Andrey Kostin, chief executive officer of VTB Bank PJSC. Photo / Andrey Rudakov/Bloomberg via Getty Images
Two leading Russian oligarchs and the boss of Russia’s sovereign wealth fund are banned from attending an upcoming meeting of Asia-Pacific business power brokers in Auckland.
The trio has been handpicked by Russian President Vladimir Putin to represent Russia on the Apec Business Advisory Council (Abac) which meets for the first time in 2023 in Auckland from February 12-14.
They are banker Andrey Kostin, sovereign wealth fund boss Kirill Dmitriev and billionaire Oleg Deripaska, who runs one of Russia’s largest industrial groups.
The United States added the trio to their sanctions list as part of a wide-ranging strategy that has seen many Russian oligarchs and financiers have their assets frozen and travel restrictions placed on them as a result of first, the 2014 annexation of Crimea, and then, the Ukraine invasion. New Zealand followed suit in 2022.
But some Apec members, like Thailand, which hosted Apec in 2022, did not adopt the US-led sanctions and the Russian Abac members were free to attend last November’s Apec Leaders Meeting in Bangkok.
Officials stressed to the Herald there would be no easing of the New Zealand sanctions to allow the three Russian business leaders to come to Auckland on a one-off basis for Abac. Russia has appointed four alternate members, But two are also sanctioned by New Zealand and it is unclear yet whether the remaining pair have registered for the February meeting.
Around 200 participants including senior business leaders and officials from Apec’s 21 economies are expected to attend the meeting which is the first to be chaired by the United States in its Apec host year.
The US Treasury has made explicit allegations against each of the trio. But their official bios on the Abac website do not mention they have been sanctioned by the United States or any other Apec member.
Andrey Kostin (66), chair and CEO of Vneshtorbank (VTB) - one of the leading state-owned banks in Russia - was first sanctioned in 2018 after making public statements supporting the annexation of Crimea and encouraging Russian citizens to vacation there.
VTB is Russia’s second-largest bank holding nearly 20 per cent of the country’s banking assets. Sanctions later applied to VTB were designed to “sever a critical artery” of Russia’s financial system.
Kostin chaired Abac in 2012 when Russia hosted Apec in Vladivostok at an event writ large for elaborate hosting of business elites on cruise ships where they feasted on mounds of Beluga caviar, with copious quantities of Krug champagne and Russian blondes also aboard.
In an interview with CNBC in 2019, he complained about not being able to travel to Bali or ski in Colorado which he said had the world’s best snow.
Later that year, the Times reported allegations by Russian opposition leader Alexei Navalny that a three million pounds (NZ$5.7m) mansion and a 200ft yacht were among gifts that Kostin lavished on young journalist girlfriend Nailya Asker-Zade.
In December 2022, Twitter CEO Elon Musk also courted controversy by posing for a selfie with Asker-Zade at the World Cup final in Qatar.
Kirill Dmitriev is CEO of the Russian Direct Investment Fund (RDIF), a US$10 billion (NZ$15.7b) fund created to co-invest in the Russian economy.
He’s been described as the lynchpin of Russia’s sovereign vehicle and a close adviser to Putin, who criss-crossed the world promoting multi-billion-dollar co-investments in Russia with global financier titans but came from an ordinary background in Kyiv.
The US Treasury said in February 2022 that the Office of Foreign Assets Control (Ofac) had sanctioned RDIF which had exposure to the US financial system and that Dmitriev was a known Putin ally.
“Putin and his inner circle of cronies have long relied on RDIF and Dmitriev to raise funds abroad including in the US,” said Ofac.
“While officially a sovereign wealth fund, RDIF is considered to be a slush fund for President Putin and is emblematic of Russia’s broader kleptocracy.”
RDIF responded saying it had never been involved in political activities, does not in any way interact with Ukraine, and follows the world’s best investment practices.
“Over the years, Russian Direct Investment Fund has received numerous domestic and international professional awards recognizing its role as one of the world’s leading and innovative investment funds. RDIF always fully complies with laws of the countries where it conducts its investments,” RDIF said in a statement.
“Prior to publication of incorrect and defamatory statement by the US Department of the Treasury, which it will have to correct on legal grounds, not a single article out of more than 500,000 (from 2011-2022) has ever referred to RDIF as ‘a slush fund’. Such defamatory statements have absolutely no basis and RDIF will use all available means to protect its rights, reputation and lawful interests, including seeking judicial recourse in relevant jurisdictions.
“According to official documents on sanctioned entities, the sanctions against RDIF are solely meant to prevent the Russian economy from attracting financial resources and not for any wrongdoing. The only reason for imposition of sanctions against RDIF articulated by the US Department of the Treasury was ‘for being owned or controlled by, or for acting or purporting to act for or on behalf of, directly or indirectly, the Government of Russia.’
“In fact, RDIF has rightfully earned reputation as a trustworthy and irreproachable investment fund managed under professional leadership of the highest quality”.
Born in Kyiv, Dmitriev left Ukraine at 14 to live with the parents of friends in California later attending Stanford. He worked for Goldman Sachs, was a McKinsey consultant and was selected as a Young Global Leader by the World Economic Forum before returning to Russia.
He and his wife are close friends with Putin’s younger daughter Katerina Tikhonova.
Dmitriev is also said to be one of several leading Russian business people asked by Putin to open lines to the US during the Trump era.
Under his leadership, RDIF claims to be the first state-owned Russian company to call for a diplomatic solution and peace in Ukraine.
He is pro-markets and has said he has a mission to change the face of Russian capitalism. RDIF supported the development of Sputnik V, a Covid-19 vaccine.
Oleg Deripaska, 54, who chairs Basic Element, came in for the most scathing criticism by the US Treasury.
In April 2018, Treasury Secretary Steven Minchin said the Russian Government operates for the disproportionate benefit of oligarchs and government elites.
Deripaska was among two dozen Russian oligarchs and government officials blacklisted by Washington that year in reaction to Russia’s alleged meddling in the 2016 US election to help Donald Trump become President.
The US Treasury said “he does not separate himself from the Russian state and acknowledges possessing a Russian diplomatic passport”. The US Treasury went on to allege “he had been investigated for money laundering, and accused of threatening the lives of business rivals, illegally wiretapping government officials and taking part in extortion and racketeering”.
Deripaska founded an aluminium giant and, according to the European Union, has under his company’s control a major arms and military equipment provider to the Russian armed forces which manufactures BTR080 amphibious armoured personnel carriers used during the unprovoked military aggression against Ukraine in 2022.
Deripaska disputes this and has filed an appeal against the EU’s sanctions decision.
“The European Council’s ruling to designate Mr Deripaska is simply unjustified and unsupported by any actual facts, relying solely on years-old articles,” his spokesman said in an email to the Herald.
“Mr Deripaska does not own any arms companies and does not produce or provide any military equipment not to Russia, not to any other country. It is outright defamatory to suggest that Mr Deripaska is somehow responsible for or is benefitting from this senseless war. Moreover, he has consistently called for peace in Ukraine and for military spending to be reduced globally.”
Deripaska has a multi-million-pound property portfolio in the UK – including an address in London’s Belgravia Square, and his net worth is an estimated two billion pounds. Last September, the United States charged him with violating the sanctions by using the US financial system to maintain three luxury properties.
The US Department of Justice said he also violated sanctions through efforts to have his girlfriend travel to the United States from Russia to bear his children.
Deripaska is also quoted as saying destroying Ukraine would be a “colossal mistake”.
In June 2022, Reuters reported Deripaska is asking the United States Supreme Court to lift US sanctions issued against him in 2018 over Russia’s “malign activity” around the world.
In a petition filed and shared with Reuters, Deripaska argued that the US Treasury Department’s Office of Foreign Assets Control acted outside of its statutory authority when it imposed the sanctions against him.
A Washington, DC federal appeals court earlier rejected Deripaska’s challenge to the sanctions, finding that US officials had sufficient evidence to impose the penalties.
The February meeting will be chaired by Dominic Ng, chair and CEO of East West Bank. Other prominent Abac members include: Google’s Michaela Browning (Australia), Janet De Silva (Canada), Ning Gaoning (China), and Wong Wai Meng (Singapore).
New Zealand will be represented by Rachel Taulelei, co-founder of Oho branding agency who chaired Abac in 2021, NZ’s host year; Malcolm Johns - incoming CEO for Genesis Energy, and Anna Curzon, chief product officer at Xero.
This is Johns’ last meeting as he is stepping down after February to concentrate on his new CEO role. He said the reality is there have been few face-to-face Abac meetings in recent years due to Covid. When present the Russians were focused on business and the Abac members were “appropriately diplomatic”.
Apec (Asia Pacific Economic Co-operation) is the region’s leading inter-governmental forum for economic co-operation. Twenty-one Asia-Pacific economies are members representing more than 70 per cent of New Zealand exports.
Each of the 21 economies can appoint three members to Abac.
Apec leaders meet annually to free up trade and investment, promote sustainable and inclusive economic growth, build the foundations for the digital economy and influence the economic direction of the region.
This story has been updated from the original to include the full statement from NDIF, remove description of Kirill Dmitriev as “Kremlin’s consigliere” and include a statement from Oleg Deripaska’s spokesman.
Volumes were lighter as investors are thinking more about the summer holidays.