichiporuk.”
Indeed, Alexander Nichiporuk has been EDB board chairman since 1994. In 2003, Nichiporuk became Alrosa JSC vice president, and then headed Alrosa JSC from 2004 to 2007. According to the media, Nichiporuk is “Finance Minister Alexei Kudrin’s protégé” and longtime associate.
Based on Gamlet Akopyan’s testimony, a criminal case of misappropriation was initiated in 2005. Investigators believe that by depositing funds at Vozrozhdeniye Bank [at an interest rate] Alrosa JSC knew to be disadvantageous, Alrosa JSC lost 153 Mln. Rub. [in potential interest]. However, the case was closed the same year “as no crime was committed.” In his Kommersant interview, Gamlet Akopyan said such a procedural decision comes as no surprise: “They all started running around as soon as they realized Kudrin himself would have to be named in this case. Then the investigator was replaced…”.
When KIT Finance Bank could no longer meet its financial obligations, Finance Minister Alexei Kudrin did everything in his power to prevent the Bank’s bankruptcy. Following a series of actions, on October 8, 2008, two investment consortium partners – Alrosa IG and Russian Railways OJSC – each bought 45% of KIT Finance. Russian Railroads management was asked to help [save KIT-Finance], and therefore government funds were used to assist with KIT Finance recovery [since the Railroads are state-owned]. Alrosa IG later sold its shares, and Russian Railways OJSC-affiliated companies are now the sole shareholders.
The rehabilitation of the indebted KIT Finance Bank – a private bank close to Finance Minister Alexei Kudrin – cost the State an unprecedented 130 Bln. Rub. (over $4.3 Bln.)
First wife Veronica Olegovna Sharova, entrepreneur, listed as director and co-owner of St. Petersburg’s Karamazov Brothers Hotel, a share of which is held by Anna Astanina (ex-wife of former VneshTorgBank (VTB) first vice president Vadim Levin). In 2008, Astanina was unlawfully institutionalized at a psychiatric facility during a post-divorce custody battle. According to the media, Astanina’s ex-husband may have thus tried to gain full custody of the children.
Veronica Sharova set up Leader LLC, which owned Delo, St. Petersburg’s socio-political newspaper published between 1995 and 2009 (then ceased operations due to lack of funding). Delo co-founders included: Mikhail Manevich; Valery Yashin (former Svyazinvest head); Sergei Bazhanov (current owner of St. Petersburg Mezhdunarodny Bank (International Bank) and Federation Council member); and Vyacheslav Shverikas (also currently Federation Council member).
Second wife Irina Igorevna Tintyakova is a philanthropist. Prior to marrying Alexei Kudrin, Tintyakova was administrative assistant to Andrei Trapeznikov (board member of Russian UES (Unified Energy System)). She met her future husband Kudrin in Trapeznikov’s reception area. Tintyakova is president of Severnaya Korona (Northern Crown or Corona Borealis) charitable foundation with branches in London and New York. According to SPARK-Interfax, aside from Tintyakova, the Foundation was co-established by Elena Voytzekhovich and Maria Margevich. Voytzekhovich was previously employed at RF President’s administrative department, while her husband, Konstantin Voytzekhovich, was assistant and press secretary to Deputy Prime Minister Alexander Zhukov. Konstantin Voitzekhovich later became Medialogia LLC director.
The Foundation’s website does not post financial reporting. Northern Crown does most of its fundraising at parties and VIP events.
Vedomosti cites Irina Tintyakova as stating that the Foundation’s annual budget is $150-250,000, 80% of which goes to orphanages and 20% is spent on administrative expenses. Alexander Lebedev’s National Reserve Bank is known to have transferred money to the Foundation in 2003, and Philip Morris donated $52,000 in 2006.
Northern Crown owns Analysis and Forecasting Center LLC.
In 2001, Tintyakova, together with Murtazali Rabadanov, set up synthetic sapphire manufacturer Ambi XXII LLC (company currently not listed as active). At the time, Rabadanov headed the Russian Academy of Sciences Crystallography Institute’s X-ray crystal structure analysis laboratory. Currently Rabadanov is Dagestan State University Rector.
According to SPARK-Interfax, Irina Tintyakova has been listed since 2002 as co-founder and 13.5% shareholder of Valentin Yudashkin Group, primarily involved in securities investment. Tintyakova said she and her longtime friend Yudashkin decided to set up a casual clothing manufacturer, but the business failed. Valentin Yudashkin Group has two subsidiaries: Valentin Yudashkin Trade House and Yudashkin Fashion House.
In 2010, Irina Tintyakova was member of the Russian National Bestseller literary prize judging panel.
In 2010, Tintyakova declared an income of 222,000 Rub. She owns two land lots, two residential homes (one of which was not declared in 2009), two apartments (one of which is 327.9 m2), an Audi A5 Coupe and an MV Augusta motorcycle.
Daughter Polina Alexeyevna Kudrina is an entrepreneur. In October 2009, she and friends founded Grand Prix Arts Center LLC, which offers voice training, acting and music theory workshops. In April 2010, she was involved in a high-profile traffic accident in St. Petersburg: her businessman acquaintance Mikhail Matviyenko lost control of his Range Rover and drove into a lingerie shop window on Nevsky Prospekt. Mikhail Matviyenko is not related to St. Petersburg Region Governor Valentina Matviyenko; he is the stepson of Vadim Novinsky (prominent Russian-Ukrainian businessman and president of Smart Holding Company Group. Forbes estimated Novinsky’s wealth at $2.7 Bln. in 2011).
Son Artyom Alexeyevich Kudrin, born in 1998, secondary school student. Minister Kudrin’s 2009 tax return lists Artyom as the sole owner of a 120 m2 apartment. In 2010, Artyom was listed as the sole owner of an (apparently different) apartment with an area of 127.6 m2.
Deputy Finance Minister Sergei Storchak is accused of attempting to embezzle federal funds under the guise of covering Sodexim Bank losses. Sodexim, a private bank, had bought several African countries’ debt to the former Soviet Union. The investigators believe that Sodexim Bank asked the Russian government for compensation that was overstated by $43.4 Mln. After Kudrin’s subordinate Storchak was arrested in 2007, Alexei Kudrin actively supported him, and the following year Storchak was released. Storchak currently continues to examine the case file, which the Russian Investigative Committee believes is a delay tactic, as Storchak hopes that the Arbitration Court will grant Sodexim’s claim seeking to have the Finance Ministry acknowledge the debt, including the disputed $43.4 Mln. Sergei Storchak’s wife Lyudmila Storchak also filed a claim against the Finance Ministry, seeking to recover 5 Mln. Rub. on the grounds that $1 Mln. of her funds was seized during a search and held for a long period of time.
A 1999 criminal case involving 20th Trust Corporation named several Alexei Kudrin’s colleagues who later moved to Moscow and were employed by the Finance Ministry. Among them is Dmitry Pankin (Kudrin’s St. Petersburg deputy who signed budget-allocating payment authorizations), who is now Deputy RF Finance Minister and is being considered to head the Federal Financial Markets Service.
Also named in the case was Nadezhda Savolainen, future deputy director of the Finance Ministry’s administrative department. She subsequently became deputy head of the Federal Health and Social Development Agency, and currently heads the Ministry of Health department of accounting procedure and supervision.
Janetta Krolli, also named in the case, became VTB director’s advisor.
Alexei Kudrin chairs VTB bank’s supervisory council. According to the media, he is a personal friend of former VTB vice president Vadim Levin, who is from St. Petersburg. Levin is friends with entrepreneur Shota Boterashvili (whom Kudrin may also know from his St. Petersburg days). Like Otar Margania, Boterashvili is a member of the Georgian Jewish ebraeli community. According to the Unified State Registry of Companies, in the 1990s Boterashvili was registered as business partner of Mikhail Mirilashvili, the son of the World Congress of Georgian Jews’ head, community leader and philanthropist. Between 2001 and 2009, Mirilashvili served time in prison for kidnapping two Georgians, who were later killed.
Companies owned by Boterashvili family were used in schemes devised to take over Shaumyan Factory assets. According to St. Petersburg media, the dispute over the Factory resulted in “one suicide (where the deceased killed himself on September 11, 2001, leaving a note that he could not bear to live after the terrorist attacks in the US) and several high-profile murders.”
Shota Boterashvili and his relatives’ subsequent businesses transactions were closely linked to VTB Bank. Boterashvili himself said that, in 2005, in his capacity as “chief advisor” to VTB board chairman, he co-founded VTB-Capital (subsequently renamed VTB-Development) and became the Bank’s full partner in Vladimir Putin-approved project called “The Europe Embankment” which involves construction in Malaya Nevka area. Europe Embankment’s original beneficiary Sergei Lvov is trying to prove through courts that his assets, currently owned by VTB, were taken over by criminal means.
Companies affiliated with the Boterashvili family supplied electronic payment systems to Aeroflot, while their St. Petersburg projects included laying a heating main from Northwest Heating and Power Plant to Primorskaya Boiler and Heating Plant, and building residential homes at 139 Moskovsky Prospekt. VTB Âank took part in financing these projects.
Shota Boterashvili is listed as board member of VTB Armenia and United Georgian Bank (currently VTB Georgia). Boterashvili and his wife Victoria Shamlikashvili were on the board of Well Drilling Corporation. In 2009, there was great controversy over the collaboration between Boterashvili and VTB Bank which took place while Vadim Levin was at the Bank. The issue was a 2007 agreement between VTB-Leasing and the Cypriot Clusseter Limited to buy 30 ZJ50DBS drilling rigs at $15 Mln.each (not counting customs duties). Under the agreement, the rigs were to be leased to Well Drilling Corporation. The contract was valued at $456.9 Mln. ($650 Mln. including customs duties).
It turned out that the Cypriot company is an intermediary, while the drilling rigs were manufactured by the Chinese Sichuan Honghua Petroleum Equipment which sells the rigs for around $10 Mln. each [(not $15 Mln. as stated in the contract)], which meant around $160 Mln. in disbenefit from the purchase [under the agreement]. No criminal proceedings were initiated despite requests to do so. In 2010, Well Drilling Corporation LLC declared bankruptcy. In March 2011, VTB minority shareholder Alexei Navalny filed a claim with Moscow Arbitration Court against VTB-Leasing, Clusseter Limited and Well Drilling Corporation in an attempt to contest the drilling rig purchase transaction.
According to Novaya Gazeta, Boterashvili allegedly attempted to help mend VTB Bank vice president Vadim Levin’s relationship with [his ex-wife] Anna Astanina. As a result, Astanina was forcibly hospitalized at a psychiatric facility. VTB-Development CJSC’s board is chaired by Sergei Matviyenko, the son of St. Petersburg Region’s governor.