The Real Russia. Today. Another former government minster is arrested for embezzlement, looking back at past shady top officials, and opinions about Mueller’s report

Tuesday, March 26, 2019

This day in history: Two years ago, on March 26, 2017, Alexey Navalny organized anti-corruption protests in nearly 100 cities across Russia, attracting unprecedented numbers of young people, riding the popularity of an investigation into Prime Minister Dmitry Medvedev.

• Former Russian minister formally charged after accusations that he used his position to form a criminal group
• Russia's top government officials embroiled in criminal investigations over the past two decades
• Unknown actors attempt to steal special communications cable near Kremlin
• Two opinions about the ‘end of RussiaGate,’ one by former diplomat Vladimir Frolov and the other by historian Ivan Kurilla

Bye bye, Abyzov 👋

Former Open Government Minister Mikhail Abyzov has been charged with fraud and forming a criminal group. According to Russia’s Investigative Committee, Abyzov worked with five suspected accomplices from 2011 through 2014 to embezzle four billion rubles (more than $62 million) from two companies based in Novosibirsk Oblast, Regionalnye Elektricheskie Seti and Sibirskaia Energeticheskaia Kompania. The suspects allegedly transferred the money they received out of Russia. Section 3 of the statute under which Abyzov was charged, which penalizes forming criminal groups, allows for a prison sentence of up to 20 years.

The former minister has been arrested, according to Interfax, RBC, and Vedomosti. RBC reported that Russia’s Federal Security Service (FSB) carried out the arrest. Interfax indicated that Abyzov currently resides in Italy and the United States, and another source told Vedomosti that the defendant had flown into Moscow for a weeklong business trip. However, Interfax reported on suspicions that Abyzov had in fact been “lured” back into Russia and may face additional fraud charges in the coming weeks. TASS wrote that the former minister is currently under questioning. A few hours after the news of Abyzov’s arrest broke, the Investigative Committee confirmed that he was being held under suspicion of using his government position to form a criminal organization that also involved entrepreneurs and energy officials Nikolai Stepanov, Maxim Rusakov, Galina Fraidenberg, Alexander Pelipasov, and Sergey Ilyichev.

From 2012 to 2018, Abyzov led the Russian government’s “Open Government” project. In January of 2012, then-Russian President Dmitry Medvedev appointed Abyzov as one of his advisors. In May, when Medvedev had returned to his former position as Prime Minister under current President Vladimir Putin, Abyzov became a member of Putin’s cabinet as the minister in charge of the Open Government project.

Medvedev first proposed the project in 2011 under the name “Big Government.” The agency was intended to serve as an investigative body that would provide oversight on the actions of Russia’s executive agencies. The task of selecting the experts who would lead the project fell to the Russian prime minister, who chose researchers from a list provided by Abyzov along with a group of self-nominated citizens who had registered on the project’s website.

After Russia’s 2018 presidential elections, the post of Open Government Minister was abolished, and Abyzov was not included in Putin’s next cabinet. The Russian government announced that Open Government would adopt a more regulatory function, but it became clear earlier this week that the agency had practically been liquidated in full.

Prime Minister Dmitry Medvedev is aware of the charges against Abyzov, executive branch press secretary Oleg Osipov told Interfax. “As I understand it, the actions in question are not connected to the official government duties of the former minister. The matter concerns [Abyzov’s] commercial activities,” Osipov said. He added that the former minister had “encountered grievances” from his business partners. Dmitry Peskov, the press secretary to Vladimir Putin, said the Russian president was warned in advance about the charges against Abyzov.

Abyzov was one of the wealthiest members of the Russian government. In 2015, his income reportedly reached 456 million rubles (more than $6.5 million), making him the wealthiest minister in Russia. In 2016, Abyzov’s income grew to 521 million rubles, and it declined to 181 million in 2017. In 2018, Forbes rated Abyzov’s net worth at $600 million. The former government official was ranked 162nd on the publication’s list of “Russia’s 200 Richest Businessmen.”

Before he began working in government, Abyzov was based in the energy industry. In the late 1990s and early 2000s, he was a leading member of Novosibirskenergo and EES Rossii. Abyzov was said to be involved in the energy reforms introduced by former EES Rossii head Anatoly Chubais between 2002 and 2008.

Between 2005 and 2007, Abyzov led Kuzbassrazrezugol, one of the largest coal mining companies in the country. He later became the chair of the boards of directors for several companies outside the energy industry, namely the industrial investment firm Ru-Com, the manufacturing direction company Gruppa E4, and the Mostotrest transportation infrastructure construction group.

Where Memory Lane intersects Crime Alley 👮

On March 26, Russia’s Federal Investigative Committee launched a felony case against former Open Government Minister Mikhail Abyzov, accusing him and five accomplices of stealing 4 billion rubles ($62.2 million) from energy companies in the Novosibirsk region and hiding the money abroad. Abyzov is just one of several top government officials to fall afoul of law enforcement over the past two decades. The newspaper Kommersant remembered some others from cabinets past, and Meduza summarizes that list below.

Andrey Vavilov

In 1997, the Russian Attorney General’s Office started investigating the embezzlement of $231 million allocated to the production of the MiG-29 fighter jet. Former Deputy Finance Minister Andrey Vavilov was a witness in the case, which officials closed after three years without ever going to court. In 2006, however, the case was reopened, and investigators accused Vavilov of committing fraud and abusing his authority at the Finance Ministry. In July 2008, by which point Vavilov was a senator in the Federation Council, the case was closed for good, with the statute of limitations expired.

Nikolai Aksenenko

Following an audit by Russia’s Accounts Chamber in 2001, officials opened a criminal case against Railways Minister Nikolai Aksenenko, who allegedly used state investment program money to buy apartments worth roughly half a million dollars. The next year, Aksenenko resigned, and he was soon charged with large-scale embezzlement and abusing his authority. The case was brought to court in October 2003, but Aksenenko died in 2005 from cancer, before the trial concluded.

Evgeny Adamov

In May 2005, at the request of the United States, police in Switzerland arrested Evgeny Adamov, the former head of MinAtom, Russia’s Atomic Energy Ministry. He was extradited to Russia later that year, where he was charged with fraud and abusing his authority in office. According to investigators, Adamov and his accomplices stole a 62-percent share of Russian-U.S. company Globe Nuclear Services and Supply (GNSS) and then signed an illegal contract forgiving $113 billion in debt for previously supplied nuclear materials. In 2008, Adamov was sentenced to five and a half years in prison, but this was later changed to probation. (The U.S. wanted Adamov for embezzling $9 million allocated by the U.S. Energy Department to help Russia improve security at its nuclear facilities.)

Sergey Storchak

On November 15, 2007, police arrested Deputy Finance Minister Sergey Storchak. According to investigators, during the restructuring of Algeria’s debt, Storchak added an extra $43.4 million to the amount of money owed to the company “Sodexim” (which bought some of the debt) through the Interregional Investment Bank. After 11 months in jail, Storchak was released on his own recognizance. In late January 2011, the investigation was closed “for lack of criminal evidence.” Throughout the case, Storchak never lost his job.

Anatoly Serdyukov

In October 2012, federal officials searched the offices of the military contractor “Oboronservis,” marking the start of an extensive investigation into the fraudulent sale of Defense Ministry property that cost the state an estimated 5 billion rubles (roughly $77.6 million, by today’s exchange rate). Within weeks, the scandal led to Defense Minister Anatoly Serdyukov’s resignation. The key suspect in the case was Evgeniya Vasilyeva, the former head of the Defense Ministry’s Property Relations Department. Serdyukov was only a witness in her trial, though he was charged with criminal negligence in December 2013 (only to escape prosecution thanks to a presidential amnesty). In July 2018, journalists reported that Serdyukov and Vasilyeva had married, though the former defense minister refuses to verify the rumors.

Grigory Pirumov

On March 15, 2016, Federal Security Agents detained Deputy Culture Minister Grigory Pirumov on charges of embezzling funds allocated to the restoration of cultural heritage sites, including the Izborsk Fortress in Pskov. In October 2017, Pirumov was sentenced to 18 months in prison and freed in court for time served, though he was re-imprisoned in January 2019, when a judge increased his sentence to three years.

Alexey Ulyukaev

On November 14, 2016, Economic Development Minister Alexey Ulyukaev was arrested on charges of soliciting and accepting a $2-million bribe. In December 2017, he was convicted and sentenced to eight years in prison and fined 130 million rubles ($2 million). Ulyukayev allegedly demanded the money for facilitating the government’s approval of Rosneft’s acquisition of a stake in the oil company Bashneft. Read the closing statement he delivered in court before he was sentenced.

The cable guys 👮

A section of cable used for government communications has been stolen near the Kremlin, and those immediately responsible for the theft have been caught, wrote the news agency RBC. The cable was reported missing from a manifold near the Bolshoi Moskvoretsky bridge on March 25. On March 26, Federal Protective Service representative Denis Simonov announced that the culprits had been “caught red-handed” at the scene. Simonov explained that one of the thieves attempted to escape law enforcement officers by jumping into the Moskva River and swimming across before he was pulled out and “practically saved” from the freezing cold water. RBC reported that the theft did not affect any government communications.

Opinions about the end of RussiaGate 🕊️

Frolov: Moscow's long shot could finally pay off now

In an op-ed for Republic, columnist and former diplomat Vladimir Frolov says the results of Robert Mueller’s report have rekindled Moscow’s hopes that its 2016 election meddling will pay off in the long run. In the article, Frolov summarizes the highlights of the investigation into Donald Trump’s Russia ties and the parting of the collusion clouds above his presidency. Frolov also openly acknowledges, as least from the Americans’ perspective, that Russian actors deliberately mounted a two-pronged attack on Hillary Clinton’s campaign: (1) a sophisticated cyber-attack that involved stealing and leaking the Democrats’ internal records, and (2) an amateurish attempt on social-media by the Internet Research Agency to “sow discord.”

Frolov says other countries’ intelligence communities also try to build inroads with the teams of future U.S. presidents, arguing that Saudi Arabia and the United Arab Emirates did better jobs than Russia in 2016, but he describes the offensive against Clinton as something special that isn’t “the business of intelligence agents.” In the short-term, this risky campaign has been disastrous, tying Trump’s hands on anything related to Russia and making sanctions only worse.

While some of the sanctions are here to stay (given that they were imposed because of Russia’s election-meddling, not Trump’s supposed collusion), Russia’s long-term investment in the Trump presidency is suddenly promising again, and rapprochement is thinkable once more. Frolov says the Kremlin could pave the way to a visit to Washington, D.C., by returning the Ukrainian sailors captured at the Kerch Strait. America and Russia might finally turn a corner — so long as Moscow avoids overstepping in Venezuela.

Kurilla: Will Moscow and Washington be smart enough to get back on track?

In an op-ed for RBC, historian Ivan Kurilla says the end of the Mueller investigation opens new options to both the United States and Russia. Kurilla stresses that the “RussiaGate” scandal has always been an attack on Donald Trump more than Russia, meaning that the end of the special investigation should reduce the toxicity of contact with Russians, paving the way to better relations. After the American media is done licking its wounds and questioning Attorney General William Barr’s handling of the Mueller report, major news outlets in the U.S. might even try to “rehabilitate their reputation” by amplifying more voices of scholars and politicians who seek “stability in Russian-American relations.”

Russia could seize this moment, as well, Kurilla says, by repealing some of the most anti-American legislation drafted and adopted in recent years. He singles out the “RuNet isolation” law and recent limitations on the work nonprofits are permitted to do in collaboration with foreign entities.