A high-profile extortion trial in Russia of a former federal minister has officially crossed over into the realm of the absurd. What began as a sting operation involving a suitcase containing $2 million in cash has ended up revealing the seamiest underbelly of the Russian oil industry: the home-made sausages of Rosneft’s notorious CEO Igor Sechin.
Regular readers will remember the case from a year ago. In November of this past year, Alexey Ulyukaev, then serving as Minister for Economic Development, was arrested by FSB officers when leaving Rosneft’s headquarters in the center of Moscow. The scene—with Ulyukaev at first refusing to leave the car in disbelief, then desperately trying to make phone calls—was redolent of Stalin’s 1930s. The Minister was caught with a bag full of cash. He hadn’t touched the money, but his fingerprints were later found on the bag. Ulyukaev was charged with extortion: He had allegedly demanded money from Sechin for approving the sale of the oil company Bashneft to Sechin’s Rosneft. Initially Ulyukaev and his ministry were against the deal (which was billed as a privatization) because a controlling majority of shares in both companies belonged to the government. But later Prime Minister Dmitry Medvedev’s cabinet approved the transaction, and Minister Ulyukaev was the one who announced the decision.
This week, the prosecution presented the court with two tapes of Sechin speaking to Ulyukaev. Nowhere on those tapes are either Bashneft or Rosneft mentioned by name. The first tape is a telephone conversation between the two, with Sechin inviting Ulyukaev to Rosneft’s headquarters to “see the company” and discuss things. The second tape was recorded in Rosneft’s office, and it starts with Sechin asking his assistant to bring tea and “a basket with sausages” into the room. The two then seem to discuss Rosneft, with Sechin bragging to Ulyukaev about his company’s success. Minutes later, Sechin once again inquires about the basket of sausages. Soon thereafter, a third man is heard saying “the Ivanychs” while presumably presenting the basket.
Rosneft’s CEO is a hunter, and he makes his own sausage products with deer meat at his own private factory. Sechin’s middle name is Ivanych, and informally he is usually called Igor Ivanych. (There is another public servant in Russia with the same first and middle name, First Deputy Prime Minister Igor Shuvalov, and to distinguish between the two Sechin is always called “the real Igor Ivanych.”) The newspaper Vedomosti reported that Sechin frequently presents a basket of 16 different kinds of home-made sausages as a gift to his business partners. It published a picture of such a basket.
Next, the two can be heard putting on their coats. Ulyukaev asks, “And the basket?” Sechin replies, “Yes, take the basket,” and the two leave.
Minutes later, when Alexey Ulyukaev was sitting in his car, the FSB appeared and arrested him. They found a basket and a bag in the trunk of his car. When asked what is in the bag, the Minister reportedly said “a good wine.” The former Minister later testified that he thought the suitcase Sechin gave him contained wine and sausages, and accused Rosneft’s CEO and head of security, General Anton Feoktistov (a long-time Sechin protégé who came to Rosneft from the FSB’s 6th Service, a counterintelligence operation), of entrapment, a felony under Russia’s criminal code.
A couple of days after the bust, Vladimir Putin said that Minister Ulyukaev had been under FSB surveillance for a year.
The case was bizarre enough before Sechin’s sausages made an appearance; as I noted a year ago, there are at least two elements that suggest that the official story is absolute garbage. First of all, Rosneft is well known to be the equivalent of a personal slush fund for Vladimir Putin. So in any deal concerning Rosneft, the ultimate decision comes directly from Russia’s President and no one else. Not only is a lowly federal minister without an ounce of authority in such matters, but even Prime Minister Medvedev would also not have a say. Rosneftegaz, a state-owned company that accumulates profits from Rosneft, Gazprom, and energy firm Inter RAO, doesn’t report to the Cabinet despite laws saying it ought to. It sends its financial reports directly to Putin. The Finance Ministry, which is responsible for the federal budget, doesn’t know how much profit Rosneft brings in annually. Ulyukaev, just like any other minister, was simply irrelevant to the decision-making process in the so-called “privatization” of Bashneft by Rosneft.
Secondly, as Ilya Shumanov, the Deputy Chief of Transparency International’s Russian office quipped, $2 million is the cost of a deputy mayor in Russia, not what one might have to pay a full-fledged federal minister. (On the other hand, that amount of money fits perfectly in a briefcase!) And even if Ulyukaev had offered himself for cheap, who in his right mind takes bribes in cash? As we know from Alexey Navalny’s investigation into Dmitry Medvedev’s schemes—investigations that brought thousands of protesters out to the streets in March—high-profile Russian public servants prefer to avail themselves of assets like mansions and yachts instead of owning them outright.
During the year that Alexey Ulyukaev spent under house arrest, the case against him mutated. Initially the prosecution claimed that the meeting between Ulyukaev and Sechin was arranged by Andrey Kostin, the CEO of VTB bank. By the time the trial started, Kostin’s name had conspicuously disappeared from the case materials. And when Sechin submitted a report to the FSB saying that Ulyukaev had extorted a bribe from him, he named Moscow as the place the crime was committed. However, the final accusation presented in court states that Ulyukaev demanded money during a business trip the two took to Goa, India, on October 15, 2016. By that day, the Bashneft privatization deal had already occurred. This date mismatch is explained away by an allegation that Ulyukaev had threatened to obstruct future Rosneft deals.
Furthermore, preparations for the trial were accompanied by the notable resignation of General Anton Feoktistov from Rosneft, and his later dismissal from military service, signed by Vladimir Putin a couple of weeks ago.
And finally, the official indictment presented in court doesn’t say a word about the FSB’s year-long cultivation of the Minister. Indeed, the trial is no longer an FSB case against him. It is Igor Sechin accusing Ulyukaev of extortion, and Alexey Ulyukaev accusing Sechin of entrapment. The government appears to be standing aside.
“So instead of a story of a corrupted official under FSB surveillance,” Konstantin Gaaze wrote on the Carnegie website, “the court is now dealing with a case of ‘one word against another’: Sechin’s testimony against Ulyukaev’s.”
Before the trial got underway in August, Rosneft’s spokesman said that if subpoenaed, Igor Sechin would testify in court to “fulfill his civic obligations.” As the trial got started, Russian media reported that the prosecution had listed Sechin as a witness, but Rosneft’s CEO has not yet appeared in court. When asked earlier this week at the BRICS summit in China about the trial, Sechin didn’t mince words:
I will testify right away. Being a minister, Ulyukaev demanded illegal rewards, he defined the amount himself, came to get it, took it with his own hands to the car, and attempted to drive away. According to the Russian Criminal Code, this is a crime. There is nothing to argue about.
And today, raising the temperature even more, Sechin called the leaking of the tapes an act of “cretinism,” as the tapes contain top secret information. He also said that the trial should not be held in public.
As Gaaze notes, many have long been wondering when Sechin would “break his own neck” with his escapades. Maybe that moment has arrived, or maybe he just “breaks his leg” and loses the case in embarrassment. Whatever was originally behind Sechin’s play against Ulyukaev—a year ago, I suspected that it was actually a strike against Medvedev—today it increasingly looks like the commanding heights of Putin’s Power Vertical have decided to wash their hands of the whole affair, leave it to the courts to decide, and let the chips fall where they may. The next thing to watch for is whether or not Sechin is actually subpoenaed to testify. If so, we can probably conclude that the Rosneft CEO is not a powerful enough player in Putin’s Russia to put a federal minister in jail on his own.