How Russia’s Oligarchs Laundered Their Reputations in the West

Sanctions haven’t touched their face-saving philanthropy.

Photo-Illustration: Intelligencer; Photo: Getty Images
Photo-Illustration: Intelligencer; Photo: Getty Images

Following Moscow’s horrific invasion of Ukraine, an overdue wave of attention has been focused on where Russian and post-Soviet oligarchs hide their wealth in the West — from real estate to private equity to the art market. Until the past few weeks, however, less attention had been paid to how these oligarchs launder their reputations (in addition to their illicit assets) and gain access to the highest rungs of western policy-makers in the process.

This phenomenon of “reputation laundering” is hardly novel nor is it limited to oligarchs who made their wealth in the post-Soviet scramble for assets — using their connections to rising despots and organized crime to build portfolios worth billions. Nor is scrutiny or concerns about how nonprofits willingly accept tainted funds — and transform donors from oligarchs to “moguls” or “philanthropists” — limited to oligarchs close to Russian despot Vladimir Putin (see the Sackler family’s donations).

But over the past few years, the massive scale of donations made by oligarchs who emerged following the Soviet collapse has started to become clear — as well as what that has meant for western policy regarding the Kremlin and Moscow’s interference operations more broadly. Two years ago, as part of the Anti-Corruption Data Collective, George Washington University professor David Szakonyi and I created an initial database of oligarchic donations to more than 200 of the most prestigious nonprofits in the U.S. — from museums to universities to think tanks. Recipients included some of the country’s foremost institutions, such as Harvard University, the Brookings Institution, and New York’s Museum of Modern Art. As we found, oligarchs had donated anywhere between $372 million and $435 million to these nonprofits. (Because some donation disclosures provide only a monetary range in which the donation fell, our final number is likewise a range.)

Unfortunately, this number is hardly comprehensive. Because there is no broader requirement for donation transparency from the nonprofits, we had to rely on private companies that aggregate data on donations, as well as IRS 990 forms and publicly available annual reports. But even with this snapshot, we gained unprecedented insight into how these oligarchs, many of whom are now sanctioned, targeted U.S. nonprofits — and how they transformed themselves from malign actors to anodyne businesspeople, opening doors for themselves and their networks to an unprecedented degree.

These oligarchs from Russia (and elsewhere) aren’t simple businesspeople looking to create jobs or revitalize local economies. As people in Russia well know, the oligarchs are little more than parasitic figures extracting wealth and hiding it in the West — attempting not only to conceal their finances but to target key industries and expand resources for the benefit of the Kremlin’s malign campaigns. And rather than be seen as oligarchs in the pocket of a dictatorship in Moscow (which should have been blackballed years ago), they’ve used these donations to U.S. nonprofits to transform themselves into supposedly successful philanthropists — with the access that entails.

For instance, Russian oligarch Viktor Vekselberg successfully donated unspecified amounts to the Wilson Center, a prominent think tank in Washington, D.C. Following the donation, the Wilson Center publicly praised Vekselberg, giving him the Woodrow Wilson Award for Public Service “for his outstanding contributions to the rebirth of Russian philanthropy.” (In 2018, the U.S. sanctioned Vekselberg for his role in Russia’s “worldwide malign activity.”) Oligarchs Mikhail Fridman and Petr Aven likewise used their own philanthropy group to donate millions to places like Brandeis University and the Jewish Federation of Greater Los Angeles. (When the E.U. announced sanctions last month, it declared that Fridman is an “enabler of Putin’s inner circle” and that Aven “does not operate independently of [Putin’s] demands.”)

U.S. nonprofits even accepted funds from the richest oligarchs in Russia. Vladimir Potanin, considered Russia’s wealthiest oligarch, successfully donated to multiple significant U.S. nonprofits, including the Kennedy Center and Guggenheim Museum. And he didn’t stop at donations: Potanin managed to obtain seats on the Guggenheim’s board of trustees and the global advisory board of the Council on Foreign Relations think tank. All of this transpired despite Potanin’s “close” relationship with Putin and the fact that, as author David Hoffman describes in his groundbreaking 2011 book, The Oligarchs, Potanin acted as the “ringleader” for the oligarchs as they seized assets and political power in the mid-1990s. (Potanin resigned from both the Guggenheim and the Council on Foreign Relations this month.)

Yet none of these oligarchs has been nearly as successful in shifting his reputation as Soviet-born Len Blavatnik — primarily because Blavatnik is the only oligarch who managed to obtain both U.S. and British citizenship. While Blavatnik has grown notorious for pressuring journalists not to describe him as an “oligarch,” that’s precisely what he is — not least because he made billions in Russian hydrocarbon sales and worked alongside multiple now-sanctioned Russian oligarchs.

The initial sources of Blavatnik’s wealth, as The Hollywood Reporter notes, “aren’t entirely clear.” But by the aughts and the early 2010s, Blavatnik, who was born in Soviet Ukraine, had grown fantastically wealthy. Part of that was because Blavatnik’s company, Access Industries, had invested in energy and aluminum assets following the Soviet crack-up, combining assets with now-sanctioned figures like Fridman and Vekselberg. Blavatnik and Access Industries gained an ownership stake in TNK-BP — at one point Russia’s third-largest oil company. Blavatnik’s fellow owners included a who’s who of now-sanctioned Russian oligarchs, such as Vekselberg, Fridman, Aven, and German Khan.

As if that weren’t enough, Blavatnik built an ownership stake alongside Vekselberg in notorious Russian aluminum producer Rusal, where the other major shareholder was the company directly overseen by Oleg Deripaska, yet another sanctioned oligarch. (Not all was business: As Vekselberg would later say, Blavatnik was his “friend … who is also a big supporter and active participant in carrying out many U.S.-Russian projects.”) When the consortium in 2013 sold TNK-BP to Rosneft — a company run by Igor Sechin, also a sanctioned Russian official close to Putin — Blavatnik netted $7 billion. As Financial Times reported, Blavatnik “extracted more than $14 billion from Russia’s natural resources industry, the biggest financial gain of any individual foreign investor” in Russia. “He made his money [in Russia], almost all his money here, and then just made investments outside,” the sanctioned oligarch Vekselberg said. “All his main money, he made here in Russia, with me.”

In the years since, Blavatnik’s wealth has exploded. Now estimated by Forbes to be worth $35.7 billion, the oligarch is considered Britain’s wealthiest man. And he hasn’t been shy about spreading that wealth to nonprofits in both the U.S. and the U.K. — including to the most supposedly esteemed institutions in each country. There was a £75 million donation to the University of Oxford, where he helped found the Blavatnik School of Government. There was at least £50 million to the Tate Modern, which named its new extension the Blavatnik Building. There was $13 million to the Council on Foreign Relations, founding the Blavatnik Internship Program. And there was a staggering $200 million to Harvard Medical School — the largest single donation in the school’s history. (Rare are those institutions that have turned down Blavatnik’s wealth: The Hudson Institute, where I am an adjunct fellow at the think tank’s Kleptocracy Initiative, is one of the few organizations on record to have returned his donation.)

On and on and on, U.S. and British nonprofits appeared all too happy to take part of Blavatnik’s wealth and to praise him for his largesse without bothering to highlight any of his links in Russia. (To be clear, there’s no allegation of any illegality on Blavatnik’s part.) Nor could these institutions claim they were unaware of Blavatnik’s ties in Russia — or the controversy these donations generated. After the Oxford donation, for instance, one professor of government publicly resigned — not least because Blavatnik had also donated significant sums to Donald Trump’s inaugural committee — while another group of anti-corruption and anti-Putin figures signed a letter calling for Oxford to “stop selling its reputation and prestige to Putin’s associates.” Following the Harvard donation, a piece in the New York Times likewise described Blavatnik as “undoubtedly a Kremlin insider, someone who has made an enormous fortune trading on his political connections to a deeply corrupt circle of oligarchs and a criminal Russian state.”

Following the Council on Foreign Relations donation, a group of leading anti-corruption experts in the U.S., Russia, and Ukraine joined a range of former U.S. officials to specifically call out the oligarch. “Blavatnik uses his ‘philanthropy’ — funds obtained by and with the consent of the Kremlin, at the expense of the state budget and the Russian people — at leading western academic and cultural institutions to advance his access to political circles,” the signatories wrote in an open letter. “Such ‘philanthropic’ capital enables the infiltration of the U.S. and U.K. political and economic establishments at the highest levels. It is also a means by which Blavatnik exports Russian kleptocratic practices to the West.”

For a time, Blavatnik appeared able to hold criticism at arm’s length. But following Russia’s butchery in Ukraine, cracks are finally starting to form in his reputation — and coming not from high-ranking officials but from those who supposedly benefited from Blavatnik’s largesse. At Yale University, which now hosts the Blavatnik Fund for Innovation at Yale, the Yale Daily News reported that Blavatnik’s donations have “sparked controversy,” with one recipient of Blavatnik Fund support publicly calling for Yale to “suspend or cancel” the program. As the recipient, Aaron Ring, revealed, the supposed donation was hardly a simple gift: The contract with the Blavatnik Fund “saw Yale permit significant investment control over new ventures” to Blavatnik’s company.

And at Harvard, NBC10 Boston reported that multiple associates and the Harvard Library have begun calling for the university to drop any affiliation with Blavatnik. “These are the oligarchs that the Kremlin has created, that Putin has created,” Oleh Kotsyuba, who works at Harvard’s Ukrainian Research Institute, said. “These are his pocket oligarchs, his wallets, where he stashes his money and where he uses them to implement certain things abroad. They have all been laundering their reputations in order to get a foot in the door.”

These efforts are picking up support internationally as well — especially by those suffering directly from the Kremlin’s kleptocratic regime. In another open letter, Ukraine’s most prominent anti-corruption group called for Harvard, Yale, CFR, and others “to rename programs and buildings named after Kremlin oligarch Len Blavatnik, who derives massive insider benefits from Putin’s regime, suppresses free speech, cooperates with corrupt Russian officials, and funds Russian entertainment propaganda outlets in Russia and anti-Ukrainian propaganda films worldwide.” (In a statement responding to this article, Access Industries said that Blavatnik “is not now and never has been involved in the Russian government or any connected political spheres.”)

Whether all of this renewed pressure is enough to finally convince western, especially U.S., nonprofits to distance themselves from Blavatnik — or any of the other oligarchs in question — remains to be seen. (Not least since none of these institutions has announced it would be returning any oligarchic wealth.) But as with Putin’s bloodshed, there will be no going back to the status quo ante for oligarchic donations. Nor should there be. If anything, Moscow’s outrageous invasion should convince western officials to create new transparency requirements for nonprofits willing to accept donations from oligarchs — and to finally reveal just how much money they’ve taken from those close to the Kremlin. This would both build on renewed pro-transparency momentum for things like real estate and shell companies and illuminate how oligarchs have turned to universities, think tanks, museums, and more to transform themselves from Kremlin insiders into supposed philanthropists. It would also reveal just how far oligarchs have sunk their teeth into the West — and how they’ve turned the most nominally reputable organizations around the U.S. into their personal reputation laundromats.

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How Russia’s Oligarchs Laundered Their Reputations