A port city, a steel cage, a palace: The steps that made Putin 'the richest man in the world'

His financial empire was built with a methodical system, using public resources and a close circle of friends. Can harsh financial sanctions really touch the man who controls the wealth of Russia?

Josh Meyer
  • Putin's financial empire was built with a methodical system, using public resources and a close circle of friends.
  • Observers say he made billionaires out of fellow spies and St. Petersburg associates who helped him.
  • "He has run his financial affairs in a way that's totally consistent with the biggest organized crime boss on the face of the earth," says former U.S. illicit finance official David Asher.

St. Petersburg was one of the richest seaports in Russia. But in the early 1990s, it was starving.  

The city once known as Leningrad was reeling amid the breakup of the Soviet Union. Grocery shelves were bare. So its deputy mayor hatched a plan. St. Petersburg would license the export of some of the region’s natural resources and use the money to feed its people.  

Timber, ore and oil departed by sea, but much of the food money never arrived. Instead, investigators later found, it went to export businesses favored by the deputy mayor – a former KGB agent named Vladimir Putin

Putin had only recently been installed in the government hierarchy there, and while his official responsibilities included foreign trade and investment, city officials suspected he was really there to watch over the city for the spy agency’s interests. 

The food shortage was not solely because of post-Soviet economic turmoil, either.  

Russian President Vladimir Putin on April 7.

Putin had deliveries withheld and rerouted to keep the wares on government-store shelves at a bare minimum, said Karen Greenaway, a former FBI agent who taught in the city at the time and has spent much of her career investigating Russian organized crime. With the pressure to supply food, superiors in Moscow were happy to approve the idea of the export-license deal.  

The plan issued noncompetitive contracts to companies largely of Putin’s choosing. Another city official later concluded that as much as $122 million that could have gone to food instead went to a close circle surrounding him – and likely to Putin himself.  

“And what does he do with part of the money? He sends it to Spain, where he buys his first villa," Greenaway told USA TODAY. 

In the three decades since his first moves in St. Petersburg, Putin has amassed a fortune that some authorities believe is so vast that it makes him one of the richest people in the world. 

Now that wealth is in the crosshairs of the West. Russia's invasion of Ukraine, which is believed to have killed thousands of civilians, has triggered economic sanctions that target him, his associates and now his adult children.

But the system that built Putin's riches has also frustrated U.S. and European efforts to punish him. Each round of sanctions raises new questions about whether those efforts can affect the man who treats the wealth of an entire nation as his own.  

Special report:Sanctions target Putin's Russian family

Special report:Navalny, Nemtsov and more Putin critics silenced by poison, bullets, jail

Vladimir Putin enters his inauguration ceremony as Russia's president in 2018, where he took the oath for his fourth term.

More:Biden hits Russia's rich with sanctions. Will that blunt Putin's Ukraine invasion?

That wealth was not built solely by simple corruption or theft, according to statements from an array of government officials, interviews with experts in U.S. intelligence and law enforcement, and a USA TODAY review of thousands of pages of reports and documents. Instead, Putin built a financial empire methodically.  

He looted and co-opted public resources, investigators say, in St. Petersburg, as a Kremlin functionary, and then on a national scale once he assumed the presidency.  

There he reached a turning point. While Putin was far from the first to capitalize on the wealth of the formerly communist country, he turned the tables on Russia’s oligarchs, using the power of his office to put himself in control of their futures – and their fortunes.

He installed his closest allies from St. Petersburg as a new class of oligarchs whose business riches became, effectively, Putin's own. Today, while Putin declares a $123,000 salary, his actual wealth is as hard to imagine as it is to quantify. Billions of dollars reportedly have passed through bank accounts of people close to him, with little way to gauge how much of that money really belongs to the president.  

And the final step of amassing riches goes beyond any one person’s bank account. With public resources and entire industries effectively under Putin’s control, intelligence veterans say, his personal wealth has become indistinguishable from the wealth of Russia. 

War crimes:Is Putin committing war crimes? Likely, but calling him out is unlikely to stop him

“He's clearly, obviously, been in a position where he can amass pretty much as much as he wants,” said Steven Hall, a onetime Moscow station chief who retired from the CIA in 2015 after 30 years of running and managing intelligence operations in Central Eurasia and Latin America. 

“There may be a sort of quibbling question with regard to when Putin, for example, builds one of these huge castles … whether he paid for that out of his quote-unquote personal funds or if he simply used Russia as his personal bank account,” Hall said. 

“But that might be sort of a distinction without much of a difference.” 

Putin's empire, according to investigators and Russian political opponents, may include 20 palaces and villas across Russia and Europe, 43 aircraft, and various yachts including the 459-foot Scheherazade, docked here at Marina di Carrara, Tuscany, in March.

The web of holdings linked to Putin throughout the world make those of the world’s other tyrants and tycoons look small in comparison, according to David Asher, who has helped lead many of the U.S. government's economic and financial pressure campaigns against defiant states, terrorist organizations, drug cartels and weapons proliferation networks over the past 25 years, including those targeting Iran, North Korea, the Islamic State group and al-Qaida.

"He has run his financial affairs in a way that's totally consistent with the biggest organized crime boss on the face of the earth," said Asher, a former State Department and Pentagon official.

"His networks are highly sophisticated, and they are set up in a way that is very difficult for the world to disrupt them. They're so vast in scale and scope that it is almost mind blowing when you look at them." 

Perhaps the most notorious byproduct of that is “Putin’s Palace,” the Black Sea villa that political adversaries say was built under the president’s direct supervision and may be worth more than $1 billion.  

Other riches, according to investigators and Russian political opponents, include perhaps 20 palaces and villas across Russia and Europe, 43 aircraft and various yachts, including the 459-foot Scheherazade.  

Experts also believe Putin has taken care to amass an overseas stash of personal assets in case his political support dries up. Estimates vary widely, in part because it may sit in the names of relatives, associates and layers of anonymous front companies. 

All of Putin’s strategic wealth-building and protection, Asher, Greenaway and other former U.S. officials say, depends on a core group around him. That group’s origins are intertwined with the roots of Putin’s political career and the place where his empire began.

More:Putin claims a win in Mariupol. What does that mean?

Step 1: St. Petersburg and the public riches

Palace Square in downtown Saint Petersburg.

After the Berlin Wall fell in November 1989, Vladimir Putin returned to the city of his birth.  

More than 100,000 KGB agents were dismissed as the Soviet Union broke up. Putin, though, remained with the spy agency after leaving his five-year posting in Dresden, East Germany. It was there, running agents from West Germany, that he encountered the kinds of material riches that most Russians never see.  

In the early 1990s, St. Petersburg was considered a Wild West of sorts, a "state within a state" where the KGB was all-powerful and, investigators say, worked closely with black-market mafias.

Men in St. Petersburg then, like Gennady Timchenko, Yury Kovalchuk and Vladimir Smirnov, would later become some of Putin’s closest friends and allies. 

He first oversaw foreign relations at his alma mater, Leningrad University, and soon became a chief aide to St. Petersburg’s mayor, Anatoly Sobchak, who needed someone to liaison with the federal security services. 

Anatoly Sobchak, then the mayor of St. Petersburg, left, with Vladimir Putin in 1994.

As deputy mayor, Putin had a broad portfolio, including the new position of promoting foreign relations and trade with the West in the post-Communist era. But his close associations with former spy colleagues and known organized crime figures raised concerns among some city officials. 

“Everyone knew … that Putin was there as KGB and was watching over Sobchak,” St. Petersburg City Council member Nikolai Andruschenko would later say in an investigative documentary, “Who is Mr. Putin?” 

At the time, St. Petersburg – Russia's second-largest city – was in many ways more strategic than the landlocked capital, Moscow. It had a thriving seaport at the head of the Gulf of Finland and lucrative oil terminals from which the country’s richest resource was shipped to Europe and beyond. Other natural resources also flowed through the port and the Pulkovo international airport for sale in the West. 

From Potemkin to Putin: What a centuries-old myth reveals about Russia's war against Ukraine

So when Putin offered to raise money for food by issuing export licenses for the sale of a quota of those raw materials, political leadership in Moscow gave their enthusiastic approval. 

But when little or no food arrived, city official Marina Salye investigated. 

“I learned that we had allocated quotas for timber, oil, metals, rare metals and aluminum for barter,” Salye said in a videotaped interview

“Licenses were issued by the St. Petersburg Committee on External Economic Relations – that is, by Putin,” Salye added. "Then the goods left for abroad, but the foodstuffs … never arrived.” 

Salye concluded that as much as $122 million overseen by Putin had disappeared. Further investigation suggested that as much as $900 million from other quota contracts orchestrated by Putin and associates also had vanished – and that he had earned commissions worth millions of dollars on those too, according to numerous sources. 

The investigations turned up no evidence that Putin had benefited personally. But he was widely suspected of receiving kickbacks too from the companies that made a fortune by getting contracts from him to sell off Russian resources overseas, Salye and others said. 

Putin would later deny any wrongdoing, suggesting in one videotaped interview that the export quota contracts were never issued. But Salye kept documentation of everything, including contracts with Putin’s signatures on them. 

Putin eventually would be tied to numerous other alleged scams in St. Petersburg, connected to the city’s fast-growing casino and gambling industry and other businesses that sprang up as the country moved from communism to capitalism. 

A container ship at the port of Saint Petersburg in 2018.

When his boss Sobchak lost his bid for reelection in June 1996, Putin was recruited by top federal bureaucrat Pavel Borodin to be his deputy, managing all of the Kremlin’s vast business and property holdings. 

In Moscow, Putin was responsible for overseeing the foreign property of the state and the organized transfer of the former assets of the Soviet Union to the Russian Federation. In other words, it was a license to steal, and an opportunity to sell off “anything from buildings to art, all of that stuff” for a cut of the proceeds, Hall said. 

Putin was also working for Borodin when he was allegedly handing out inflated contracts for a $1 billion-plus renovation of the Grand Kremlin Palace complex. 

The scandal became public when Swiss authorities launched a sweeping fraud and money laundering investigation that initially focused on a Swiss construction company, Mabetex, accused of making many secret million-dollar payments into the Swiss bank accounts of leading Russian officials in exchange for those refurbishment contracts. 

Borodin received more than $25 million in commissions for awarding the contracts, according to documents produced by investigators in Switzerland. In all, $62.5 million was paid in bribes for contracts worth $492 million on the project, with some of it distributed to friends and fellow Kremlin officials, including then-President Boris Yeltsin and his influential daughters, Swiss authorities alleged. 

In July 1998, the ailing Yeltsin and his daughters elevated Putin, a relatively obscure functionary, to the position of director of the Federal Security Service, or FSB, the successor state security organization to the KGB. A year later, Putin was appointed prime minister, or Yeltsin’s top deputy and heir apparent. Yeltsin soon stepped down, which made Putin president on Dec. 31, 1999, and allowed him to coast to victory in the election that March. 

Russian President Boris Yeltsin receives flowers from Prime Minister Vladimir Putin during a farewell ceremony in the Kremlin, Dec. 31, 1999. Yeltsin had announced that he was resigning and that Putin, in conformity to the Russian constitution, would run the country as acting president.

Putin’s activities in St. Petersburg and at the Kremlin were a springboard in his rise to the pinnacle of Russian government. So were his successful efforts to block investigations of those activities.  

Numerous St. Petersburg officials would ultimately go public in accusing Putin of establishing a highly developed racketeering enterprise and monetizing his relationships with contacts in both the KGB and the criminal underworld. 

Salye, the former city official who investigated the exports-for-food licensing deal, made public her findings and openly called for Putin to resign. 

“The firms were obviously completely fake, phony,” Salye said during a videotaped interview later included in the “Who is Mr. Putin?” documentary, which was released by Radio Free Europe. 

Salye revived her allegations against Putin just as he was assuming the presidency, backing them up with evidence from her investigation. A decade later, she revealed she had been in hiding ever since.

"I have everything in my files," Salye told a reporter who visited her remote hideaway. She fled in 2000, she said, because she believed "they're going to kill me."

Two years later, just weeks after again criticizing Putin publicly, Salye died, at 77, of a heart attack that some associates said was suspicious. 

Another corruption investigation into Putin’s activities in St. Petersburg had been launched by the major fraud section of the regional government.

As soon as Putin became president, Russia's top prosecutor shut down the case, and the chief investigator, Lt. Col. Andrei Zykov, was fired

That same month, Swiss authorities issued an arrest warrant for Borodin in the Mabetex probe. Putin appointed him secretary of state overseeing the new union between Russia and Belarus, protecting him from prosecution. 

Another of his first acts as president was to grant Yeltsin immunity. 

Borodin would later be arrested in New York on money laundering charges but released – mostly because of lack of cooperation from Russian officials, Swiss authorities said.  

Putin moved quickly to consolidate power with the help of his former KGB network known as the “siloviki,” the Russian term for security strongmen. He launched a major reorganization of the FSB that would give it broader powers and placed it under his direct control. 

The new president also began using his insider knowledge of what Russia owns – at home and internationally – for his personal benefit. 

“Because he's the president of Russia, he can now avail himself of just enormous amounts of property and perks that technically belong to the Kremlin; the leased planes and dachas and ships and all kinds of things,” Putin biographer and former U.S. intelligence analyst Fiona Hill said in an interview. 

And he knew exactly how to access it, she said, “because he was the head of the Kremlin property agency." 

Many Russians initially looked to Putin as their savior from the oligarchs who had snapped up the nation’s industries and resources during the rush from communism to capitalism.  

Putin, they believed, was the dynamic young leader needed to bring the oligarchs to heel. 

As businessman Sergey Kolesnikov would later write in a whistleblower letter: “How wrong we were.”  

More:How Ukraine became the independent democracy it is today: A visual perspective

Step 2: Turn the tables on the oligarchs

In October 2003, Russian agents climbed aboard a private jet at an airfield in Siberia. They were there to take its passenger, a man who, at the time, was the richest person in Russia. 

He was Mikhail Khodorkovsky, a onetime Soviet loyalist who had grown rich as head of the oil company Yukos but had also become a reformer. He dared to confront Putin publicly, criticizing what he said was rampant government corruption, at a meeting in early 2003.   

Khodorkovsky had also begun opening the oil giant’s books to firms outside Russia as part of discussions about a possible sale. That infuriated Putin, who feared losing control of the company and his access to its huge profits – and possibly exposing corrupt dealings with his government – according to Hill. 

So when Khodorkovsky was hauled off his plane, he went straight to prison and, ultimately, into court on tax fraud charges. Putin then froze shares of Yukos and took other steps that effectively stripped Khodorkovsky of his own company. 

In the courtroom, Khodorkovsky was seated in a metal cage. Images from the trial were published worldwide. While Khodorkovsky and his attorneys would claim the charges were baseless and politically motivated, he would be convicted and sentenced to nine years in a Siberian prison camp. Putin’s message was clear. 

Mikhail Khodorkovsky faced trial from the inside of a cage. He would be convicted and sentenced to nine years in a prison camp.

“After Khodorkovsky was convicted, these other oligarchs went to Vladimir Putin and said, ‘What do we have to do not to sit in the cage?’” prominent American-born Russia financier William Browder would later tell a U.S. Senate committee. “And he said, very straightforward, 50%, not 50% for the Russian government, or 50% for the presidential administration of Russia, 50% for Vladimir Putin. 

“And so he became the richest man in the world in that moment.”  

Putin’s efforts to tame the oligarchs actually had begun just months after he assumed the presidency. That summer, he summoned 21 of Russia’s richest industrialists to the Kremlin and reminded them that “you built this state yourself, to a great degree, through the political or semi-political structures under your control.”  

Putin told the oligarchs present that they could keep their conglomerates, their yachts and their villas as long as they kept quiet, stayed out of politics and did as he asked. Some who were perceived as reneging on the deal, like oil baron Boris Berezovsky, died by murder or suicide in exile overseas. Others, like Alexey Ulyukaev, were fired from their jobs and thrown in jail, Hill told USA TODAY.  

The original oligarchs who remained loyal to Putin became ATMs that produced for the president whatever he wanted, according to USA TODAY’s interviews and research. 

Concentrating, growing and protecting those riches would require a new circle of allies. 

Step 3: The Ozero oligarchy

Soon after Putin quit his deputy mayor job in St. Petersburg, he was relaxing in the sauna of his dacha just off Lake Komsomolskoye when it caught fire and burned to the ground.

Putin immediately built another, and seven friends from St. Petersburg built country houses next to his and formed their own gated community. On Nov. 10, 1996, the men founded the Ozero, or Lake, dacha cooperative, with a shared bank account for all members to use.  

They were so close they would often carpool together to their idyllic retreats an hour and a half north of the city, Hill said in her 2013 book, “Mr. Putin: Operative in the Kremlin.”   

“We were simply a small group of people united by common interests ...” one of the founders, Vladimir Yakunin, told Russia’s Prime news agency years later. He portrayed the group as a tightknit fraternity of patriotic businessmen who wanted to make money in addition to "developing and looking after our country.”  

 Over the next two decades, the same group would – with Putin’s help – come to control some of Russia’s biggest assets, including oil, gas, construction, the media and railways.   

Greenaway, who retired in December 2018 as supervisory special agent heading the FBI's International Corruption Unit, said there’s a special name in Russian for the kind of closer-than-brothers friendship enjoyed by Putin and his St. Petersburg associates: "druzhba." It is a relationship, she said, in which trust is everything and where members will do anything for one another, no questions asked.  

Yakunin became deputy transport minister after his former KGB colleague became president. He soon took over Russian Railways and ran it for a decade. In that role, he helped Putin stage the Sochi Winter Olympics in 2014 by building an $8 billion-plus road and railway line to the ski slopes.  

Vladimir Smirnov, founding director of the dacha cooperative, headed a St. Petersburg fuel company that gained a virtual monopoly over gasoline sales thanks to concessions issued by Putin. Another company official was Vladimir Kumarin, leader of the vicious Tambov Gang mafia whose nickname was Russia’s Al Capone, according to organized crime expert and author Mark Galeotti.

By 2002, Smirnov was running Tekhsnabexport, which exports the billions of dollars in goods and services produced by Russia’s nuclear program.   

Smirnov and Putin also were implicated in a long-running criminal money laundering investigation in Germany into the St. Petersburg Real Estate Holding Company, or SPAG, in the early 2000s.   

German prosecutors alleged that SPAG – where Putin served as an adviser until his inauguration – was used to launder ill-gotten gains into, and out of, St. Petersburg. 

The head office of Bank Rossiya in St. Petersburg, in 2014.

A third Ozero cooperative founding member, Yury Kovalchuk, stuck even closer to Putin. The KGB-connected financier became the chairman and largest shareholder of Bank Rossiya in 2004, which grew into a powerhouse after Putin directed Russian government business to it. Within eight years, according to Putin biographer Catherine Belton, its assets grew fortyfold to nearly $9 billion.

Along the way, Kovalchuk would earn a reputation as “Putin’s wallet” for allegedly using Bank Rossiya’s many tentacles to camouflage the wealth of the group – and of Putin.   

The bank, for instance, transferred at least $1 billion to an offshore entity, according to documents leaked from Panamanian law firm Mossack Fonseca and analyzed by a team of investigative journalists in what has come to be known as the Panama Papers.   

“Putin associates disguised payments, backdated documents, and gained hidden influence within the country’s media and automotive industries, the leaked files show," according to one report by ICIJ, the International Consortium of Investigative Journalists.

The bank also played a role in facilitating the transfer of more than $2 billion into accounts held by Putin’s childhood friend, classical cellist Sergei Roldugin, that are widely believed to be Putin’s, according to reports published in 2016.  

 Despite his five-figure salary, Roldugin – godfather to Putin’s eldest daughter, Maria – acquired a 3.9% share of Bank Rossiya itself by 2010.   

Russian President Vladimir Putin, left, presents a medal to Russian cellist Sergei Roldugin, during a ceremony in 2016.

Another shareholder in Bank Rossiya: housecleaner turned millionaire Svetlana Krivonogikh, one of at least two alleged mistresses of Putin’s widely believed to have borne him a child. Krivonogikh and another suspected longtime Putin mistress, Alina Kabaeva, live lavish lifestyles, complete with villas and ties to various friends of the Russian president from St. Petersburg, according to the Panama Papers, a recent leak called the Pandora Papers and other media reports about offshore accounts.  

Putin's ex-wife Lyudmila enjoys perhaps even more benefits, including a more than $4 million home on the coast in Biarritz in the south of France. 

 “Though the president’s name does not appear in any of the records, the data reveals a pattern – his friends have earned millions from deals that seemingly could not have been secured without his patronage. The documents suggest Putin’s family has benefited from this money – his friends’ fortunes appear his to spend,” according to one of the Panama Papers investigative reports.

Kirill Shamalov during an interview in Moscow in 2015. He became a billionaire after marrying one of Vladimir Putin’s daughters.

Kovalchuk hosted the 2013 wedding of Putin's daughter Katerina Tikhonova to the son of another founding member of the Ozero cooperative, Nikolai Shamalov, at his Igora ski lodge.  

Shamalov, a former St. Petersburg dentist and medical equipment salesman, got to know Putin when he worked briefly for the then-deputy mayor at City Hall. Like Kovalchuk, he became rich overnight when he acquired a major stake in Bank Rossiya.

Within 18 months of his wedding to Putin’s daughter, Shamalov’s son Kirill became Russia’s youngest billionaire – worth an estimated $2.85 billion – thanks to business deals offered by some of Putin’s St. Petersburg associates.  

In her 2014 book, “Putin's Kleptocracy: Who Owns Russia?” Russia scholar Karen Dawisha offered examples of how Putin and his druzhba friends fit the very definition of the term "kleptocracy."   

Together, those in and out of government were intentionally using a combination of corruption, authoritarianism and closely held political power to misappropriate the wealth of the people and the resources and land that was Russia, Dawisha wrote. And in the process, they made themselves billionaires and swore fealty to the man who made it possible.   

Back in 1991, as the deputy mayor overseeing the resources-for-food scam, Putin gave a lucrative oil export license to one of his close former KGB friends, Gennady Timchenko.   

Timchenko then founded a Swiss commodities trading firm, Gunvor, which would go on to become one of the largest traders of Russian oil exported to the West. A hockey buddy of Putin’s, he also made millions by becoming an early shareholder in Bank Rossiya.   

Gennady Timchenko, left and Viktor Vekselberg of Renova Group during the Saint Petersburg International Economic Forum in 2018. Timchenko's oil firm reportedly garnered half the Russian trading market.

Timchenko later returned the favor by giving Putin’s new son-in-law some of the sweetheart business deals that made him a billionaire, Russian anti-corruption activists allege.  

 And Timchenko allegedly used Gunvor to funnel money to Putin himself after the Kremlin helped it garner as much as 50% of Russia’s massive oil trading market, according to a confidential State Department cable from November 2008 that was released by Wikileaks in 2010.  

“The company is rumored to be one of Putin's sources of undisclosed wealth, and is owned by Gennady Timchenko, who is rumored to be a former KGB colleague of Putin's,” the unsigned cable from the U.S. Embassy in Moscow concluded.  

The cable cited one Shell Russia official as saying that most oil traders charged a commission of 5 to 20 cents a barrel but that Russian authorities in some cases required Shell to use Gunvor – and to pay it $1 a barrel.

In another confidential cable from 2008, U.S. Ambassador to Russia John Beyrle wrote about how political activist Alexei Navalny was launching “a rare if not unprecedented effort to force transparency in the oil sector” in Russia by filing lawsuits demanding information about various companies’ potential hidden financial arrangements benefiting Putin.   

In particular, Navalny was seeking information about “the rising and reportedly massive volumes of trade” between Russia’s top three oil companies and Timchenko's firm that had resulted in “reportedly very large profits for Gunvor and its secretive ownership, which is rumored to include Prime Minister Putin," Beyrle wrote. “Navalny said he believes that trading oil through Gunvor is just a front for ‘massive corruption’ and he is frustrated that nobody in Russia seems to care.” 

U.S. officials who have investigated Russian corruption believe that this type of scheme – requiring Western companies to pay inflated prices through intermediaries like Gunvor – has been just one of many ways in which Putin is suspected to have personally benefited. 

One source told the FBI that Putin was personally involved in such arrangements across all of Russia’s economic sectors, generating potentially billions of dollars even if his cut from each was minimal, Greenaway said.

“Putin's rule is that the most you can jack up anything to take a cut is 25%. And that cut includes (some for) him,” Greenaway told USA TODAY.   

“So he has a rule that he's telling people who are very close to him about how they're allowed to operate corruptly in business,” Greenaway said. “And that’s got to tell you that the guy is a kleptocrat at the end of the day, not some intelligence officer genius.”  

Organized crime and corruption investigators from other countries have come to similar conclusions.  A once-confidential Swiss intelligence report described how “firms are established under a formal pretext specifically to engage in illegal activities.” A Spanish prosecutor wrote that Russia and two allied countries had become "virtual mafia states," where “one cannot differentiate between the activities of the government and OC (organized crime) groups.”  

Gunvor, Timchenko, Kovalchuk, Roldugin and other Putin associates all have denied wrongdoing, including having any improper or corrupt association with Putin or the Kremlin. Putin himself has publicly dismissed claims of corruption and personal enrichment as “rubbish.” 

In May 2008, just before term limits forced Putin to relinquish the presidency after eight years, Putin held an epic 4½-hour news conference.  

In it, he was asked about news reports quoting a well-respected analyst with close Kremlin ties, Stanislav Belkovsky, as saying Putin effectively controlled stakes in Russian oil and gas companies worth $40 billion – but had hidden them behind a network of offshore trusts. 

"They picked everything out of someone’s nose and smeared it on their little papers,” Putin said of the media, before agreeing that he was, indeed, fantastically wealthy. 

"I am the richest man in Europe and the whole world. I collect emotions,” Putin said, smiling. “I am rich because the people of Russia have twice entrusted me with the top position in such a great country as Russia. I think this is my greatest wealth." 

Putin framed himself as a tireless public servant. "All these eight years I toiled like a galley slave from morning till night, unsparingly,” he said. “I am happy with the results of my work.” 

By then, it was becoming almost impossible for Putin to explain away the other trappings of wealth. They could be seen across Russia, and especially in one place: atop a cliff on the Black Sea. There, near the village of Praskoveevka, a palace was rising that would put even the one built by Putin’s idol, Russian tsar Peter the Great, to shame. 

Step 4: The wealth of a nation 

Satellite image of the so-called Putin's Palace complex on the Black Sea.

The project that would come to be known as “Putin’s Palace” began as a small spa complex with a modest budget of $14 million, paid for by oligarch donations funneled through companies overseen by Shamalov. The money was billed as part of a broader initiative to fund public service projects for the Russian people. 

Other high-profile projects included providing new medical equipment and high-tech workplaces, “all as a direct result of the ‘generosity’ of certain oligarchs,” according to a detailed whistleblower letter from Russian businessman Sergei Kolesnikov, who helped oversee the initiative.

But in mid-2009, Shamalov conveyed to Kolesnikov and others a new decree by Putin – to suspend work on all other projects and channel the funds and efforts into Project South, the nickname for the spa and a nearby vineyard created to grow the best wines in Russia. 

A year later, the project had morphed into an enormous Italian-style palazzo with a casino, winter theater and summer amphitheater, church, swimming pools, sports grounds and landscaped parks, heliports, tea houses, staff apartments and technological buildings. 

“A modern-day version of Peterhof, the tsar’s palace near St. Petersburg,” was how Kolesnikov described it in his December 2010 letter to then-Russian President Dmitry Medvedev.

By then, the price tag had swelled to more than $1 billion, according to detailed reports and budgets overseen by Kolesnikov, he wrote, with all inside and outside design work approved by Putin himself. 

And that didn’t count the billions of rubles that Kolesnikov said were diverted out of the state budget to build a mountain road, a new high-voltage power line and a special natural gas supply pipeline.

To conceal the value of the marble, gold leaf and other luxury materials supplied, Shamalov imported them without proper customs clearance, Kolesnikov alleged, and paid with cash or from offshore accounts. 

When Kolesnikov protested that the scheme “blatantly violated Russian law,” he wrote, he was isolated from his oversight and financial role and eventually fired. 

Kolesnikov, who left Russia before writing his letter, beseeched Medvedev to halt the project in keeping with his campaign promises to curb kleptocracy. 

“That corrupt officials are building palaces for personal use while children are dying because there isn’t money for medical treatment,” Kolesnikov wrote, “is nothing short of a national disgrace.” 

Work on the complex continued, despite increasing criticism by Russian opposition leaders, citizen protest groups and a barrage of media reports about the palazzo and other displays of wealth by Putin and his confidants. 

Appeals to Medvedev were ineffective. He had been Putin’s proxy all along, critics said, while Putin retained the levers of power. After Medvedev's one term, Putin was reelected, and in 2020 he would go on to have the constitution changed to allow him to remain in office through 2036. Effectively, Putin had become president for life. 

In August 2012, three months after Putin took office again, opposition leader Boris Nemtsov – a former deputy prime minister of Russia – held a news conference in Moscow to present a detailed investigative report about Putin’s wealth.   

In a dig at Putin’s 2008 remarks, he titled it "The Life of a Galley Slave.” 

Boris Nemtsov, political reformer and former deputy prime minister, in 2007. ''We must not put up with this,” Nemtsov once wrote. “We believe that the way of life of those in power must become a topic for public discussion."

Nemtsov and a co-author provided copious details – and dozens of photos – showing how Putin had expanded the trappings of the office of the president for his own benefit and how that helped explain his insistence on returning to power.

Putin had access to 15 helicopters and 43 other aircraft, Nemtsov said, including two executive jets and an Ilyushin Il-96 airliner featuring an $18 million bejeweled cabin and a $75,000 bathroom with gold-plated accessories.  

The report identified 11 luxury watches seen publicly on Putin’s wrist that were worth more than $600,000. And it said Putin had nearly doubled the roster of state-administered homes and vacation dachas to 20. One was a 2,300-acre residence on scenic Lake Valdai with a pool, two restaurants, a cinema and bowling alley and a “presidential church.”  

One $37 million superyacht, Sirius, was bought by the Presidential Administration for Putin in 2011; it boasts a spa pool with a waterfall, wine cellar and teak interior. But the “real diamond of the Kremlin flotilla,” the report said, was the $50 million five-deck superyacht Olympia, tricked out in maple wood and marble, with a jacuzzi, bar and barbecue. 

''We must not put up with this,” Nemtsov wrote. “We believe that the way of life of those in power must become a topic for public discussion and that all expenditure from the budget and all their incomes must be published.'' 

In response, Putin spokesman Dmitry Peskov told a Russian newspaper that “information about the president's state residences and transport is absolutely open to all, there are no secrets here.” 

“This is all state property and as the elected president, Putin uses it according to the law,” Peskov said. “What's more, he's obliged to in many cases.'' 

After Russia invaded Ukraine and seized Crimea in 2014, the Obama administration sanctioned several members of Putin’s inner circle, including Kovalchuk and Yakunin.   

The Treasury Department also sanctioned Bank Rossiya, describing it as the personal bank of Russia’s elite. And it blacklisted Timchenko, who Forbes said was worth $15.3 billion, saying his activities “in the energy sector have been directly linked to Putin.”  

“Putin has investments in Gunvor," Treasury declared, "and may have access to Gunvor funds." 

Days before the sanctions hit, Timchenko reportedlysold his 43% stake in Gunvor, which vehemently denied any financial ties to Putin.  

Putin himself escaped sanctions, mostly because the administration focused on those believed to be enabling and benefiting from suspected kleptocracy, recalls Daniel Glaser, a top Treasury Department financial intelligence official involved in the sanctions effort. 

Although they were criticized as anemic, the U.S. sanctions – and similar ones by the European Union – intensified the spotlight on Putin’s suspected wealth. 

So did Nemtsov, who accused Putin of making billions of dollars from corrupt deals with energy firms and for the construction of the site of the Sochi Olympics.

The body of Boris Nemtsov is carried during a farewell ceremony Moscow in March 2015.

Nemtsov continued to put pressure on Putin until February 2015, when he was shot four times in the back and killed on a bridge just outside the Kremlin.  

The next January, a British public inquiry concluded that Putin “probably” approved an order to have the FSB assassinate one of its former officers, organized crime specialist Alexander Litvinenko, in London in 2006 to silence his criticism of Kremlin corruption. 

Newspapers around the world published the Panama Papers three months later, including revelations about secret offshore accounts linked to Putin associates. That was followed by Browder’s dramatic 2017 congressional testimony, in which he said his own extensive investigation showed Putin had become the "richest man in the world," worth an estimated $200 billion. 

Financier William Browder is sworn in during a Senate Judiciary Committee hearing in 2017.

Putin accomplished that, Browder testified, by instructing a vast web of associates “to do terrible things. To arrest, kidnap, torture, and kill, to take people's properties away" and granting them absolute immunity from any form of accountability.

Browder had hired a young Russian lawyer to investigate the theft of $230 million from his Hermitage investment fund, the biggest in Russia at the time. The lawyer’s work implicated Putin as a direct beneficiary of the scheme, Browder would say.  

But instead of triggering further investigation of Putin, it was the young tax lawyer who was targeted. He was thrown in prison on fraud charges, beaten and deprived of medical care, Browder said. Finally he died of a heart attack. 

That young investigator’s name was Sergei Magnitsky. The Global Magnitsky Act, which bears his name, is the federal law pushed by Browder that allows the U.S. president to issue sanctions for Russian human rights abuses today. 

The grave of lawyer Sergei Magnitsky in Moscow, seen in 2012.

'Financial war' 

With opposition leader Nemtsov dead, other political reformers, including Navalny, carried on in Russia.  

The FBK Anti-Corruption Foundation he established in 2011 continued to air investigative documentaries and public reports that showcased embarrassing information about Putin, his Ozero and St. Petersburg cronies and their wider circle.

Russian opposition activist Alexei Navalny during a political protest in Moscow in 2019.

In August 2020, Navalny was poisoned and nearly killed by the nerve agent Novichok while visiting remote Siberia. He accused Putin of trying to silence him, and an investigation led to agents of the FSB.  

Navalny returned to Russia in January 2021, was immediately detained and has been in custody ever since. But his investigation of Putin’s wealth has not been squelched. 

Alexei Navalny prepares to return to Moscow from Berlin after recovering in Germany from his poisoning in August 2020.

Days after his arrest, Navalny’s foundation released its “Putin’s Palace” documentary, with astonishing new details about over-the-top luxury – and mold infestation – at his billion-dollar palace on the Black Sea. 

Navalny called it “the history of the world’s largest bribe” and provided documentation of how it had been built for Putin with $1.35 billion in illicit funds provided by members of his inner circle. 

Nearly a quarter of all Russians would later say they watched the video, which sparked widespread demonstrations. Putin once again denied the allegations, and one of the other members of the Ozero cooperative came forward to claim the palace was his.  

More recently, far more intense scrutiny has focused on Putin and his inner circle amid Russia’s war on Ukraine. The escalating series of U.S. and EU sanctions have targeted Putin himself, the two daughters he had with ex-wife Lyudmila and some of his inner circle from St. Petersburg. 

More:Mapping and tracking Russia's invasion of Ukraine

Putin has denied that the sanctions have had any impact, and there is ample evidence that he and his associates blunted their effects by sheltering their assets long ago. 

Russian President Vladimir Putin attends a meeting via videoconference in Moscow, Russia, March 25, 2022.

Asher, the former U.S. illicit finance expert, said Washington and its allies will need to do much more if they want to significantly disrupt Putin's suspected web of financial holdings. That includes sanctioning literally thousands of front companies and other hidden assets tied to his family members, St. Petersburg friends in the Ozero dacha cooperative – and the financial institution Bank Rossiya.  

"You don't go to financial war against what is essentially a Mob family unless you are prepared to go after the 10 or so people around Putin that actually matter economically," Asher said, singling out Kovalchuk and Timchenko. "They're basically the guys who orchestrate the global network." 

Most Putin associates targeted in the U.S. post-Crimea sanctions in 2014 suffered little damage, Asher said, because they took advantage of a loophole in U.S. law that allows sanctions only against majority owners of most companies and shell corporations. In response, he said, Putin’s inner circle simply dropped their ownership below the 51% threshold and continued.   

Nevertheless, Asher said, "they are eminently targetable.” 

“Would we have to use some extreme tools? Sure. But does the circumstance warrant using extreme tools? Yes," said Asher, including going after the partial-owner entities and possibly implementing the World War II-era Trading With the Enemy Act to seize or sanction more of their holdings.  

"We are dealing with a situation where this madman, this coldblooded killer criminal, is engaged in economic warfare,” Asher said. “He's managing to move his money all over the world and defy U.S. sanctions. So the Europeans have taken a few yachts away from him. What the hell does he care?" 

Years later, flowers mark the bridge where Russian opposition leader Boris Nemtsov was gunned down, Feb. 7, 2022.