Top Russian Minister Arrested, Accused of Taking $2 Million Bribe

Russia's economy minister was arrested Monday over his role in an oil deal.

ByPatrick Reevell
November 15, 2016, 3:01 PM

— -- Russia's economy minister has been arrested on corruption charges, the most senior official ever detained under President Vladimir Putin, startling a country that rarely sees top functionaries punished despite rampant allegations of government misconduct.

The minister, Aleksei Ulyukaev, 60, was detained on Monday night “in the act” of receiving a $2 million bribe, according to Russia’s Investigative Committee, a law enforcement body that handles major cases.

Ulyukaev is suspected of soliciting the bribe in return for approving a high profile oil deal. The sting operation that led to his arrest, followed months of surveillance by Russia’s F.S.B. service, investigators said. The Investigative Committee today charged Ulyukaev with extortion and a Moscow court placed him under house-arrest. If found guilty, Ulyukaev could face up to 15 years in jail.

The case was immediately seized on by Russian state television as proof that authorities were successfully waging an anti-corruption campaign, while the Kremlin swiftly announced it was following the case closely.

“These are very serious accusations, which demand very serious proof,” Kremlin spokesman Dmitry Peskov told reporters, adding that only a court could determine Ulyukaev’s guilt. Peskov said that president Vladimir Putin had been following the investigation from the beginning.

The arrest and charging of a serving official of Ulyukaev's seniority is unprecedented since Putin came to power in 1999. Although police raids, asset seizures and enforced resignations are common tools in tussles among the country’s power-brokers, Ulyukaev’s high-profile arrest was seen as exceptional, prompting speculation of a struggle within the elite. It follows a series of arrests and reshuffles that have reshaped the top levels of Russian government this year; Putin has recently replaced his long-serving chief of staff, while overhauling Russia’s security agencies and appointing his former top bodyguard to oversee them.

A technocrat, Ulyukaev was tasked with overseeing Russia’s economic development policies, working closely with Russia’s prime minister, Dmitry Medvedev. Not in Putin’s inner circle, Ulyukaev was still known as a seasoned adjunct in the Kremlin system, linked to a more technocratic, economically liberal group clustered around Medvedev, who are often seen as in competition with hard-line isolationists in the government.

The arrest prompted immediate speculation beyond the official version. Some observers suggested that Ulyukaev's fall has lifted the curtain on a turf war between different factions in the government and that has played out around the oil deal that led to his arrest.

That oil deal has been at the center of a struggle at high levels of the government for months. Top officials sought to block the buyout of regional oil producer Bashneft by Rosneft, the state-controlled energy giant that is headed by a Putin ally and one of the most powerful men in the country, Igor Sechin. Both Medvedev and Ulyukaev had come out against Sechin over the deal, questioning whether Rosneft, already majority state-owned, should be permitted to take part in what was supposed to be a privatization.

Opposition to the deal was overruled by president Putin, and the struggle was finally settled last month, with Rosneft agreeing to purchase the state’s 50 percent stake in Bashneft for up to $5 billion, the Financial Times reported.

Ulyukaev though is accused of trying to extort Rosneft by threatening to block the deal. Investigators arrested him at 3 a.m. in Rosneft’s Moscow offices, claiming he had sought to take the huge bribe in cash. The Investigative Committee today said the deal’s legality was not in question following Ulyukaev’s arrest.

Some Russian observers, though, expressed doubts about the case against Ulyukaev, arguing it made no sense he would have tried to block a deal approved by Putin himself or to extort Sechin.

“You would have to be a lunatic,” Aleksander Shokhin, the head of the Russian Union of Industrialists and Entrepreneurs, said in a radio interview, “a month after the deal was approved legally, politically, to threaten Rosneft with something and to extort $2 million from Igor Sechin, basically one of the most influential people in our country.”

Aleksei Navalny, an anti-corruption campaigner and opposition activist who has endured political prosecutions, suggested the arrest’s purpose was simple, writing in a blog post:

“They’re doing in such cases what all authoritarian leaders do. Periodically repressing some unexpected character, so as to frighten all the rest.”

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