20 years under Putin: a timeline

On September 15, Vladimir Yevtushenkov, chairman of the Sistema conglomerate, was placed under house arrest on charges of money laundering in connection with Sistema’s acquisition of the Bashneft oil company. Analysts quickly drew a parallel between this arrest and the Yukos case. Political analyst Tatiana Stanovaya discusses the real reasons for the prosecution of Yevtushenkov.


The arrest of Vladimir Yevtushenkov prompted Sistema's market capitalization to drop by 32 percent. Photo: ITAR-TASS


On its face, there are a lot of similarities between the Yukos case and that of Vladimir Yevtushenkov: in both cases, the head of a successful company, who was also one of Russia’s wealthiest businessmen, was arrested. As in the Yukos case, the real motives behind the persecution of the chairman of the Sistema conglomerate are clear. One look at the front pages of the major Russian business newspapers quickly reveals what (or rather who) stands behind both accusations: Rosneft CEO Igor Sechin.

Rosneft recently approached Sistema about the possible sale of the Bashneft oil company. However, as Vedomosti newspaper reported, according to an anonymous source close to the Kremlin, Yevtushenkov declined Rosneft’s offer to buy Bashneft because he was not satisfied with the price offered, and this refusal to sell was the reason for the businessman’s arrest—an outcome that he never expected. According to Vedomosti, Yevtushenkov attempted to discuss the situation with the Russian government but could not get a meeting. Kommersant has also mentioned the possibility that Sechin stands behind the attacks against Yevtushenkov.

It is worth recalling that Bashneft was acquired by the Sistema conglomerate along with several other assets of the Bashkirian fuel and energy sector for $2.5 billion in 2009. In summer 2014, Moscow’s Basmanny District Court froze Sistema’s shares in Bashneft in light of charges of embezzlement and money laundering connected with the sale of Bashneft to Sistema. In mid-July, Levon Ayrapetyan, chairman of the Sobesednik publishing house and, according to the Russian Investigative Committee, the primary intermediary in the sale, was also placed under arrest in connection with the same case. Evidence given by former Bashkortostan senator Igor Izmestyev, who is currently serving a life term for his involvement in the organization of several murders, served as the ground for Ayrapetyan’s detention. According to investigators, Ayrapetyan was illegally paid $50 million for providing intermediary services in the Bashneft transaction.

As stated by Yevtushenkov’s lawyer Igor Komarov, Ayrapetyan is currently refusing to testify or to cooperate with the investigation. Another suspect in the case, Ural Rakhimov, the former head of Bashneft who sold the shares to Sistema, has left Russia for Austria. Consequently, the prosecution’s whole case is built upon Izmestyev’s testimony. It is also worth mentioning that the use of testimony from prisoners sentenced to life terms to prosecute other cases is a common practice in Russia. Although prisoners have seemingly nothing to lose, the quality of their life in prison depends entirely on their relations with the management of the correctional facilities where they are confined, and consequently, inmates are willing to go to any lengths to improve their conditions of incarceration.

There is yet another interesting similarity between Yevtushenkov’s case and the Yukos case. The criminal proceedings against Yukos were supervised not only by Sechin, but also by former Russian prosecutor-general Vladimir Ustinov. At the time, the prosecutor’s son Anton was head of the Federal Tax Service’s legal department and was responsible for detailing charges in tax evasion cases. In 2006, his department was supervising the handling of the Bashneft case when the Moscow Arbitration Court demanded that controlling stakes in six companies of the Bashkirian fuel and energy sector, including Bashneft, be returned to the state. Tax authorities claimed that Rakhimov had neglected to pay 42 billion rubles in taxes on the sale of these companies and demanded that the transactions be declared invalid since they were made “against the principles of public order and morality.” The court of cassation, however, suspended this judgment. Today, Anton Ustinov serves as an advisor to President Vladimir Putin on the strategic development of the fuel and energy sector.

An attack against Yevtushenkov was prompted by Western sanctions against the Russian energy sector in general and Rosneft in particular. Yevtushenkov’s unwillingness to sacrifice himself to support the Kremlin’s general party line is in this context seen almost as a war crime.

Thus the following question arises: Why have the police and security forces again become interested in the old criminal case against Bashneft? Several reasons can be identified. First, in 2011, the Russian Federal Agency for Subsoil Usage issued a license to Bashneft for the development of the highly productive Trebs and Titov oil fields in the Nenets Autonomous Region. The recoverable oil reserves in these fields are estimated to be 410 million tons. To carry out these operations, Bashneft founded a joint enterprise with Lukoil, a move that provoked Sechin’s displeasure, because Rosneft was at the time also hoping to get a license for these oil fields in order to expand its resource base. The company subsequently tried to purchase the license for the fields from Bashneft, but these attempts failed. In June 2014, a group of Bashneft’s minority shareholders unexpectedly filed a lawsuit against Bashneft and Lukoil. There is reason to believe that Rosneft had something to do with this.

Second, in summer 2014, rumors began spreading throughout the Bashkortostan Republic that the close circle surrounding former Bashkir president Murtaza Rakhimov and supported by the Sistema conglomerate intended to run their own candidate, former prime minister of the republic Rail Sarbayev, against the current president of Bashkortostan, Rustem Khamitov. Thus, Yevtushenkov’s opponents found a formal reason to complain to the Russian authorities about Yevtushenkov’s destabilizing activity in Bashkortostan.

Third, the police and security forces were annoyed by Yevtushenkov’s plans to capitalize investments in the company and conduct a secondary public offering of Bashneft stock. Yevtushenkov was convinced that these steps would help him protect the company from a hostile takeover, but ultimately, he only precipitated the opposite outcome.

Finally, Yevtushenkov’s “politically disloyal” behavior connected with the situation in Ukraine played a role in determining his fate. According to Yulia Latynina, Yevtushenkov was acting as a middle man between former Ukrainian president Viktor Yanukovych and the new Ukrainian government. The Kremlin does not like any demonstration of initiative regarding politically sensitive topics, especially when this initiative entails independent contacts with “enemies.”

Rosneft, however, denies any involvement in the Bashneft situation. Rosneft spokesman Mikhail Leontyev has labeled the rumors about a conflict between Sechin and Yevtushenkov “misinformation.” According to him, Bashneft is not an attractive asset for Rosneft, because the former company’s oil production has decreased. Putin press secretary Dmitry Peskov declared that there are no political motives behind Yevtushenkov’s arrest and has called on the media to not draw parallels between it and the Yukos case.

Nevertheless, it seems clear that the abovementioned reasons served as a pretext for launching an attack against Yevtushenkov and that Sechin’s actions were prompted by Western sanctions against the Russian energy sector in general and Rosneft in particular. In a situation in which Rosneft is facing difficulties accessing Western financing while Bashneft is planning a secondary public offering of stock, every careless word can serve as a strong irritant. Yevtushenkov’s unwillingness to sacrifice himself to support the Kremlin’s general party line is in this context seen almost as a war crime.

In this regard, the case against Yevtushenkov is not as politically motivated as that involving Yukos. Yevtushenkov did not challenge Putin’s regime but was part of the system. He was a politically loyal businessman who played by the rules, and the attack against him was provoked by his unwillingness to make sacrifices “for the good of the Motherland”—an alarming signal for the Russian business community, as well as for foreign investors. Such an arrest indicates that the economy is entering a “state of siege” in which all relations are governed in the interests of the “key players” whose survival guarantees the stability of the regime. Such a situation will have long-term negative effects on the country’s entire political and economic system.