Source: REUTERS
The
story of Kirill Shamalov, the celebration of his wedding to the Russian
president’s younger daughter, and the loan from a politically
well-connected bank that helped make him a billionaire
IGORA, Russia - The wedding party dominated a ski resort nestled in the hills about an hour’s drive north of St. Petersburg. No expense was spared and everyone was sworn to secrecy. The happy couple rode in a traditional Russian sleigh drawn by three white horses, said one of the workers who described the scene to Reuters.
The bride wore a long pearl-tinted wedding dress, the groom wore a dark overcoat, said another person who attended. The newlyweds were Katerina, younger daughter of Russian President Vladimir Putin, and Kirill Shamalov, son of an old friend of Putin.
Their wedding celebrations took place in February 2013, at Igora, a small ski resort that combines beauty and discretion, five people who were there told Reuters. Set amid woodland with a picturesque lake, the resort is co-owned by the family of Yuri Kovalchuk, another old friend of Putin, and a Cyprus company with undisclosed shareholders.
One person who attended the event said staff were told the bride and groom were named Kirill and Katerina, and that guests wore white scarves embroidered with the letters “K&K” in red thread. When shown a photograph of a woman known as Katerina Tikhonova, the source identified her as the bride. Tikhonova is Putin’s younger daughter, as Reuters confirmed in November.
“Guards were behind every corner, (they) didn’t let anyone close to the celebration,” said a staff member at the resort, which has a luxurious spa complex. “But we knew it was Kirill and Katerina – Putin’s daughter – celebrating marriage.”
At the time of the wedding, Kirill – a tall, dark-haired man with rimless glasses - was a rising star of Russian business, but still only 31. His fortunes began to skyrocket soon after his wedding to the president’s daughter, a competitive acrobatic dancer who is now helping to oversee a $1.7 billion expansion of Moscow State University.
Within 18 months, Kirill acquired a large chunk of shares in a major Russian oil and petrochemical processor called Sibur - a stake now worth an estimated $2.85 billion, based on the value of recent share deals. He also quit his job as a business manager and set up a company to run his personal investments.
How did such a young businessman go so far, so fast? A Reuters examination of Shamalov’s career shows that in the summer of 2013, months after he married Putin’s daughter, Kirill opened discussions about buying shares in Sibur from one of the president’s wealthiest friends.
A year later, he was able to borrow more than $1 billion, judging by the published accounts of his investment company. The loan came from a bank headed by another longtime associate of Putin, and where Shamalov’s brother holds a senior position. The money was used to make an investment in Sibur that within months proved highly profitable for Kirill.
Asked about his business deals and the wedding, Kirill Shamalov and Sibur declined to comment.
The trajectory of Kirill’s fortunes sheds new light on how people close to Putin have taken commanding positions in key companies - and how such opportunities are now being extended to a new generation. Like the wedding, much of this transfer of riches has occurred away from public scrutiny.
“We are not allowed to talk about this. I can be fired - you know whose daughter it is.”Vladimir Milov, a former Russian deputy energy minister and now an opposition campaigner, said Putin’s friends had acquired major assets with the help of lenders with links to the state, such as Gazprombank.
“It’s extremely non-transparent, so it is hard to get to and judge the specifics of the loan agreements,” Milov said. “They consider Gazprombank their pocket bank.”
He added: “They are looking to pass on their power and privileges to a new generation.”
Asked about the wedding celebrations and business deals, Dmitry Peskov, spokesman for the Russian president, said: “Putin's daughters are not involved in politics or business. The businessman, Shamalov, is well known. As far as we are aware, all his activities are in line with the laws of the Russian Federation. For many years he has been in the management of the company Sibur, and along with other senior managers is a shareholder. His career and business are not within the sphere of interest of the Kremlin. We do not give comments on the private lives of Putin's close relatives.”
THE BROTHERS SHAMALOV
When Kirill Shamalov was growing up in the 1990s, his father, Nikolai, was a co-founder with Putin and others of a development of dachas known as The Ozero (Lake) Cooperative, about 100 km (60 miles) north of St. Petersburg. Various members of the Ozero development went on to prominence in Putin’s Russia.
Nikolai Shamalov became a shareholder in a small lender called Bank Rossiya, which over the past 15 years has grown to be one of Russia’s most influential banks. Kovalchuk, the co-owner of the Igora ski resort, is the largest Bank Rossiya shareholder.
Nikolai Shamalov has two sons: Yury, born in 1970, and Kirill, born in 1982. Both have prospered during the Putin years.
After studying naval engineering and foreign trade at university, Yury Shamalov worked, according to his official corporate biography, as a staffer on the foreign economic relations committee of the St. Petersburg city council. Putin ran the committee.
On the eve of 2000, Putin became president and began to stamp his authority on Russia’s economy. One company he paid particular attention to was the gas giant Gazprom, which he brought back under state control. Among Gazprom’s assets were Sibur, the petrochemical company, and a lender called Gazprombank.
Both Yury and Kirill Shamalov went on to take important roles in these and other institutions as Putin consolidated his power.
THE BANK
In August 2003, according to his corporate biography, Yury became president of Gazfond, a huge investment fund that controls the assets of Gazprom’s pensioners. Led by Yury, Gazfond later acquired control of Gazprom’s banking subsidiary, Gazprombank. Yury went on to become one of the bank’s deputy chairmen.
Gazfond had effectively bought a state asset and turned it into a private bank controlled by people with long-standing links to Putin.
“They are looking to pass on their power and privileges to a new generation .”Kirill Shamalov, meanwhile, was also making rapid progress. In 2002, he was appointed Gazprom’s “Chief Legal Counsel for foreign economic activity,” according to a biography on Sibur’s website. He was just 20 and had not yet graduated from his law studies at St. Petersburg State University.
Three years later, after completing his law degree, Shamalov became “Chief Legal Counsel” at Gazprombank, then still a subsidiary of Gazprom. Then, in June 2008, Kirill joined Sibur as vice-president for business administration.
It was a notably small world. Kirill’s brother Yury was already both a director of Sibur and a deputy chairman of Gazprombank. Chairman of the bank was Alexei Miller, who in the 1990s had worked with Putin in St. Petersburg. When Putin became president, he had trusted Miller enough to put him in charge of Gazprom.
In addition, Gazfond, where Yury Shamalov was chairman, exerted strong influence at both Sibur and Gazprombank. And the same month that Kirill joined Sibur, according to financial declarations, Gazfond, through its control of Gazprombank, became the ultimate owner of Sibur.
Gazprombank declined to comment, and Gazfond did not respond to questions.
TIMCHENKO CONNECTION
On top of their family links, the brothers Shamalov have deep connections to other members of the Putin elite who reshaped Russia’s economy in the 2000s and made personal fortunes doing so. One is Gennady Timchenko, who became a shareholder in Bank Rossiya along with Nikolai Shamalov.
Timchenko has known Putin for more than 20 years. In the 1990s, he began oil trading from St. Petersburg, when Putin was a rising politician there, and went on to co-found Gunvor, a company that grew to be one of the largest traders of Russian oil. Last year, the U.S. government alleged that Putin had a personal stake in Gunvor, though it offered no evidence of this. Gunvor denied the allegation.
Timchenko was an important contact for Kirill Shamalov, because the oil-trading magnate later became a large shareholder in Sibur.
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