Sergei Pugachev shows: You just do not mess with the Kremlin
Sergei Pugachev was once a trusted and close friend of Russian President Vladimir Putin. But not anymore. His case, as much as any of the string of mysterious deaths of people who have upset the Kremlin, go to show how Putin has carved out power in Russia for some time to come, despite economic hardship resulting from Western sanctions, falling oil prices and a tumbling currency.
Pugachev's fleeing from London late last week, claiming attempts were made on his life, in the midst of High Court fraud case which alleged he owed the Russian authorities £655m highlights one thing above all else: you don’t mess with the Kremlin.
A former regime insider, Pugachev made his money by setting up Mezhprombank, a Moscow bank. But having fallen out with Putin, he has been fighting a legal battle over claims he embezzled millions of dollars from the bank, forcing a High Court case in which Russia demanded his extradition and the UK froze his assets.
"Essentially anyone who is rich in Russia for any reason is only rich because they've been able to financialise a bit of the state,” says Oliver Bullough, author of The Last Man in Russia, which traces the current contours of Russia, a country so willing to crush its citizens. “But then Pugachev fell out with Putin, and as soon as you fall out with the Kremlin – if you've been an insider- they can ask for the bit of the state you financialised back”.
And so they did, with the Russian government's Deposit Insurance Agency trying to recover the funds they claim he stole.
But what’s more, it’s not so surprising that he says his life was at risk. “Whatever you might think of Pugachev, whether he is a fraudster or a victim, these are the sort of cases where it’s clear if you mess with the Kremlin, bad things happen to you,” explains Professor Mark Galeotti, who specialises in organised crime and security affairs in modern Russia at the London School of Economics.
Pugachev defied a High Court order as he claimed his life was in danger (Source: Getty)
“Pugachev claims there was a device in his car, and whether there was or not, within the Russian ex pat community, there is a distinct fear and feeling that if you fall foul of government or powerful interests in Russia these days, they can and will reach out even to England to get you.”
And it’s not the first time. Remember a month ago when whistle-blower Alexander Perepilichnyy, who played a role in exposing fraud in Russia, was found with a rare poison in his stomach in his home in Surrey?
We don’t know exactly what happened to Perepilichnyy, but “the more recent discovery of traces of poison in his system certainly contribute to the sense that even in a relatively secure country like the UK, it is dangerous to cross powerful Russian interests,” says Galeotti.
It is clear to many, including Bullough, that if Perepilichnyy was murdered, it could “only have been with very high level approval.” Bill Browder, head of London-based investment firm Hermitage Capital, which used to have substantial interests in Russia, believes Russian officials assassinated Perepilichnyy, after a breakthrough in the fraud case he was working on.
Likewise, former KGB operative Alexander Litvinenko was granted asylum to the UK in 2000, and while in London wrote books accusing the Russian secret services of staging the Russian apartment bombings in an attempt to bring Putin to power. In November 2006 after having met two Russian contacts – Andrei Lugovoi and Dmitry Kovtun – in a Mayfair hotel, he suddenly fell ill and was hospitalised, with tests finding the rare poison polonium in the teacup he drank out of. A British investigation pointed to Lugovoi, a Russian security agent, and is widely believed to have been ordered by Putin.
Marina Litvinenko has always suspected Putin's involvement in her husband's death (Source: Getty)
Inside Russia, Sergei Manitsky – an accountant employed by a firm that was retained by Browder – was one case where “there’s no mystery about his death, to put it mildly,” says Bullough. He was an accountant who uncovered wrongdoing and wouldn't let it go. He was subsequently held in a Russian prison where he was beaten to death.
And this is what all these cases point to: Putin is dominant because even the elite in Russia are going to be careful about expressing concerns about him or the direction of the country. “Any kind of organisation against Putin is going to take a long time because everyone knows if what you’re doing becomes visible, you are going to be in trouble,” says Galeotti.
It is only when a lot of people such as Pugachev start to lose a lot of money, because of the Ukraine Crisis or Western Sanctions, or falling oil prices that could put pressure on Putin. “But there is not much sign of that at the moment. People who make the decisions, the political elite, are not showing signs of losing affection for him,” says Bullough. “I don’t think he’s going anywhere.”
Indeed, Ben Judah, author of Fragile Empire: How Russia Fell in and Out of Love with Vladimir Putin, says that while economic growth is lagging and sanctions remain in place, Putin got a big popularity boost from recouping the Crimea and restoring pride to Russia. In fact, in a way, these sanctions have given Putin an excuse for economic troubles.
And for those who may have wanted to challenge Putin, there has now been at atmospheric change, with what Judah says is a “fear of the whole system of enforcement and punishment which we can label Putin”.