Publication: Monitor Volume: 6 Issue: 146

President Vladimir Putin is set to meet tomorrow with eighteen of Russia’s leading oligarchs as part of an attempt to smooth relations between the authorities and the tycoons, many of whom have recently been the objects of unwanted attention from the tax and law enforcement authorities. Among those who have been invited are: Vaget Alekperov, head of LUKoil, which is being investigated for alleged large-scale tax evasion; Vladimir Potanin, head of the Interros financial-industrial group, whom prosecutors have accused of conspiring to defraud the state of US$140 million in connection with the 1995 privatization of Norilsk Nickel; Rem Vyakhirev, head of Gazprom, Russia’s natural gas monopoly, whose offices were recently raided in connection with the criminal case against Media-Most chief Vladimir Gusinsky; Alfa Group co-founder Mikhail Fridman; Russian Aluminum co-founder Oleg Deripaska; Yevgeny Shvidler, the president of the Sibneft oil company; and United Energy Systems (UES) chief Anatoly Chubais, whose company, state auditors have charged, may have been partially sold to foreigners in violation of Russian law (Vedomosti, July 25; see also the Monitor, July 14). Notably absent from the invitation list were Media-Most’s Gusinsky; Boris Berezovsky, the controversial tycoon and veteran Kremlin insider who was declared himself a “constructive” opponent of Putin and who recently gave up a seat in the State Duma; Roman Abramovich, the tycoon who is formally a State Duma deputy but believed to be the real No. 1 at Sibneft and Deripaska’s partner in Russia Aluminum; and Moscow banker Aleksandr Mamut, who is said to be close to Abramovich and a key Kremlin insider.

Indeed, despite the frequent statements from Putin and other Kremlin officials that the era of the oligarchs is over, there remain strong reasons to doubt that Putin’s real goal is either to end their existence “as a class,” as he once promised, or even to hold all of the tycoons equally at arm’s length. While it may be the case that Berezovsky, once considered the most powerful of the oligarchs, may now be considered a liability by his erstwhile allies–including Abramovich, Kremlin administration head Aleksandr Voloshin and Putin himself–the Kremlin still appears to be playing favorites. For example, the Finance Ministry recently completed a study which found that Sibneft was required to pay eight times lower taxes than other large oil companies like Surgutneftegaz, Sidanko (owned by Interros) and Onako. According to a newspaper report, 90 percent of Sibneft’s business is peacefully operating “in the shadows”–that is, off the tax authorities’ radar screen (Segodnya, July 26). Sibneft, together with Deripaska’s Siberian Aluminum and Berezovsky’s LogoVAZ, moved earlier this year to take over a number of key aluminum smelters. Despite the fact that their joint holding, Russian Aluminum, is said to now control as much as 80 percent of Russia’s multibillion-dollar aluminum industry, the authorities have repeatedly claim that the take-over did not violate Russia’s antimonopoly laws (see the Monitor, March 10).

Such factors have caused some observers to dismiss both Putin’s overall anti-oligarch drive and tomorrow’s planned roundtable meeting. Indeed, a newspaper controlled by Potanin’s Interros group cited unnamed “analysts” as saying that the meeting could become simply the latest “smokescreen by the Kremlin authorities” (Komsomolskaya pravda, July 26). Chubais, meanwhile, said in an interview published this week that much of the current conflict between the tycoons and the authorities is the result of “splits” within the business world itself, which is carrying out its “competitive struggle via the authorities.” Chubais called the situation “especially alarming,” and said that Putin must address the issue “publicly” in connection with tomorrow’s meeting (Novaya gazeta, July 24). Chubais, meanwhile, may be in imminent danger of losing his position as UES head. Minority UES stockholders have challenged his plan to restructure the company, and some observers believe they are being supported by the Kremlin (Russian agencies, July 27).