A year ago, on February 24, Russia’s “special operation” * began in Ukraine, and one of the most famous Russian oligarchs, Roman Abramovich, re-registered most of his assets in 10 trust funds in offshore financial institutions in Cyprus and Jersey in favor of his six children.
According to leaked documents obtained by the Organized Crime and Corruption Investigation Center (OCCRP) and its partners, including Forbes and The Guardian, these trusts own at least $4 billion in property. Nineteen days later, Abramovich was sanctioned by the European Union, although the oligarch’s assets have already passed into the ownership of his children, and therefore were not subject to freezing or arrest. In the weeks that followed, Abramovich moved his superyachts out of Europe, mooring them on more hospitable shores. Four of his ships, including the 162-meter Eclipse for $429 million and the 140-meter Solaris for $507 million, went to Turkey, where Western countries could not seize them – Turkey takes a neutral position in the conflict in Ukraine.
Over time, under pressure from the British authorities, Abramovich had to sell his beloved Chelsea football club, a member of the English Premier League, but the businessman is still doing very well. His finances dwindled from about $14.3 billion on Feb. 23 to $6.9 billion two weeks later, when the ruble collapsed and trading on the Russian exchange was suspended. According to Forbes, today the value of Abramovich’s assets is slightly closer to the previous values and amounts to $9.2 billion.
Abramovich is not the only one who re-registered property for family members. Many billionaires circumvented the sanctions by transferring trust funds and offshore companies where their assets are stored to their spouses and partners. Others have avoided having their yachts or planes confiscated by taking them to friendlier countries such as Turkey and the United Arab Emirates, which have not imposed sanctions on Russia.
However, the Russian oligarchs did not suffer long from the sanctions – later they managed to regain most of the wealth. Some of those who did business in Russia seized the opportunity to strengthen their positions and amass assets that others wanted to get rid of. In April last year, Vladimir Potanin bought back Rosbank from the French financial group Société Générale, which originally acquired the organization from him in several transactions from 2006 to 2014.
Two weeks later, Potanin bought Tinkoff Bank, one of Russia’s largest private banks, from former billionaire Oleg Tinkov for an undisclosed amount. After these acquisitions, Potanin ended up on the UK sanctions list in June and the US in December. Apart from the well-chosen moment, the deals turned out to be quite profitable in themselves: thanks to the banks, from March 2022 to March 2023, Potanin’s fortune grew by $6.4 billion, which was enough to keep the status of the second richest man in Russia.
“Basically, for Potanin, it was a resounding success, and his advantage is that he pulled off the deal even before he was sanctioned,” said Anders Åslund, a Swedish economist and expert on Russian oligarchs, who describes how some Russians are cutting spending. “Now people are either emigrating or focusing exclusively on Russia. Potanin is a very atypical example.”
In 2022, high prices for oil, metals and minerals also helped to boost the profits of Russian companies and replenish the country’s oil and gas budget by billions of dollars – as did the rebound in the Russian stock market and the value of the ruble. Compared to the lowest level recorded on September 26, the Moscow Exchange index (it includes 50 largest companies traded on the Moscow Exchange) grew by 31%, and if we count from the moment the trading closed on the eve of the start of the “special operation”, then the indicator fell by only 18 %. The ruble exchange rate against the dollar reached pre-conflict levels, and starting from March 10, 2022, when its value reached a historic low, the national currency has risen in price by 65%.
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Because of all this, 2022 turned out to be extremely successful for the richest Russians. In the global ranking of billionaires in 2023, according to Forbes, the names of 105 Russians appear, whose total fortune reaches $474 billion. In March 2022, there were only 83 Russian citizens on the list, and their total finances were estimated at $320 billion. For comparison, in the period from From March last year to March of the current year, 735 billionaires from the United States lost $200 billion, and the richest Chinese lost $300 billion.
Since 2014, the US, EU, UK, Canada, Switzerland and Australia have imposed sanctions on at least 48 Russian or Russian-born billionaires, Forbes estimates. Most of them suffered in the first months after the start of the “special operation”. In the global ranking of billionaires in both 2022 and 2023, 39 of them were included. Since February 23, 2022 (a day before the start of the “special operation”), these 39 people have lost $45 billion, or 13% of their collective wealth.
In March last year, the ruble went into a peak, and the Moscow Exchange closed. If you look at how things were going for these list participants starting from that moment, the picture emerges completely different. From March 2022 to March 2023, these 39 sanctioned billionaires won back $104 billion. During this period, only three became poorer. Seven others have increased their wealth enough to return to the ranking of the richest people in the world in 2023, although they did not make it in March 2022.
“Their assets are remarkably well preserved,” says Victor Winkler, a sanctions lawyer and former head of global sanctions standards at Germany’s Commerzbank. “(Until 2022) a huge proportion of their property was already in countries that do not comply with Western sanctions. Many were able to quickly respond to the restrictions adopted after February 23, since they … were introduced much later than the start of the conflict.”
Fertilizer magnate Andrey Melnichenko, who is now Russia’s richest man, has won the most. Over the past year, his wealth has increased by $14.1 billion to $25.2 billion, helped by rising prices for fertilizer and coal, key products of his two private enterprises, fertilizer maker EuroChem and coal-fired energy company SUEK. In 2006, Melnichenko transferred his shares in these firms to a trust fund, and on March 8, 2022, he transferred the rights of the beneficiary in favor of his wife Alexandra. Then in June, she also came under sanctions. Representatives of the businessman claim that for this reason Melnichenko should not have been on the list of billionaires at all, but Forbes believes that relatives or partners hold these assets just for him. In fact, when calculating the finances of all Russian billionaires, Forbes determined their performance for 2023, starting from the ownership structure as of February 2022 (even before the start of the “special operation”), therefore Melnichenko’s rating still reflects EuroChem and SUEK .
According to Anders Åslund, it is also crucial to distinguish between the consequences of sanctions for oligarchs with a significant share of assets abroad and for those whose property is mainly located in Russia. “I think they suffered a lot. Those who were in the middle (between the West and Russia) lost the most,” the analyst emphasizes. He points to the declining capitalization of enterprises like the Luxembourg-headquartered financial company Alfa Group, which is owned by sanctioned billionaires Mikhail Fridman, Petr Aven, German Khan and Alexei Kuzmichev. No sanctions were imposed on the fifth co-owner, Andrey Kosogov. In this, the four are fundamentally different from those whose assets are concentrated in Russia and who have closer ties to Putin, such as Arkady and Boris Rotenberg, for example.
According to Forbes, Arkady Rotenberg, his brother Boris and son Igor have become richer since the beginning of the “special operation” and together earned $500 million, and their total fortune reached $6.2 billion. little, the Rotenbergs were not particularly affected by Western sanctions on shares in foreign companies or financial investments abroad.
However, the prospects for the Russian economy are not as bright as one might think, looking at the finances of the country’s richest citizens. Russia’s economy contracted 2.1% last year, according to official statistics, and the decline was nowhere near as large as forecasts of a 12% or more decline. However, the decline is still sharp, especially when compared with GDP growth of 3.5% in the European Union or 2.1% in the United States. There are also signs that Western sanctions are finally starting to hurt the Russian economy, such as the ceiling on Russian oil prices introduced in December and the ban on imports of oil products from Russia to the European Union that came into full force two months ago. Thus, according to the results of the first quarter of 2023, the Russian Ministry of Finance reported a budget deficit of 2.4 trillion rubles, mainly due to a reduction in oil and gas revenues.
As for the consequences for the richest Russians, over the past year only one person involved in the sanctions lists has left the club of billionaires – Oleg Tinkov. According to Forbes USA sources, this happened because when he began to criticize the “special operation”, the entrepreneur was forced to sell his own assets on the cheap.
Tinkov claims that sanctions are being imposed against the wrong people. “If I were Western governments, I would aim more accurately,” the businessman told Forbes in May 2022. “The list didn’t include many of Putin’s wallets, but I did.”