Gennady Timchenko is richest Russian to have family face US sanctions

By the time the Biden administration sanctioned Gennady Timchenko this week, it was nothing new for the Russian billionaire. He’s one of the few ultra-rich individuals who has been penalised by the European Union, UK and US.

But it came with an added sting: The sanctions included his wife and two daughters.

That makes Timchenko the wealthiest Russian billionaire yet to face US sanctions directly applied to family members, as the government looks for new ways to step up pressure on Vladimir Putin and his allies a month after the invasion of Ukraine.

“They personally gain from the Kremlin’s policies,” President Joe Biden said in a tweet Thursday announcing sanctions on more than 400 individuals and entities. “And they should share in the pain.”

The Timchenko family didn’t reply to requests for comment sent through the Elena & Gennady Timchenko Foundation.

The latest move by the US is part of a widening crackdown on Russian elites and family members who could be benefiting from their assets or helping to protect them. Timchenko, 69, is founder of the now-sanctioned Volga Group, an investment firm with interests in energy, transportation and construction. He has a fortune worth $12.9 billion, according to the Bloomberg Billionaires Index.

“Ultimately, governments have unease with targeting based on your bloodline,” said John Smith, former director of the U.S. Treasury’s Office of Foreign Assets Control, who’s now at Morrison & Foerster. “It’s not something a government generally wants to do, but they can be forced into it by the bad acts of the people who use their families as human shields.”

Western links

Timchenko’s sanctioned daughters have connections in the West. Ksenia Frank, who sat on the board of Timchenko’s firm, Transoil, has Finnish nationality and heads the family foundation’s supervisory board.

Frank studied French and philosophy at the University of Edinburgh, according to the foundation’s website. She also earned a master’s degree from the Insead business school, which is the alma mater of her husband Gleb Frank, the son of a former transport minister under Putin and who was also sanctioned.

The sanctions also hit Timchenko’s wife Elena, the founder of the family foundation who also has Finnish citizenship, and daughter Natalya Browning, who has British nationality. His 131-foot yacht, Lena, which has been blocked by Italian authorities, was also on the sanctions list.

Gennady Timchenko’s son, Ivan Timchenko, wasn’t sanctioned.

The measures indicate the US is turning more aggressive in applying sanctions, said Rachel Alpert, co-chair of Jenner & Block’s national security, sanctions and export controls practice.

In early rounds, family members were targeted for having some connection to the Russian state or its military, but now “just being an adult child of a person who is sanctioned is enough,” she said.

‘Luxurious lifestyles’

The US has sanctioned other prominent Russian families since the Ukraine invasion as well.

Those close to Putin spokesperson Dmitry Peskov “live luxurious lifestyles that are incongruous with Peskov’s civil servant salary,” according to the US Treasury. That includes the multimillion-dollar apartment given by Russia’s government to his wife, Tatiana Navka, an Olympic ice skater. Peskov’s daughter, Lisa, who has a popular Instagram account, posted on her Telegram channel that the penalties were a “witch hunt” fueled by “frenzied hatred of everything Russian.” They are all sanctioned.

The Treasury Department also sanctioned family members of Yevgeny Prigozhin, who financed the Internet Research Agency, the Kremlin-linked troll farm that interfered in the 2016 US elections.

It additionally targeted the wife and daughter of Nikolay Tokarev, the president of Transneft who served with Putin in the intelligence services in the 1980s. The $50 million real estate empire of Tokarev’s daughter includes an oceanfront island villa in Croatia, according to the Treasury.

The US isn’t alone in targeting relatives of Putin allies. The UK this week sanctioned Polina Kovaleva, described as the stepdaughter of foreign minister Sergei Lavrov who owns a London property worth about 4 million pounds ($5.3 million).

Smith, the former OFAC director, said enforcers in drug wars would target kingpins’ family members who were used to hide assets, and authorities are using the same strategy when applying sanctions on influential Russians.

Selective sanctions

Sanctions of Russian family members have been selective. Suleiman Kerimov transferred his main asset, a stake in Russia’s biggest gold miner Polyus, to his son Said in 2015. Suleiman, worth $12.4 billion, was sanctioned by the US in 2018 and by the UK and EU this month. Said hasn’t been sanctioned.

The Kerimov family shifted the headquarters of the holding company that controls its Polyus stake from Jersey to Cyprus, according to a filing this week.

In the US, a 2020 Senate report found Igor Rotenberg helped his father avoid 2014 sanctions with asset transfers, by using shell companies and the secrecy of New York art auction houses.

“If an oligarch is using his family as a pasture for his wealth, then it’s an easy issue for governments to say we’re going to stop that sanction evasion and sanction the spouse or children,” Smith said.

Timchenko was born in Armenia in 1952, grew up in Ukraine and East Germany and studied engineering before working at a Soviet builder of nuclear reactors. He joined the Soviet Ministry of Foreign Trade, and by 1991, as the Soviet Union was collapsing, he positioned himself at a key European importer of Russian oil.

In 2000, he started his own oil trading company, Gunvor. By then he had befriended Putin while he was the deputy mayor of St. Petersburg. Putin was also chairman of a judo club that Timchenko co-sponsored.

As Gunvor thrived, Timchenko in 2007 formed what was then called Volga Resources. Through the investment firm, he bought stakes in gas producer Novatek, which came to constitute his most valuable holding. He sold his position in Cyprus-based Gunvor in 2014 ahead of US economic sanctions, in which the Treasury alleged that Putin had investments in Gunvor and could have access to the company’s funds.

Timchenko has since expanded into other industries, acquiring stakes in construction company Stroytransgaz and the rail company Transoil, which was sanctioned this week along with Volga.

On March 21, Timchenko resigned from Novatek’s board of directors. The company didn’t provide a reason for his resignation, but it came in the weeks after the EU and UK sanctioned him.

© 2022 Bloomberg