Forbes subscribers were invited to attend an online briefing on March 30, 2022, with several Forbes reporters and editors on Russia’s oligarchs, former oligarchs, sanctions and more in light of Russia’s war on Ukraine. Below is a transcript from the event. It has been edited for clarity.
Kerry Dolan: Good morning. I’m Kerry Dolan. I’m an assistant managing editor at Forbes in charge of the billionaires list. I want to welcome you this morning to our discussion about what’s going on in Russia and Ukraine, particularly regarding the oligarchs and the billionaires in those countries. I’d like to introduce you to my colleagues: Luisa Kroll, who’s an executive editor at Forbes, Giacomo Tognini, who is a staff writer and on the wealth team who has been covering a lot of the movement of the billionaires and the oligarchs, and John Hyatt, also a reporter at Forbes, who is on the wealth team. Welcome to all of you.
Giacomo, talk about who are the oligarchs, why do we care about them and how does Forbes define who an oligarch is?
Giacomo Tognini: Kerry, and welcome to everyone here. I’ll start on this and maybe pass it on to John since he had a great story on what is an oligarch and how we define them. But broadly speaking, oligarchs are wealthy businesspeople who are very politically and socially influential, and who have obtained their wealth in part due to political influence.
At Forbes, we’ve been tracking oligarchs and Russian billionaires since the 1990s. Generally speaking, there are two time periods in which we classify when these people became oligarchs and became very wealthy. One is in the 1990s when Boris Yeltsin was president. And there was a scheme in which several individuals obtained shares in state-owned companies that they privatized and became quite wealthy. A second phase was after Vladimir Putin became president in 2000 where you had some of the people closer to him, historically, some of his childhood friends and former judo sparring partners, for example, who also became quite wealthy, thanks to their ties to him. I’m going to pass it to John to make sure I haven’t missed anything, but that’s an overview.
Dolan: John, maybe you could talk a little about why we care about these people and how many we think there are.
John Hyatt: Sure. Adding to what Giacomo said, it’s quite interesting. I think traditionally oligarchs are thought of as benefiting from the privatization during the Yeltsin years and that’s certainly that first wave that Giacomo hit on, but then as Putin consolidated his grip on power over the last 20 years, we’ve seen a growing emphasis on close friends of Putin’s, people with large stakes in companies that Putin helped orchestrate them getting those stakes, so there is an interesting conflict between oligarchs who benefit from private companies and those who benefit from Putin’s control. We’ve seen a little bit of conflict between those groups.
Dolan: To clarify, we’ve been tracking billionaires for a long time. Just because you’re a billionaire in Russia, does that mean you’re an oligarch?
Luisa Kroll: No, though it means you are most likely an oligarch. We did the math. There are 83 billionaires this year, down quite a bit from January because of Putin’s invasion of Ukraine, but I think we counted 14 that made it on their own, the way that we think of most, say, tech entrepreneurs in the U.S. doing it, where they really didn’t have any kind of advantage from a privatization or political influence, etc.
The one thing that I want to jump in and talk about, which I find incredibly interesting and confusing, is the relationship between these oligarchs and Putin. Because I think a lot of people assume that all these oligarchs have really great relationships with Putin, and that they’re working for him. I think it’s important to understand how very complicated it is, because I think that’s one of the reasons why the sanctions may be effective or not effective.
A lot of these people, as Giacomo alluded to, got rich during Yeltsin’s era. And there are reports that when Putin came to power—there’s a very famous case that Forbes tracked for many years, but there was the richest man in Russia, Mikhail Khodorkovsky, who basically was thrown in jail by Putin and his fortune was taken away. It was seen very much as a pivotal moment in Russian business history where Putin made it clear that the oligarchs had to report to him and that they had to follow his rules. There’s one person who’s been following Russia for years who insists that at that time, Putin made a deal with all these oligarchs and basically said, you give me 50% of your fortune and I’ll make sure I don’t take your entire fortune away.
Dolan: You’re talking a Bill Browder, right?
Kroll: Bill Browder, yes. There’s not actually definitive proof of this, but there’s a lot of evidence that they acted in ways that tried to keep them either in good graces of Putin or tried to distance themselves. You definitely saw a period of time in the 2000s where a lot of these oligarchs were cashing out and trying to take their money offshore, in my opinion, to stay away from Putin and to try and figure out a way to protect their money and keep it away from him. It’s very interesting.
Dolan: I think one of the most prominent cases of where an oligarch turned against Putin is, of course, Boris Berezovsky.
Kroll: The person that started all our wealth coverage in Russia was an amazing journalist named Paul Klebnikov. He worked with Kerry and I in New York years and years ago, and then he moved to Moscow to open Forbes Russia for us, and to start our first Russian rich list. Paul did a very powerful story on Boris Berezovsky that Berezovsky actually ended up suing Forbes for libel, and it was a long-drawn-out case.
Basically, the long story short, Berezovsky ended up having to move to London to escape Putin, who was charging him with all sorts of misdeeds. And he ended up dying. It was said to have been a suicide, but it was left open by the coroner, and there were some that believed that he was poisoned. His last interview before his death was with a Forbes Russia reporter. And in that interview, he basically said something about how he envied Khodorkovsky because he was pretty much clean. He was able to give up his whole fortune, but he was not done in by Putin. It was a really interesting thing for him to say, particularly, hours before he died.
Dolan: Yes, and this was a guy who was very instrumental in Putin’s rise, too. He was a big supporter of Putin, so the fact is that he turned against him and then there was his demise. It was made to look like suicide, but who knows? We don’t have all the details.
Let’s talk a little bit about the sanctions that have been put in place. Who has been sanctioned and why, and what’s happened with that? Giacomo?
Tognini: In terms of the billionaires that we consider oligarchs, I think it’s 14. We had another 19 oligarchs who were billionaires before the war but have lost too much money since the invasion to still qualify. So, we have tracked in terms of billionaires who have been sanctioned, 25 in total since 2014. Eleven were sanctioned after the annexation of Crimea, either in 2014 or some were in 2018 and one in 2021; one also right before the invasion on February 23, 2022, and then another 14 since the invasion.
Dolan: Just to underline that—we’ve been saying there are 83 Russian billionaires, so there’s a bunch that are not sanctioned and who are not oligarchs. Is that right?
Tognini: Yes, exactly, and I think it’s interesting, also going back to what we were saying before, about why some have been sanctioned. For example, several have been sanctioned by the European Union and the United Kingdom, but not by the United States. We have a few—I think the most interesting examples are Viktor Vekselberg and Oleg Deripaska—who have been sanctioned in the United States and the United Kingdom, but not in the European Union. They were both sanctioned in 2018 by the U.K. And I can go into a bit more detail on them.
Then, in terms of closeness to Putin, there are a few people who were sanctioned by the European Union. One is Andrey Melnichenko, who, if you look at the reasons why these people were sanctioned, in the announcement, it’s because they attended a meeting with Putin on February 28 of several Russian business leaders on the day of the war. And so as a reporter, it’s been difficult to figure out the justification behind some of the sanctions announcements.
Obviously, for a lot of these people, we know they built their fortunes while Putin was in power or just before that, and obviously own large assets, large companies in Russia, but then you have others, for example, I mentioned Deripaska, he’s been said by the U.S. government to have a diplomatic passport when he was sanctioned in 2018, for example, and to have fairly close ties to Putin. So, it’s been very confusing, honestly, to see why some are sanctioned in some countries and others aren’t.
Dolan: Just to interrupt, but just like as you call and you ask to speak to somebody in [the U.S.] Treasury, or I don’t know if there’s an EU spokesperson, nobody wants to tell you. No one wants to say, well, we really should be sanctioning Vagit Alekperov or somebody else, but we haven’t done it yet. I’m curious, has anybody given you any kind of rationale, even outside the government? Why Alekperov isn’t getting sanctioned? Luisa?
Kroll: I was just going to say that the Treasury officials—the people who are deciding who’s sanctioned—will not talk on the record. But there have been some discussions and again, John and Giacomo have been knee-deep in the reporting so they can talk more thoroughly, but for instance, the most famous case right now is Abramovich, and he is not sanctioned by the U.S. There are reports that Zelensky personally asked Biden not to sanction him because he wanted Abramovich to play a role in the negotiations between Russia and Ukraine.
And the Kremlin confirmed that Abramovich did play an early role. There was a big report recently about whether Abramovich and a couple of the Ukraine negotiators were possibly poisoned. He was just sighted back in Turkey again, seemingly to play a role. So, there’s all sorts of political calculations that go into why somebody is sanctioned.
Dolan: For people who may not be so knee-deep into it, Luisa is referring to Roman Abramovich, who is best known for being the owner of the Premier League’s Chelsea Football Club, which at the beginning, he said he was going to put it in the stewardship of the foundation of the club, which kind of made no sense to me because it didn’t really change the ownership of it. And now it’s up for sale. Then he got sanctioned after he put it up for sale, and we’re waiting to see what happens in terms of bidders for it.
Kroll: Before we go on, I want to take the opportunity to talk a little bit more about Abramovich because I do think he’s been cited so publicly, and he’s such an interesting case study to look at what’s been happening in Russia. He was an orphan. He grew up quite poor. I think he first started making rubber ducks, but he became wealthy during the Yeltsin privatization era.
I believe it was in 2005, he sold Sibneft, which was a big oil and gas company, back to Russia. That’s when he made a huge amount of money. It’s really interesting. My guess is that it was helping Putin consolidate his power, but it also enabled him to cash out. And over the years he’s been spending more and more time outside of Russia. He’s gotten himself both Israeli and Portuguese citizenship. He’s well-known in Israel as a very generous donor. He’s given roughly half a billion dollars there.
It’s really interesting to see how on the one hand, he’s very much linked to Putin, but on the other hand, there’s evidence that perhaps he tried to forge a new path, but you can never quite leave.
Hyatt: One other detail on Abramovich that I think is telling and interesting: During the beginning of the war, when he said he was going to sell Chelsea Football Club, he said that the proceeds would be donated to victims of the war. It was a bit of an ambiguous statement and some further reporting, I believe it was the Guardian, reported that those proceeds might be donated to Russian victims of the war instead of or in addition to Ukrainian victims of the war. So kind of a perfect encapsulation of how somebody like Abramovich, who made his money in Russia and moved his capital to the West, has had to strike a balance between expectations and cultural mores in the West, and the realities of operating under Putin’s rule.
Dolan: And he’s covering himself by saying “victims of the war”; he’s not really saying which side he is supporting. As we mentioned, he’s managed to get passports to Israel and to Portugal; this is another trend we’ve seen from some of the Russian billionaires—they got second passports in a number of other countries, including the U.S.
Abramovich has been sanctioned by the U.K. and the EU. Are there others who have been sanctioned that you think are worth highlighting that stand out as being super powerful, super interesting, have super interesting assets that have been seized? What’s the difference between asset seizure and assets being frozen?
Kroll: I’m going to let Giacomo take this one. But I think that Alisher Usmanov, who was one of the earliest Facebook investors, is definitely worth some discussion.
Tognini: Yes, definitely. I see a question about the discrepancy in sanctions between countries. We’ve actually heard, John and I, from some sources that this is actually a lot of coordination between the EU, the U.S. and the U.K. We’ve also been tracking sanctions by Switzerland, Australia, Canada and Japan. So, while it’s seemed disorganized to us, apparently it’s a lot more organized than it usually is.
But yes, we have generally been tracking the assets, specifically the yachts, aircraft and real estate that has been frozen. And I use the word frozen. Without boring all our participants, from what we’ve understood from speaking to sanctions lawyers and other lawyers and people involved in this world, when an individual is sanctioned, their assets can be frozen in the sense that they can’t sell or rent the asset and they can’t use it. For example, Usmanov, when he was sanctioned by the U.K., the sanctions notice specifically cited two of his properties in the U.K., two large estates. And it said that he could not gain any economic benefit from them or sell them or rent them or pay for their upkeep.
When you look at aircraft and yachts, what happens is that they’ll be registered for a flag of convenience in some country and then they’re owned by an offshore company in another jurisdiction. In that sense, it’s difficult for countries to actually freeze that asset because they need to go through the whole chain of ownership, which is often very obscure. Also, seizing an asset is the government actually taking ownership of it, from my understanding, and I’ll let John correct me if I’m at all wrong here, in terms of the reporting he’s been doing as well, is that seizing an asset is a whole legal process that takes a very long time, while freezing is something they can immediately do. You’re on the sanctions list, even before the person has a chance to fight back legally, you can freeze that asset. And one thing that countries, some jurisdictions, have been doing… the Isle of Man, for example, which is a British Crown Territory between Ireland and the U.K., it’s a place where a lot of aircraft have been registered for tax and secrecy, more tax benefits, by a lot of oligarchs and not just Russian billionaires, billionaires all over the world. What they’ve been doing is they’ve been deregistering these yachts and aircraft, saying, it’s no longer registered here. And what that means is that those vessels or aircraft lose their insurance. It means they can’t sail or fly anymore unless they register somewhere else, be it Russia or any other country, and then gain that insurance again.
Long story short, for a lot of these people who have been sanctioned in the West, they still own these assets. But they can’t travel, if you’re sanctioned by the EU, you can’t travel to the EU. If the U.S. has sanctioned your jet, anyone anywhere in the world who does maintenance on that jet is subject to secondary U.S. sanctions, even if you’re in Dubai or wherever. So, it really does limit their movement and enjoyment of these assets; it doesn’t mean they’ve been taken away. I’m happy to answer any more questions on that if anyone has any other points.
Dolan: A couple of questions from the audience. One is about the aim of the sanctions. Question: the sanctions on these 14 or 15 billionaires since the invasion, is that an attempt to keep those billionaires from aiding Russia in the war?
Kroll: That’s a terrific question. I think that it’s much clearer when they are sanctioning oil and gas from Russia what the intention is and what the impact on globalization and on world markets is. I think that, and I forgot to say this earlier, it was really interesting when they started to sanction people at that meeting that Putin called when he had them surrounded. My sources in Russia basically told us that he called the meeting, made them show up, would not allow anybody to ask a question or say even a word, and then had them go. So, they really did not have much influence at that time.
The reason I bring that up is because I think that they are using the oligarchs to make a point. I personally think that they’re hoping they will put pressure on Putin to stop the war. I do not think that they were going to be using the money directly to help the war. There have been a number that have condemned the actions. So, I think it’s more that they’re hoping these guys who have made so much money in Russia and who are seen as so influential will in some way force Putin’s hand. I’m not sure it’s really going to happen that way.
Dolan: A number of oligarchs who have had the sanctions have come out and condemned the war but not Putin.
Kroll: Especially in the early days, Mikhail Fridman of Alfa, Alexei Mordashov, came out and publicly said that they do not condone the violence and hope that the war would end. But they did not come out and speak out against Putin. As far as I know; no one really has of the current billionaires. Mikhail Khodorkovsky, not surprisingly, did come out strongly against Putin in his remarks.
Dolan: He has nothing to lose because his fortune has been taken away. We don’t consider him an oligarch anymore.
There’s another question here. Who among the oligarchs have not been sanctioned by the U.S.? It’s a long list, I take it.
Kroll: We alluded to one earlier, Vagit Alekperov, who I think is a really interesting one. He is the founder of Lukoil, which is one of the biggest independent oil companies in Russia. I think it’s responsible for 2% of the world’s oil supplies. He was on our first billionaires list in 1997. He does have assets outside of Russia and Giacomo, you can correct me, but I think he’s got some assets in places like Italy. What our sources have said is that these governments have not sanctioned him in part because they want somebody that’s in the oil business that’s more on the independent side still kind of free. And that since Igor Sechin, who is not a billionaire, so we don’t include him in our calculations, but he’s the head of the state-run oil company. But since he’s sanctioned and is seen as really a problematic person that they want Alekperov free to be able to use him more as a negotiating point.
Dolan: Speaking of Igor Sechin, someone in the audience is asking about the current status of sanctions on Gazprom (the Russian majority state-owned energy company) and how that affects Western company’s ability to do business with Gazprom?
Kroll: I’ll just quickly say that there’s obviously been a lot of discussion about what can Europe do to free themselves from the dependence on Russian oil. I think that it’s something like 40% to 50% comes from Russian oil, not all from Gazprom. I don’t have that specific figure, but it’s really problematic. And so, when Biden said that they were issuing sanctions against oil and gas from Russia, the EU didn’t follow suit. And it was seen as a very political decision where both parties were in discussions together. But because the U.S. gets so much of its oil production from the U.S., we were able to do that, whereas Europe is in a much tougher situation.
And I think the concern right now is that it’s going to take some time for Europe to extricate itself from relying on Russia. And until that happens, it’s just really politically fraught. There are no easy solutions, in the short term, at least.
Dolan: Right. And we see BP getting rid of its stake and its joint venture in Russia, so there’s some big issues.
There’s a question about Abramovich. I know we talked about Roman Abramovich a little bit already, but someone is asking what is his agenda? He has a seat without a portfolio in the peace talks in Turkey. Is he a friend or a threat to Putin, particularly if his health issue a few days ago was caused by poison? I think the poisoning was actually reported just two days ago but was actually supposed to have happened earlier in March. That’s how I had read the news reports of that. So, it’s interesting, it took a while for it to come out, that this poisoning may have happened early on.
Kroll: With regards to Abramovich, I think that it’s unclear. It’s kind of ambiguous, and that’s why he’s in this really interesting role, because I think some people in the West think he is on the friendlier side, particularly with his work in Israel and such, and Putin, obviously, must think that he is also friendly to him, which is why he’s approving him to be part of these discussions. He’s definitely walking a fine line.
Dolan: Another question from our audience: What is to stop the oligarchs just riding it out and waiting until their assets are unfrozen? Is the time line expected to be significant so that freezing assets becomes a real deterrent? Well, you talked about this a little bit, Giacomo, in that they can’t get on their planes. They can’t get on their yachts. Maybe you could go in a little more detail about what you think the time line might be.
Tognini: Sure. I think in this case, it’s constructive to look back at those who were sanctioned in 2014 or 2018. For example, Arkady Rotenberg, who is Putin’s childhood friend and judo sparring partner, was sanctioned in 2014 by the EU and the U.S. and the U.K. In September 2014 he had several of his assets in Italy frozen, but he then sued the EU. In 2016, he obtained a partial reversal of those measures. And we found out recently that one of those assets, a luxury hotel in Rome, is still owned 50% by him and 50% by a company. Well, 50% by a company in Cypress owned by Arkady, and 50% by another company in Cyprus where his brother Boris, who is also sanctioned in the U.S. and the U.K., is the director. We’ve seen so many examples of other oligarchs who move their assets to their spouses, children, cousins, close associates. We’ve been seeing so many reports of that recently.
Alexei Mordashov, a big steel magnate, on the day he was sanctioned by the EU, transferred shares in a travel company Tui and in Nordgold, the gold producer, to his wife. And unless these relatives are also sanctioned, that’s an easy way of getting around it. Also, the U.S. and the EU both have something called the 50% rule, where if you’re a sanctioned individual and you own less than 50% of an asset, it’s not sanctioned. Oleg Deripaska, a metals magnate who was sanctioned in 2018, reduced his ownership below 50% in one of his larger companies and that company was removed from the sanctions.
That’s also a question I’ve been having, both in terms of the waiting it out, and like we saw with Arkady Rotenberg, suing successfully. Deripaska sued in the U.S. for its sanctions and he was unsuccessful. So, it’s partly how will it play out legally? How will it play out in terms of them finding increasingly complex ownership structures, or relatives or friends to hide behind?
I think there’s another question here about the unwinding of these. How does this eventually unwind and how devastating will this actually be on Russia long-term? Speaking, at least of the oligarchs, I think it’s an open question whether if there’s some sort of political agreement and the war ends, will these sanctions be rolled back? And in that case, the freezing would definitely be temporary. I don’t know if John wants to add anything on the effect of the sanctions. We’ve both had a lot of conversations about this recently.
Hyatt: I think that was a great summary. One thing that struck me speaking with former sanctions officials who are a bit more available for talking on the record than current Treasury officials, they emphasize that these sanctions aren’t punishment as much as the public might want them to be punishment. I think a lot of us see what’s happening in Ukraine and are horrified and angered, and we want sanctions against these Russian oligarchs to punish them for their role in facilitating the Kremlin’s consolidation of power, for being accepting of what Putin has done. But, ultimately the goal of the sanctions is to, as Luisa was discussing earlier, have these oligarchs exert influence over Putin to do what they can to get him to end the war.
So in a sort of perverse way, you want the oligarch’s assets to be unfrozen, insofar as that would reflect the end of the war or an outcome in which the sides have ceased hostilities and we’re returning to some sort of normal working order where people can be international citizens, they can have assets abroad. While that doesn’t offer insight on the timeline, it is just to say that, in a sense, the goal is to have these assets unfrozen at some point.
Dolan: But that would be the secondary goal. The main goal is to get the war over.
Hyatt: Precisely.
Dolan: Someone has a question about how this whole situation will affect supply chains for consumer products and globalization, and if this will truly end globalization as we know it. Any thoughts on that? Certainly, supply chains . . . besides in terms of what’s coming out of Russia, it’s mostly oil and gas, so that’s the big issue there. I don’t really know besides that what else Russia exports that’s of big concern to, certainly, American consumers. But do you guys have thoughts about globalization? That’s certainly something I’ve seen bandied about—people think this will end globalized supply chains. I don’t know if that’s true.
Kroll: I hate to say it, but I think it’s too early to tell. I think we have to see. I think these next few weeks will be critical.
By the way, while I’ve been sitting here, I got some sort of news flash. I don’t know if it’s true, but Putin basically reportedly banning the naming of Abramovich anywhere in Russia after the accusations of poisoning. I personally think that we don’t know to what lengths Putin is going to go. And if these latest ceasefire talks are not successful, if he continues to retreat from any discussions, any willingness to negotiate, I think indeed it could be end of globalization as we know it. But I think that there’s still a little bit of window before that closes.
Hyatt: One quick thing I’d add on the issue of globalization. We discussed this earlier, I think there are two layers of the sanctions. There’s the economic sanctions against companies and industries and that affects global supply chains and broader macroeconomic issues. Then I think with the case of these oligarchs and their assets and sanctions against them, there’s this other layer of the globalized world we know of, in which people can hold assets abroad and they can have citizenships of multiple countries, they can live a global lifestyle.
So I think that there are those two layers that we have to consider here. One, the core industries of commodities, energy, agriculture, food products and we’re already seeing the disruption there. But then when we think about globalization through the lens of oligarchs, I think we have to consider the lives that people live in the 21st century of being able to travel to different countries and being able to do different things. But I would echo Luisa in saying, it’s difficult to say what the ultimate outcome is going to be there.
Dolan: Just to add to that, I feel like the fact that, as Giacomo was pointing out before, some of these assets are held through these Cyprus-based companies or the planes and the jets are sometimes hard to track down the ownership because they are hidden. That’s not, of course, unique to Russian oligarchs. That’s something we see among billionaires globally. And I think that one of the things that we, as a team who’s looking for billionaires around the world and their assets, we want transparency and disclosure of ownership because it makes our job easier.
For example, in the U.K., they have the Companies House, which is a government arm, and you’ve got a private company, you’ve got a report to Companies House, and those documents are available to anybody who wants to go into the Companies House website. I really wish we had something like that in the United States because there’s a lot of secrecy in the U.S. You can hide assets in South Dakota and people incorporate in Delaware for all kinds of reasons. So, one of the things that I’ve been thinking about a lot since this happened is just shining a light on the ability of the very wealthy to hide assets, and it’s not just Russians.
Tognini: That’s a great point, Kerry. And also, just what John was saying, that we’ve not been seeing recently sanctions on individuals and not their companies. I was reading about one of the largest fertilizer companies in the world, PhosAgro in Russia, they sanctioned the now former CEO, Andrey Gurev Jr. He’s the son of the billionaire Andrey Gurev. And he was sanctioned and sent down as CEO. His father, who’s a billionaire, and whom we consider an oligarch, is not sanctioned. And I read PhosAgro is not sanctioned, supposedly because of the potential impact on fertilizer prices. We’ve seen Evraz, a big steel maker, not been sanctioned, but Abramovich, a large shareholder, has been sanctioned. So, I think that’s one way in which we’ve seen countries try to impact the person, without trying to impact the markets and the commodities.
Then on the point, Kerry, that you were saying on transparency, there’s been a lot of reports recently that we’ve also been working on about the next destinations for a lot of these Russian oligarchs. Okay, now that they can’t hold their assets through companies in Cyprus or the Isle of Man or wherever, Dubai and the UAE in general has been spoken a lot about. We know that at least three Russian billionaires have homes there. We’ve seen several yachts and planes owned by these people recently travel there. And then Turkey has also recently cropped up in that sense. For example, Abramovich’s two yachts are both docked in Turkey. There’s been reports recently that he’s been in Turkey for the negotiations between Ukraine and Russia. I think it’ll be really interesting to see, even if we have transparency in a lot of these jurisdictions that used to be popular, where are these people going to go next? And how will they be able to own or hide assets in the future?
Dolan: I wonder, at a certain point, does enough pressure get put on, let’s say, the United Arab Emirates so that even going to Dubai is not really the escape that it appears to be right now. I don’t know if that will happen. The interesting thing about Europe coming together, uniting in its opposition to the war and applying sanctions, it’s amazing how, if Putin decides not to stop with Ukraine and wants to go into Romania or pick another country, will that get more other countries a little bit concerned about, who have been on the sidelines, to act in concert with the U.S., the U.K. and the EU?
One question from the audience is what role are cryptocurrencies playing as a way to avoid sanctions? Do any of you guys want to take that one?
Kroll: I think the main thing is that we’re hearing that it is helping them. That is just to Kerry’s point about secrecy and the ways that the oligarchs are getting around a lot of this, there is some evidence that is happening. I will say there are some oligarchs who are claiming that their lives are being upended and they can’t pay their staff and woe is me. But there are reports that they’ve been able to use cryptocurrency to stay afloat or have access to cash and such when they really shouldn’t or can’t.
Dolan: That one can’t be seized from them, I guess? The idea is that you don’t know if somebody’s wallet really is, whatever, pick your sanctioned billionaire’s wallet and therefore you can’t seize it. Interesting. Going back to what you said Giacomo earlier about if these people are putting assets in their name of the wife, and so therefore it’s no longer theirs and therefore it can’t be sanctioned, it seems to me that’s an easy fix for the authorities. Wouldn’t you want to just start out by sanctioning the person and their immediate family? I guess, you could give it to your cousin. Is a cousin considered immediate family?
Kroll: There’s been a lot of evidence that for whatever reasons, it’s not unfolding that way. Alfa Group, which is an oligarch-created conglomerate, has a number of billionaires involved. They started off sanctioning two of them. And then that left two of the college buddies and a couple others still running the company. They then sanctioned two more of them. And I believe there’s still a fifth that now is in control. And each time they announce the sanctions, the board members step off, reduce their stakes. But to me, it seems apparent that this other guy is still just holding down the fort while these guys have to deal with their legal problems. So, will it really change the ownership and the running of this particular company? I’m not really sure it will, but again, we’ll be watching as it all unfolds.
Dolan: We’ve got one more minute and I see a question that maybe we can end with. How are the sanctions affecting people in the U.S.? I have to say, I haven’t felt any effect. Have you guys? I’m curious. Gas prices going up, maybe?
Tognini: I have family in Italy, and it’s been interesting to see anecdotally, how here this story is viewed as this is something happening over in Europe, and it hasn’t, right, other than gas prices. But I feel like there’s a much greater sense of fear as to what could happen in terms of the war spreading. Even in a country like Italy, which is very far from the war, obviously there’s been rising gas prices, but I’ve also heard reports in Spain and Italy of, they’ve been trying to push the EU to have some sort of price controls or more aggressive government action against the effects of the war. I know the question is about the U.S., but just to highlight that dichotomy.
Kroll: I do think inflation in the U.S. was already on the rise, but I think this war has driven up consumer prices. I think in addition to oil, there’s concern about food prices impacted, in particular, by wheat, etc. I do think that Americans are and will feel impact from sanctions, but more broadly from the war and the slow death of globalization, if that’s where we’re heading.
Dolan: I want to thank Luisa and Giacomo and John, and thank you to everyone who attended.
This transcript has been edited for clarity and may not reflect the recording exactly.
