Gennadi Timchenko: Russia’s most low-profile billionaire

The Kremlin has found a replacement for Roman Abramovich. The oil that Chukotka’s oligarch used to make his fortune may flow away from him – to one of Putin’s former co-workers. Everyone prefers to be cautious in speaking of Gennadi Timchenko.

The Kremlin has found a replacement for Roman Abramovich. The oil that Chukotka’s oligarch used to make his fortune may flow away from him – to one of Putin’s former co-workers.

Russia’s oil industry was shaken up by some news last week: Gazprom is transferring the oil exports of what used to be Roman Abramovich’s Sibneft to the control of a company called Gunvor, associated with another of President Putin’s friends – Gennadi Nikolaevich Timchenko. In other words, there has been an increase in the regiment of intermediaries who divert petrodollars from the state’s coffers.

Gunvor (Switzerland) already handles at least a quarter of Russia’s oil exports, but the company doesn’t even have its own building in Moscow – only a token office in the Morskoi Dom business center near the Kremlin. Then again, Gunvor is quite secure, since it also has a non-geographic proximity to the Kremlin, and analysts estimate that Timchenko’s business is worth about $25 billion.

Timchenko has spoken to the media on at least two occasions. The first time a journalist phoned him, Timchenko denied being himself; the second time, he said he couldn’t talk because he was in the middle of cooking dinner. Finnish journalists haven’t been able to reach Timchenko either (he holds Finnish citizenship).

“Yes, I’ve approached Timchenko via one of his managers, requesting comments, but he’s never responded,” says Pekka Hakala from Helsingen Sanomat. “After all, he lives in Switzerland.”

Indeed, according to the land registry of the Geneva canton, Timchenko owns a hectare of land (10,268 square meters) on the shores of Lake Leman and a modest chalet worth $11 million. Timchenko’s name never appears on any Rich List and is hardly ever mentioned. It seems to be no coincidence that “Gunvor” is a Scandinavian name meaning “cautious in war.”

The human cover story

Everyone prefers to be cautious in speaking of Timchenko – or not to speak of him at all.

Former presidential candidate Ivan Rybkin: “During the last presidential campaign, I described Timchenko as the person who controls the Kremlin’s unofficial cash register – and after that, my offices were ransacked.”

Timchenko’s company exports most of its oil via the Baltic states. Even the Estonian state security police prefer not to make any official comments about Timchenko. An Estonian police source told us: “Timchenko controls Gunvor in Switzerland, TransOil in Russia, Tarkon in Estonia, IPP in Finland, and dozens of other companies and offshore firms. In this business, he’s responsible for strategic oil supplies. He has patrons among Estonian officals – and, most importantly, among the chekists in Russia. In fact, Timchenko himself has a secret service background and makes no secret of his friendship with Putin.”

Intelligence agents don’t have biographies – they have cover stories. According to the cover story, Timchenko and Putin grew up in the same city and are around the same age. They worked together at the KGB’s First Directorate. Later on, Timchenko was a shareholder in the Rossiya Bank (St. Petersburg), associated with Putin. In 1998, Timchenko became a co-founder of the Yavara Neva judo club (the club’s website proudly states that it is headed by Vladimir Putin). During Anatoly Sobchak’s “emigration,” Timchenko is reported to have been the liaison between the former St. Petersburg mayor and the future president.

In a cautious whisper, an opposition politician told us: “Remember how Putin once misspoke during the YUKOS bankruptcy procedure, referring to the new owners of YuganskNefteGaz as the Baltic Finance Group, not the Baikal Finance Group? That was a Freudian slip. Putin knows that his friend hails from the Baltic coast, and that auction featured some of Timoshenko’s associates – a certain Igor Minibayev… Earlier, Gunvor bought 3 million tons of Iraqi oil for $500 million. The United Nations report says that Timchenko got this from ZarubezhNeft, which is headed by a certain Nikolai Tokarev, who used to be Putin’s superior officer when Putin was a KGB agent in Dresden.”

Abramovich’s heir

Agent Timchenko moved into the oil industry twenty years ago, in the perestroika era, when he became the head of a foreign trade enterprise called KirishiNeftekhimeksport. His affairs have only prospered since then.

Analysts at Hermitage Capital Management have worked out the reasons behind Timchenko’s rise. Hermitage Director Vadimi Kleiner says: “We did some research and found that KinEx, one of Timchenko’s companies, was buying oil at surprisingly low prices.”

In 2002, for example, KinEx bought oil from SurgutNefteGaz at $35 below world prices (per ton), while other intermediaries had to be content with a discount of two dollars. During four years of cooperation, KinEx alone increased its owner’s fortune by $1 billion (and Timchenko controls many other companies besides KinEx).

Kleiner says: “I don’t know how Timchenko manages to get such profitable contracts. We study economics – but that’s a question of politics.”

In the 1990s, Timchenko tried to get involved in the real economy – that is, oil production – but soon backed away. Given Russia’s realities, re-selling oil is far more lucrative. Those who control exports can skim the cream.

Even TransNeft, which is state-controlled, has found a way of selling oil while bypassing the budget. The Druzhba pipeline and TransNeft’s other export pipelines end up with hundreds of thousands of tons of “unclaimed” oil each year, as a result of setting exaggerated standards for “technical wastage.” And who gets the money from this? We couldn’t get any comments from TransNeft.

“This isn’t the most convenient time for TransNeft executives to answer such questions,” says a former TransNeft employee. “Over the past few months, there have been rumors at the Federal Property Management Agency that TransNeft and other raw materials transporters may be united into a giant holding company headed by Gennadi Timchenko.”