(Forbes) – In Russia, don’t bother trying to go against oilman and political titan Igor Sechin. To some well-known businessmen and politicians, Sechin is more powerful than Vladimir Putin. If someone or some entity is going against Sechin, place your bet on Sechin.
The CEO of Rosneft is not known as the Darth Vader of Russia for nothing. His name has been associated with the downfall of at least two billionaires — including Mikhail Khodorkovsky of Yukos Oil, who has spent his entire post-Russia life feeding the Western world with all sorts of unsavory tidbits of information about the government that basically exiled him. Now, it’s former economic development minister, Alexey Ulyukaev’s turn to get burned. (A week ago, it was billionaire Vladimir Yevtushenkov, founder of private equity firm Sistema.)
Sechin has a list of men he has put in metaphorical body bags. With Khodorkovsky, Sechin was a pest on the sidelines of a dispute between Yukos, the Kremlin and tax authorities. Rosneft eventually took over Yukos Oil, then the biggest private post-Soviet oil company in Russia. It made Khodorkovsky a billionaire back then. The two sides have kept European courts busy for the past decade.
Yevtushenkov thought he could escape the wrath of Sechin, and the government. Sistema owned an oil company called Bashneft that wound up putting Yevtushenkov under house arrest. He was freed and gave his company back to the government at the deep discount of $0. Two years after his release in December 2014, Rosneft took over Bashneft and then sued the pants off Sistema for around $2 billion. That lawsuit basically means Rosneft got Bashneft for half-off. It paid around $5 billion for it when it bought Bashneft from the federal government in 2016.
Late last year, Sberbank put out an equity report arguing that Sechin was not a very good CEO. The point was that Rosneft was mainly growing because of these discount acquisitions. But their mismanagement of them afterward falls on the shoulders of Sechin.
Sechin or his lawyers didn’t like what they read. The Russian language version of the report was scrapped, edited, and re-filed to clients.
Putin has never stood in the way of Sechin’s battles. He asked the courts to be fair with Sistema. He basically handed Yukos assets to Rosneft in a 2007 auction with only one other player, and Rosneft beat them in 10 minutes.
He asked Sechin to testify in the Ulyukaev bribery case, but guess what? Sechin did not testify. He ignored Putin, a man everyone left of center in the U.S. considers to be the power behind the throne in Washington DC.
Putin may control the army and the spy satellites and the hackers. But Sechin controls an important part of the economy and has friends in the judicial system. He was Putin’s chief of staff in the early days of Putin’s reign. He is an uber-nationalist, with ties as close to the security forces as Putin’s, and he is more powerful than Russian prime minister Dmitry Medvedev.
Let’s put it this way, Alexey Navalny organizes protests against Medvedev and to some extent, even Putin and his United Russia party. In 2016, Navalny, an anti-corruption advocate who has become the darling of American media, pushed a story to business daily Vedomosti that a new multi-billion ruble property in Moscow belonged to Sechin. Sechin’s lawyers went after the paper, but not after Navalny. Four years prior, Sechin linked Navalny to Bill Browder, another exiled expat, and former hedge fund manager at Hermitage Capital. Browder, who now lives in the U.K., spends much of his time lobbying politicians in Canada and Europe to follow in Washington’s footsteps with their own version of the Magnitsky Act. The Act bans certain Russians from traveling to the U.S. and having money in U.S. banks. Sechin is not part of that list, but he is currently sanctioned by the Treasury Department.
A month ago, Ulyukaev, once a fixture at investor conferences in Moscow and St. Petersburg, was found guilty of asking Sechin for bribes upwards of $2 million. He professed his innocence yet again in a closing statement to the court. Sechin was to blame for it all, he says. It is unclear exactly why Sechin would want to punish Ulyukaev.
During the trial, I’ve addressed the oddities in the investigation against me. It was a truly amazing investigation, where the supposed victim — Rosneft CEO Igor Sechin — first transforms into a witness and then, after forfeiting this status, becomes a phantom witness. Then he disappears altogether, vanishing somewhere in the vastness between Khanty-Mansiysk and Rome. The man simply dissolves into thin air. Like the budgetary effect of Rosneft’s purchase of Bashneft, only the smell of sulfur lingers. But who is this phantom witness? Perhaps he’s some kind of expert on foul-smelling deeds? In this case, it wasn’t the plaintiff who reported the crime; that was done (by his subordinate, Federal Security Service General Oleg Feoktistov, then head of Rosneft’s security) on the plaintiff’s behalf, based on the plaintiff’s story. The man who organized this sting operation disappears without testifying. Does he exist then only in our imaginations? The key materials in the case have disappeared….This case has aroused considerable public interest, not unlike a circus. An elderly gladiator at retirement age defends himself with a cardboard sword, and people sit back to watch the whole thing happily, all from their comfy seats. It was said long ago for whom the bell tolls; I want to say now that the bell could start tolling for any of you.”
Ulyukaev was sentenced to 8 years in prison on Dec. 15. He is required to pay a 130 million rubles fine, or around $2.3 million.
Bribes and tax evasion have been the casus belli of the Russian government’s attacks on individuals since the fall of the Soviet Union. It’s knocked out Khodorkovsky and killed Yukos Oil. It’s kicked Hermitage Capital to the curb, once one of Russia’s biggest foreign controlled investment firms, and turned Russophile Bill Browder into a one-man gang gunning for anything within a country mile of Putin’s inner circle. It may yet crush Sistema, a successful private investor and an initial backer of numerous publicly traded companies that have nothing to do with the state, like Mobile TeleSystems traded on the NYSE, and Ditsky Mir, Russia’s version of Toys R Us.
And then there is political adversary Ulyukaev, who unlike the freemen listed above, will spend a large part of his retirement in a maximum security prison. May he get out of it alive.