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Vladimir Kiriyenko presenting at a Rostelecom conference inSeptember 2018

Meet the new boss After helping to create Russia’s ‘sovereign Internet,’ the son of one of the Kremlin’s most powerful officials takes the helm at the country’s most popular social network

Source: Meduza
Vladimir Kiriyenko presenting at a Rostelecom conference inSeptember 2018
Vladimir Kiriyenko presenting at a Rostelecom conference inSeptember 2018
Kirill Kallinikov / Sputnik / Scanpix / LETA

On Monday, December 13, Vladimir Kiriyenko was appointed to serve as the new CEO of Vkontakte’s parent company, VK. The son of Sergey Kiriyenko (President Putin’s first deputy chief of staff and the Kremlin’s unofficial domestic policy czar), Vladimir previously worked as a vice president at Rostelecom. His appointment followed a major sale of shares that transferred control over VK to Gazprombank and the insurance giant Sogaz. Meduza explores key details of the new CEO’s life. 

The Investor

The transfer of VK’s (previously Group’s) ownership was unexpected. On December 2, Alisher Usmanov’s USM holding company announced its sale of shares in MF Technologies, the holding group that controls VK. As a result, structures affiliated with Gazprom now own 90 percent of the shares in MF Technologies. 

Both RBC and The Bell had reported that VK would change its CEO as well. According to both outlets, outgoing CEO Boris Dobrodeev (son of VGTRK head Oleg Dobrodeev) would be replaced with Vladimir Kiriyenko — the son of First Deputy Chief of Staff of the Presidential Executive Office Sergey Kiriyenko. VK confirmed these reports in a press release on December 13.

Vladimir Kiriyenko previously held an executive role at Rostelecom. He became the company’s vice president in 2016 at the age of 33. His appointment coincided with his father Sergei Kiriyenko’s new position in the Presidential Administration — he became its deputy chief of staff in charge of domestic policy. When he assumed the role, Rostelecom’s president at the time, Sergey Kalugin, explained that the young VP was responsible for charting “a more active direction for the company to enter new and growing segments of the market.” Kalugin gave no details about how Kiriyenko would achieve such a goal. 

Prior to his role at Rostelecom, Vladimir Kiriyenko had no experience in the telecommunications industry. He had spent his entire career in his home region of Nizhny Novgorod. The younger Kiriyenko studied at the local branch of the Higher School of Economics, and after graduating at 22 years of age, immediately became the chairman of the board of directors of a local television company, Volga. At the time Vedomosti reported that the company belonged to a friend of his father, Lukoil vice president Vadim Vorobyov. Vladimir Kiriyenko also co-owned Sarovbusinessbank with Vladimir Travin, another close friend of his father. 

In 2007, Vladimir Kriryenko’s company, Capital, received a 25-percent stake in an agricultural holding along the Volga River, NZhMK, after its owner Nikolai Nesterenko appealed to Kiriyenko Sr. for help thwarting an unwanted acquisition by another company, Rinako. According to Forbes, Nesterenko wrote to Prime Minister Mikhail Kasyanov and sought assistance from law enforcement, thereby preventing “an attempted hostile takeover.”

Vladimir Kiriyenko always hoped that his son would be viewed as a successful businessman, according to a source interviewed by Forbes. As a result, he started “receiving all these assets,” and he began managing the family’s business. Forbes estimated that Kiriyenko Jr.’s assets in industrial enterprises are worth $50 million. 

Vladimir’s biography on Rostelecom’s says that he “has experience with direct investment in Russian companies and the IT-sector.” In 2013, he began leading a venture capital fund called Titanium Investments. This fund did indeed invest in startups. Among them is Factory of Online, a business that Russifies popular foreign video games (though the last game it worked on was released in 2014). The fund was also involved in the peer-to-peer lending service, which is currently defunct and whose website no longer works. A more successful investment was 365score, an Israeli app for sports fans which is used by 40 million people around the world. 

Following his appointment at the state-owned Rostelecom, Kiriyenko pledged to divest from Titanium Holdings, even though he was not formally obliged to do so. However, iStories reported that in that same year, Kiriyenko Jr. registered a similarly-named offshore company — Titanium VC Limited — in the British Virgin Islands and used it to invest in foreign startups. Vladimir Kiriyenko was its beneficiary until at least mid-2017. 

The Lobbyist

Rostelecom emerged in its current form about ten years ago. In the past, it had been a part of the state-owned Svyazinvest holding, and managed intercity and international telephone networks. But demand for traditional telephony services was falling. As a result, the company pivoted to Internet and wireless services. For example, network operator Tele2 is a wholly owned subsidiary of Rostelecom. 

Rostelecom’s growth was also driven heavily by the state. In 2009, Vladimir Putin awarded the company a state contract to create the “Gosuslug” (Public Services) website. Since then, the government has signed contracts with Rostelecom for maintaining the “electronic government’s” infrastructure. The most recent contract for 2020 and 2021 is valued at 11.9 billion rubles ($162 million). 

Since then, the number of government contracts received by Rostelecom only grew further. Rostelecom is uniquely tasked with streaming video from presidential and parliamentary elections, video-monitoring of Russia’s standardized Unified State Exam, and Russia’s electronic voting system. 

Kirill Kallinikov / Sputnik / Scanpix / LETA

After Kiriyenko joined the company’s leadership, Rostelecom became the sole provider of wireline services to an array of federal government departments. In 2019, moreover, Rostelecom won an auction to connect “socially significant places” to the Internet across half of the country. Such places include schools, various municipal and governmental functions, and police and fire stations. Besides these activities, Rostelecom is part of an initiative to reduce digital inequality within the country, achieved by extending telecommunications networks to smaller towns and settlements. 

In addition to other governmental projects, Rostelecom digitized the All-Russian census. Now, census workers have replaced their traditional paper notebooks with Russian-made tablets procured by Rostelecom. In exchange for the 360,000 tablets, Rostelecom received 9 billion rubles ($123 million). Now, Rosstat’s situation centers can track census workers and remotely provide direction through a network also managed by Rostelecom. 

Rostelecom also received exclusive contracts to “establish data protection and traffic filtration systems for schools and electoral commissions” — including functionality to prevent access to blocked websites and “extremist materials.”

Experts point to Vladimir Kiriyenko’s influence as a key factor in Rostelecom’s success. “Kiriyenko is an effective manager; thanks to his lobbying capabilities, he strengthened Rostelecom’s position in securing government procurements,” explained Yuri Bryuvkin, the director of the analytics firm Rustelecom. 

Kiriyenko Jr. himself said that Rostelecom is first and foremost focused on working with “government clients” and large businesses. At the same time, he has also spoken negatively about certain government initiatives. For instance, Kiriyenko argued that Rostelecom should not take advantage of its wealth of customer data, which it is obliged to collect and retain in accordance with Russian anti-terrorism laws. Per this legislation, network operators are also required to transmit these data to law enforcement upon request. 

The Defender

In recent years, the interests of Sergey and Vladimir Kiriyenko have become ever more interconnected. After an unsuccessful attempt to block Telegram, officials became interested in creating a so-called “sovereign Internet.” A 2019 law provides the legal basis for it: network providers would be obliged to install special devices — “technical tools for threat prevention,” which would enable Roscomnadzor to control users’ traffic. 

Sergei Kiriyenko was a key figure in initiating Russia’s sovereign Internet, according to Forbes and the BBC. Originally, the concept was framed as defensive, to protect the Russian internet from external attempts to disconnect it. But when Roscomnadzor obtained the ability to control networks, it began to exercise it. For instance, the agency can now independently decide to “slow down” Twitter inside Russia. 

Roscomnadzor’s technical tools, which it installs on provider networks, are equipped with software from — a company owned by Rostelecom. 

Alexey Danichev / Sputnik / Scanpix / LETA

Rostelecom’s role does not end there. The largest node in Russia’s Internet traffic was a company called MSK-IX. In the early 2010s, the company was absorbed by the Safedata group, which combined several large data centers. Today, Safedata (now named RTK-TsOD) is wholly owned by Rostelecom. 

MSX-IX’s technological resources provided the basis for the Internet Technical Center, which was the technical administrator of Russia’s Web domains (.ru, .РФ, and .su). The firm was owned by KTs – the Coordination Centre of national internet domains – and it was an independent domain regulator. 

Over time, the Coordination Center lost its independence: in 2015, the government was listed as one of its founders. Then in 2017, Rostelecom created its own private company — TTsI — which received technical control over the root servers of Russia’s domains. Now, Rostelecom has control over servers that have records of each domain, its owners, and their IP addresses. According to Meduza’s source at Rostelecom, Kiriyenko Jr. oversaw the activities of both RTK-TsOD and TTsI. 

Rostelecom enjoyed financial success while Vladimir Kiriyenko worked there. Company profits stood at 297 billion rubles ($4 billion) when Kiriyenko assumed his post in 2016 and had risen to 546 billion rubles ($7.4 billion) by 2020. Contracts with the government and large corporations constituted 33 percent of the company’s total profits. The digital services under Kiriyenko’s management were a particularly strong driver of growth. For instance, he oversaw the successful launch of the multimedia platform Wink. “Rostelecom today has a much clearer and more transparent ecosystem of digital services. Sure, not all of them are in high demand, but they are interconnected,” telecom analyst Sergei Polovnikov told Meduza. 

The manager

For its previous owners (Alisher Usmanov’s holding structures), an asset like VK was unattractive, according to The Bell. The company was not highly profitable. While Usmanov’s Metalloinvest delivered $1.34 billion in profits, VK mustered a comparably paltry $138 million. And in 2021, VK’s first three quarters posted consecutive losses, while its stock shed 40 percent of its value. “It was obvious that VK wasn’t what USM wanted to invest in. Whereas VK was a pressing issue for the Presidential Administration,” a source told The Bell. 

“Market data painted a clear picture: foreign social networks were gaining users while Vkontakte was falling behind. For the government, it was politically undesirable if VK lost contact with its Russian audience. And for Usmanov, such a state of affairs was uncomfortable, too, since he has a certain responsibility to the state,” added The Bell’s source. Someone working for the federal government’s cabinet told Forbes Russia that Sergey Kiriyenko has been tapped to resolve the solve the problem within two or three years.

But Kiriyenko Sr. reportedly did not embrace the recruitment of his son for this assignment. According to Meduza’s own source with ties to the Putin administration, Sergey Kiriyenko wanted his son to remain at Rostelecom, earning “good money” and doing “substantive work” — all “without any politics.”

The source also noted, however, that Kiriyenko Jr. may have been relieved to get away from Rostelecom in light of a police raid on the company’s offices in the spring of 2021. “Who knows what they’ll dig up in the end?” Meduza’s source reasoned.

Kiriyenko Jr. has always been known as an extremely careful manager and not the easiest colleague, recalls a source who works for one of Rostelecom’s partner companies. “He always seemed to be afraid. He was never decisive when it came to doing mundane things, like signing off on internal strategy documents and giving comments for press releases, fearing the questions he might be asked later.” Meduza’s source summed Kiriyenko up as “neither fish nor fowl.”

“He was annoyingly meticulous,” a source at Rostelecom told Forbes Russia. “He’s not the type to listen to a positive answer and be satisfied. He always remembers the details and is keen to question whatever isn’t going as well.”

Another Rostelecom subcontractor described Vladimir Kiriyenko in the following terms: “People who grew up in powerful families can end up weird. But Kiriyenko Jr. gives off the impression of an intelligent and calm person. He understands finance and business and is a respectful communicator. He doesn’t offend anyone.”

Story by Igor Korolev with additional reporting by Andrey Pertsev

Translation by Nikita Buchko