Yesterday, after JPMorgan Chase & Co. sold its commodities trading unit, The Market Now covered some of the ways that the profitable commodities business carries reputational risk. Well, today add one more: It raises questions about what kinds of relationships you have with invasion-prone autocrats.
The U.S. Treasury Department today imposed sanctions on Russian billionaire Gennady Timchenko, the co-founder of the oil trading company Gunvor Group Ltd. The U.S. charged that Gunvor was directly tied to Vladimir Putin, claiming that, “Putin has investments in Gunvor and may have access to Gunvor funds.”
Gunvor, one of the world’s biggest commodities traders and a dominant player in the Russian oil market, shot back within hours with some stunning news. It said that Putin held no stake in the company, and in fact — this is the surprising part – that Timchenko himself had sold his share, leaving the company 87 percent owned by Swedish billionaire Torbjörn Törnqvist. That probably settles the question of whether Putin owns part of Gunvor now (he doesn’t), but may still leave folks with a question about whether he may have had an investment in the company before today, as the U.S. asserts.
Despite the Treasury department’s charges, the evidence for a direct ownership stake by Putin is thin. Gunvor has certainly prospered since Putin has been in power, and Timchenko has indeed known Putin for a long time. But claims that Putin himself has owned part of Gunvor have been around for a long time, and so far no one has presented direct evidence of that.
There’s a long backstory here. In a 2008 article on corruption in Russia the Economist cited the links between Timchenko and Putin. Timchenko sued for libel; the Economist took out the references to Timchenko in the current online version and appended the carefully worded statement that the magazine accepts Gunvor’s assurance that Putin has no ownership interest. The Economist again wrote about Gunvor in 2012, with charges of market manipulation, though without any references to Putin’s involvement. Rumors of Putin’s interest in Gunvor have figured in a U.S. diplomatic cable, and a Russian publicist and gadfly, Stanislav Belkovsky, has retailed claims that Putin owns “75 percent” of Gunvor.
Unfortunately, no one seems to have come up with any documentation. TMN is skeptical that this kind of documentation exists. Make no mistake: Putin is obviously well taken care of, and certainly seems to have unlimited funds at his disposal. But it feels like a stretch to expect that somehow if you lift up enough matryoshka-doll shell companies you will find a document that says that “Vladimir Vladimirovich Putin owns X million shares of companies M, N and Y.”
It’s natural for people who come from a country of laws to assume that such documents must exist. Russia, however, does not always seem to be a country of laws. Searching for documents that catalogue Vladimir Putin’s wealth may be as fruitless as searching for a deed that would show Akhenaten owned a pyramid. A pharaoh doesn’t need a piece of paper attesting to his wealth.